Panama's Preferential Mortgage Law

A government benefit that subsidizes part of the mortgage interest for first-home buyers when the property price does not exceed USD 120,000. The government covers up to 85% of the interest offered by the bank; the buyer pays a preferential rate between 4.0% and 5.5% depending on price tier and region, for 7–8 years. The governing regulation is Law 468/2025 with the reform introduced by Law 481/2025, in force since January 2026.

Buyers of a first home (primary residence) for residential use, with a property price not exceeding USD 120,000 including land and improvements. Previously benefited persons, second homes and properties for commercial use are excluded. The loan must be issued by a financial institution authorized by the Superintendency of Banks of Panama.

Under the reform in force since January 2026, the benefit applies for 7–8 years depending on price tier and region, non-renewable. After that period, the buyer pays the full commercial rate offered by the bank. It is important to plan ahead, because the reform removed the prior requirement for banks to offer transition alternatives.

It depends on property price, loan term and the rate offered by your bank. For a USD 100,000 property at 7.5% over 30 years with 10% down, monthly savings are around USD 150–200 and cumulative savings during the 7 years can exceed USD 12,000. Use the calculator (available in Spanish) to model your exact case.

The regulation prioritizes new homes. For specific cases of eligible used homes, check with your bank and a legal advisor before signing a promise to purchase. Eligibility is confirmed by the authorized financial institution based on requirements from the Ministry of Housing (MIVIOT) and the Ministry of Economy and Finance (MEF).

The Preferential Mortgage Law is aimed at resident buyers of first homes. Foreign buyers who are not residents typically do not qualify for the subsidy, but can still access regular mortgages from Panamanian banks (usually 60–70% LTV). Foreigners who hold Panamanian residency and meet the income and property conditions may qualify — confirm with a local banking advisor.