Buying a House in Puerto Rico With a U.S. Based Mortgage Lender

If you’ve ever dreamt of owning a piece of paradise in the Caribbean, Puerto Rico may be your perfect destination. Buying a house in Puerto Rico is an attractive proposition with its stunning beaches, rich cultural heritage, and thriving real estate market. It is becoming increasingly popular among Americans in the mainland United States.

Many homebuyers from out of Puerto Rico as well as native buyers in Puerto Rico are under the assumption that they need to go to the local bank to qualify and get approved for a mortgage loan. Getting approved for a mortgage in a local bank based in Puerto Rico is fine. Alex Carlucci of Gustan Cho Associates and a top producing loan officer said the following about mortgage lending in Puerto Rico:

Banks in banks do not offer the types of mortgage loans mortgage brokers, correspondent lenders, and direct mortgage lenders offer. You can get phenomenally low rates from banks if they fund mortgage loans they originate from in-house funds or portfolio loans. But you will rarely find a bank offering FHA and V.A. mortgage loans that do manual underwriting with credit scores down to 500 FICO. You will need help finding a bank in Puerto Rico that offers non-QM loans on primary, second homes, and investment homes.

One option for financing your dream home is to work with a U.S.-based mortgage lender. In this comprehensive guide, we’ll explore the ins and outs of purchasing real estate in Puerto Rico with a U.S.-based mortgage lender, including frequently asked questions to help you navigate the process.

Buying a Home in Puerto Rico

Portfolio loans are mortgage loan lending institutions like banks and credit unions. However, banks and credit unions have much tougher lending requirements and overlays on government and conventional loans. Most banks in Puerto Rico do not offer non-QM and non-traditional loans. So, what will a homebuyer or real estate investor do if they do not qualify for a mortgage loan in Puerto Rico? This article w a mortgage loan in Puerto Rico other than a Puerto Rico-based bank or credit union. Read on. 

One of the top reasons Americans in mainland USA are so interested in buying a house in Puerto Rico is because of high federal taxes and the bitterly long, harsh cold winters. More and more Americans are ready to buy a house in Puerto Rico.

The type of homebuyers buying a house in Puerto Rico is remote workers, retirees, real estate investors, business owners relocating due to no federal income taxes in Puerto Rico, or buyers of second and vacation homes. Many small to medium size U.S.-based companies are relocating or planning to relocate their corporate headquarters to Puerto Rico, anticipating tax benefits.

Puerto Rico has beautiful weather year-round. Yes, you can enjoy the outdoors and have great weather 12 months of the year, year after year. Puerto Rico is one of the top vacation spots. Most vacationers fall in love with the Island of Puerto Rico after their first trip. Many tourists fall in love with Puerto Rico once they step on Puerto Rican soil and dream of living on the island someday. Besides the huge tax benefits, there are other reasons individuals, their families, and business owners plan on buying a house in Puerto Rico. Try to use our lender to buy home in Puerto Rico, click here, fill-out the form and we will get back you. 

Reasons For Buying a House in Puerto Rico

• Natural Beauty: Puerto Rico boasts breathtaking landscapes, from pristine beaches to lush rainforests. The island’s natural beauty offers residents an unmatched quality of life.
• Unique Culture: With a rich history that combines Spanish, African and Taino influences, Puerto Rico has a vibrant and diverse culture. Residents can enjoy a unique blend of traditions, music, and cuisine.
• Warm Climate: Puerto Rico enjoys a tropical climate, with temperatures averaging around 80°F (27°C) year-round. It’s a haven for those seeking an escape from harsh winters.
• Diverse Real Estate Market: The Puerto Rican real estate market offers many properties, from beachfront condos to historic colonial homes. There’s something to suit every taste and budget.
• Tax Advantages: One of the key benefits of living in Puerto Rico is its favorable tax policies. Certain residents, particularly those in the Act 60 program, can benefit from significant tax incentives.

Besides being the tax haven for high net-worth people, there are other benefits to buying a house in Puerto Rico. Other benefits to buying a house in Puerto Rico include affordable housing, low cost of living, and vibrant culture and lifestyle. Dale Elenteny of Gustan Cho Associates explains the tax benefits in Puerto Rico:

Puerto Rico, a U.S. territory, is one of the top places where Americans from inland USA go for vacations and buy second homes. Puerto Rico is hands down raising many eyebrows from U.S. citizens due to the generous tax benefits of Act 60 Individual Investor.

