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Cabo San Lucas

Beachfront lot : 1 Hectares 

Beachfront : 450 meters lineals

Location : Cabo San Lucas

Status : SOLD 

Turistic development : Cabo Dorado

Price : $ 12 usd by square meter

Financing Real Estate in Mexico

This is a brief summary on Financing Real Estate in Mexico; you can find more info and articles about this topic on our Financing Section. 

Mexico's Banking and Financial industry is currently experiencing a boom, particularly with regards to Real Estate transactions. Secured transactions and an efficient collateral enforcement in case of default are some of the factors promoting the development of these financial market.

Loans for Real Property have established new records in the last year, both in the local market, as well as in the market of those overseas investors and buyers. Current annual interest rates are among the lowest in the past 10 years. The demand for low and mid-income housing has sky-rocketed, as well as the demand for Ocean-front/view and retirement homes for newcomers to the country.

Some Bank have specifically targeted American buyers in the Northern border of Mexico, such as BBVA Bancomer and Banamex, the two biggest financial groups in Mexico. BBVA Bancomer is marketing loans through its subsidiaries, The Laredo National Bank (US Bank) and its Mexican Mortgage company, Hipotecaria Nacional. Bancomer is offering its services through its subsidiary in the US, The California Commerce Bank and Banamex Loan Division. Both have been successful and have learned to make their service a smooth and very professional experience.

Many other Mexican and foreign Banks offer loans for Mexican Real Estate. Some other groups and institutions, such as the SOFOM's offer similar financing products as well. 

If you are applying for a loan at a non-Mexican lending institution, make sure they have enough proven experience in processing these type of loans since the process may vary from country to country.




Major modifications were recently made to the legal framework of financial institutions in Mexico, particularly those regarding the lending market. On July 18, 2006 the Official Gazette published these amendments and additions to a variety of laws and rules, which will allow for a market freedom never before experienced in Mexico’s financial and lending markets.


Although the commercial banking system has improved over the last 5 years, it still lacks the flexibility and availability of resources required by an increasingly demanding market. Moreover, its profits still come from charging high fees and commissions, instead of coming from other acceptable banking activities. Mexico is a country with a highly underserved housing demand; the need for affordable homes can be seen in all sectors, from popular low-income projects to high-end luxury residences.  By affordable housing, I make reference not only to reasonable pricing, but also to available loan sources with a wide range of options.


During Fox’s presidential term, a type of financial institution was authorized to operate, particularly in the mortgage market. It is called Sociedade Financiera de Objeto Limitado or SOFOL for short, literally Limited Purpose Financial Corporations. In exchange for access to fund sources, they carried the burden of strict scrutiny from the Comision Nacional Bancaria y de Valores (Securities Exchange and Banking Comisión), as well as from the Finance Ministry, the Secretaria de Hacienda y Credito Publico. They were also obligated to comply with a series of requirements, such as special authorizations from Hacienda, and to start and maintain a minimum amount of capital with regards to their accounts receivables.


Many of these SOFOLs worked along with a public entity called Sociedad Hipotecrai Nacional (SIF), jointly in charge of providing enough funds to stimulate the housing and construction markets in Mexico. The SIF provided cheap development loans to the SOFOLs, which served as a vehicle to reach out to the public. Today, the market has shifted from the traditional commercial bank loan, to the more flexible final product offered by the SOFOL.


The success of the SOFOL experience triggered the modifications and additions to the Law currently in effect. This success is combined with a series of factors such as the high demand for housing, the low construction costs, the interest of the investor community, and the profitability of projects.


The SOFOM in a nutshell.


Before the modifications and additions made last July to the financial law, only financial entities were authorized to offer credit, loans and/or mortgage products to the public. Today, the legal framework offers the ability to become an institutional lender without having to be a part of a financial institution like a bank or a credit union.


A SOFOM is created once a corporation (Sociedad Anonima) stipulates the development of certain activities on a professional and regular basis in its corporate purpose. The activities included are the following:


·        Credit Transactions

·        Factoring

·        Leasing


Once having incorporated these provisions in its corporate purpose, the corporation is required to add SOFOM to its name, i.e. Mexico Lending, Sociedad Anónima SOFOM. A SOFOM may or may not be part of a financial group or entity. If it is independent from a financial group, then it would not be under the scrutiny of the Comision Nacional Bancaria y de Valores, and would not need any kind of special permit to begin operations. It would also be required to include the words “Entidad no regulada” (Non-regulated entity), whereas the regulated SOFOMS (those linked to financial institutions) would be required to state the opposite.


The non-regulated SOFOMs would nevertheless be overseen by the CONDUSEF (Comision Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros), the Federal Comission for the protection of consumers of financial services. The CONDUSEF would have authority and may impose sanctions upon the SOFOM or even upon their consumers when provided by the Law, in case of breach of contract or controversy.


Among some other benefits, a SOFOM may:


·        Act as trustee in loans offered through master or secured trusts, providing the ability to start the foreclosure in case of default.

·        Assign the rights to accounts receivables with or without the participation of a Notary Public, as long as the debtor is properly informed.

·        To be considered as a corporation part of the financial system for some tax benefits.


The Mexican Mortgage Market


In recent years the sophistication of the financial transactions have pressured the country’s political system to respond to very specific needs. The receivables market is currently experiencing a boom around the country. Secured transactions with easily enforced collection of collateral are becoming the trend among the lending community, and will most likely become the main financing product in the future. As previously mentioned, there are many factors (high demand, low construction costs, investor community interest, etc.) included in the formula.


Foreign investors are analyzing and considering their options. On one side there is the high demand for affordable housing and low construction costs. On the other side there are high costs regarding land acquisitions and title remedies. The decision may lie in the gap between the interest rates charged in Mexico and other countries, like the US. This differential will offset the investors’ decision and the bottom line will define the trend.