The Act 60 Individual Resident Investor Act is an act that gives 100% capital gains tax exemption on interest, dividends, capital gains, and other returns on investments. You need to purchase a home in Puerto Rico for your decree to be valid. In 2019 the Act 60 Individual Investor Act was enacted, which requires a person to buy a home in Puerto Rico to keep the tax exemption of the decree to remain valid.

Where To Buy a House in Puerto Rico

Everyone has heard the universal term for all real estate investors, location, location, location. When doing your due diligence on buying a house in Puerto Rico, find out where you plan on buying your owner-occupant primary home, second home, or investment property. Angie Torres of Gustan Cho Associates is a native of Puerto Rico and says the following about buying a house in Puerto Rico:

Puerto Rico is a small island where many popular places are easy to find. Are you interested in buying a house in Puerto Rico in the mountains? Or a beachfront home? The most popular city in Puerto Rico among foreign home buyers is the capital of Puerto Rico, San Juan. San Juan is followed by Palmas del Mar, Dorado Beach, and Bahia Beach.

All of these communities are popular among foreign homebuyers.  San Juan has the largest population and is home to 80% of the Puerto Rico citizens on the island. There is nothing you cannot find in San Juan. Homebuyers who dream of living in beachside resort communities, you will find that buying a house in Puerto Ricon in Palmas del Mar, Dorado Beach, and Bahia Beach is the answer to realizing your dream of owning a beachfront home is going to become a reality. Prices in beachside communities have started skyrocketing but yet remain affordable. Click here to get loan for our house in Puerto Rico

Facts About The Territory of Puerto Rico 

Puerto Rico is a Caribbean island and incorporated island territory of the United States. The island is 1000 miles southeast of Miami, Florida, and northeast of the Caribbean Sea, right? This section will cover data and facts relevant to homeowners and citizens buying a house in Puerto Rico.

The Population of Puerto Rico

•  The current population in Puerto Rico is about 3,252,407 people. And the main languages are Spanish and English.

The Population Growth in Puerto Rico

• The population on the island has been declining, partly due to some economic challenges, with most people leaving for the U.S. mainland.

Median Income in Puerto Rico

•  The median household income is about $21,200

Tax Rates in Puerto Rico

• There is no federal income tax if you reside in the Commonwealth of Puerto Rico for 183 days out of the year.
• Businesses are exempt from paying federal income taxes on capital gains.
• Sales and use tax rates are about 11.5% for personal Property and other specific services, while business-to-business tax rates are about 4%.

Education in Puerto Rico

•  People with High school educations are over 77.5 percent, while those with degrees are over 28 percent. 

Weather in Puerto Rico

•  The climate in Puerto Rico is Tropical Marine, with an average temperature of 26 degrees Celsius. Generally, the island enjoys warm, sunny, and humid weather throughout the year.   

Median Home Prices in Puerto Rico

•  The median property price is $375,000, with the price per square foot at around $293.

Renters vs. Owners in Puerto Rico

•  Given the super-friendly tax breaks, finance possibilities, and zero immigration concerns, buying Property is much more popular than renting on the island.

Find an Agent For Buying a House in Puerto Rico

• Especially if you are relatively new to the market, finding a local must spend considerable time looking for a reputable and trustworthy you would face a serious language barrier challenge without a local agent who is conversant. 

Get Pre-Approved for a Mortgage in Puerto Rico

Many homebuyers in Puerto Rico have limited choices when shopping for a mortgage lender with less-than-perfect credit or non-traditional income. Most homebuyers in Puerto Rico only know to go to a bank to get pre-approved for a mortgage.

Gustan Cho Associates has no lender overlays on government and conventional loans. The team at Gustan Cho Associates are experts in helping borrowers with credit scores down to 500 FICO in Puerto Rico. Gustan Cho Associates has a network of 21o wholesale mortgage lenders. Over 50% of our clients are borrowers of non-QM loans.

Search For a House in Puerto Rico
Get the listings in these three areas and try to find the best properties you could look at. Your estate agent will help you in this stage.  

Make an Offer & Close The Deal. 
 And your realtor has ensured that there are no problems with the home that would cost you. A lot is involved in this stage so you will need as much expert help as possible. The process does take some time to complete – about 15 – 45 days, which is understandable considering all the processes you may Property prices have increased. 

Get Qualified and Pre-Approved

Gustan Cho Associates are mortgage broker licensed in 48 states, including Puerto Rico, Washington, DC, and the U.S. Virgin Islands.  Over 80% of our clients are borrowers that could not qualify at other mortgage companies. Half of our borrowers are folks who need non-QM and alternative financing mortgage loans such as no-doc mortgages, stated-income loans, DSCR, asset depletion mortgages, bank statement mortgages, 1099 income mortgage loans, and other non-traditional mortgage loan programs. Angie Torres, the National Operations Director at Gustan Cho Associates and native of Puerto Rico said the following:

In Puerto Rico, the time is now. The reason is that the property market on the island is on an upward trajectory, which means that property prices will be on the roof sometime soon. And considering the rate at which Americans are coming to invest in the island, it might be sooner than expected. Get a local real estate agent to help in your investment journey today! 

Frequently Asked Questions (FAQs)

1. Can I use a U.S.-based mortgage lender to buy a house in Puerto Rico? Yes, you can use a U.S.-based mortgage lender to finance your home purchase in Puerto Rico. Since Puerto Rico is a U.S. territory, U.S. financial institutions can operate there.
2. Are the mortgage rates and terms similar to those in the mainland U.S.? Mortgage rates and terms in Puerto Rico can be similar to those in the mainland U.S. but can also vary. Elements like your credit score, the size of your down payment, and the specific lender you choose will influence the rates and terms of your mortgage. It’s crucial to explore different options and assess offers thoroughly to secure the most favorable deal.
3. Do I need to be a U.S. citizen to qualify for a mortgage in Puerto Rico? No, you do not need to be a U.S. citizen to qualify for a mortgage in Puerto Rico. Permanent residents, non-U.S. citizens with valid visas, and even foreign investors can secure a mortgage. However, eligibility criteria may vary between lenders, so discussing your specific situation with them is crucial.
4. How much down payment is required to buy a house in Puerto Rico? The down payment requirement for buying a house in Puerto Rico is typically similar to that in the mainland U.S. Some government-backed loan programs, like FHA and VA loans, offer lower down payment options, so it’s worth exploring these options if you qualify.
5. Are there any unique considerations for buying property in Puerto Rico? There are some unique considerations when buying property in Puerto Rico. Familiarizing yourself with local real estate laws, property taxes, and any potential hurricane-related risks is essential. Working with a local real estate agent who understands the Puerto Rican market can be advantageous.
6. What documents are required to apply for a mortgage in Puerto Rico? The documentation required for a mortgage application in Puerto Rico is similar to that in the mainland U.S. Common documents include proof of income, tax returns, bank statements, credit reports, and identification. Your lender will provide you with a specific list of requirements during the application process.
7. Can I use a mortgage lender based in Puerto Rico instead of a U.S.-based lender? You can choose a mortgage lender based in Puerto Rico. However, using a U.S.-based lender might offer more familiarity and convenience if you are a U.S. citizen or have a significant connection to the mainland U.S. It is important to thoroughly analize both the benefits and drawbacks of each option.
8. Do I need to be physically present in Puerto Rico to apply for a mortgage? While it’s only sometimes necessary to be physically present in Puerto Rico to apply for a mortgage, visiting the island to view properties and meet with local professionals, such as real estate agents and mortgage brokers, can be beneficial. Many steps in the home-buying process can be done remotely, but your presence can simplify certain aspects.
9. Are there any government programs or incentives for homebuyers in Puerto Rico? There are some government programs and incentives for homebuyers in Puerto Rico. These programs can include grants, tax incentives, and subsidies to promote home ownership and revitalize the local real estate market. Researching these options and consulting with a local real estate expert to take advantage of available benefits is advisable.
10. How long does the mortgage approval process typically take in Puerto Rico? The mortgage approval process in Puerto Rico can take anywhere from a few weeks to several months, depending on various factors, including the complexity of your financial situation, the lender’s processing times, and the local real estate market conditions. Starting the process early is crucial, and being prepared for possible delays is important.

Buying a house in Puerto Rico with a U.S.-based mortgage lender can be a smooth and rewarding process when approached with careful planning and consideration. The island presents an exceptional combination of its natural splendor, cultural vibrancy, and advantageous tax policies, rendering it a compelling choice for real estate investment. Whether you’re a U.S. citizen, permanent resident, or foreign investor, the Puerto Rican real estate market has options to suit your preferences.

If you are planning to buy a primary home, second home, or investment property in Puerto Rico, please contact us at Gustan Cho Associates by calling us at 800-900-8569 or text us for a faster response. You can also email us at alex@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.