How Private Lenders Review Construction Loan Requests in Costa Rica

Construction financing in Costa Rica is different from borrowing against a completed home. A lender is not only reviewing the land or existing structure. The lender also needs to understand what has been completed, what remains to be built, whether the project can be legally completed, how much the remaining work will cost, and how the loan will be repaid.

A completed home can be inspected and valued based on its current condition, access, utilities, title, and resale demand. Construction involves future work, future costs, and future value. That creates more questions and more risk for the borrower and lender.

GAP Equity Loans reviews qualified private property-backed loan requests starting at US$50,000. GAP reviews borrowers of any nationality, does not require or pull a credit score, and uses first-lien security only. GAP coordinates qualified requests with private lenders and may participate directly in selected opportunities.

Every construction request remains subject to individual review, lender requirements, due diligence, and a workable legal and closing structure. A property submission, conversation, application, fee, or budget does not create an approval, funding commitment, draw schedule, rate, or closing date.

Construction Financing Is Not a Standard Home Loan

Private construction financing is normally short-term financing secured by suitable Costa Rica real estate. It should not be treated like a long-term bank mortgage that simply funds a new home over many years.

GAP commonly reviews terms from six months to three years. Many private property-backed loans use interest-only payments during the agreed term, with the principal balance due at maturity. The exact payment structure depends on the lender and signed documents.

The borrower needs to understand how payments will be made during the term and how the principal will be repaid at maturity. The property provides security for the lender. It does not replace the need for a credible repayment plan.

A construction request may involve an existing home that needs completion, a renovation, an addition, a partially completed residence, a small development, or land with an approved and practical building plan. Each situation is reviewed differently.

What Private Lenders Review First

Before reviewing finishes, architectural renderings, or the hoped-for future sales price, a lender needs to understand the underlying property and the complete request.

Important first questions often include:

• Where is the property located?
• What is the current condition of the land, home, or project?
• Who owns the property, and is the ownership structure clear?
• Is there practical physical and legal access?
• What is the realistic current value?
• What work has already been completed and paid for?
• What work remains, and what will it cost?
• Are permits, water, electricity, drainage, and other essentials in place or realistically available?
• How much is being requested, and exactly how will the funds be used?
• How will payments be made, and how will the principal be repaid?

A beautiful design alone does not make a project financeable. The lender also needs to understand whether the finished property will fit the local market and whether it would have practical resale demand if necessary.

The Existing Property Matters Most

Construction plans may add value, but the lender begins with the current property. Location, title, access, usable area, drainage, water, electricity, surrounding development, and marketability all matter.

A partially completed home in an established area with practical access and utilities can be easier to understand than raw land in a remote area with uncertain road access, no confirmed water, limited usable area, or weak buyer demand.

For a first review, it helps to provide:

• A Google Maps, Waze, or WhatsApp location pin
• Recent photographs of the land, structures, driveway, road access, and surrounding area
• A Folio Real and Plano Catastro, if available
• Lot size, usable area, construction size, and current construction stage
• Information about road access, easements, drainage, retaining work, water, and electricity
• Any existing appraisal, purchase information, comparable support, or realistic value explanation

Raw land is usually more difficult collateral than a completed home. There is a substantial supply of land for sale in many areas of Costa Rica, and land can take longer to sell if a lender needs to recover funds.

When raw land is considered, it normally supports a much lower loan-to-value ratio than a completed home. A stronger land file may have practical access, confirmed water, electricity, drainage, usable building area, permits or a clear permit path, and a location with real demand.

Value Must Be Realistic and Conservative

A lender does not rely only on the borrower’s hoped-for future sales price. The review may consider the current land value, completed work, construction quality, comparable properties, location, buyer demand, likely selling time, and the cost to finish the project.

Future value can be relevant, but it should not be treated as certain while permits, utility connections, construction, landscaping, access improvements, or a future sale remain unfinished.

For example, a borrower may expect a finished home to sell for US$800,000. If comparable completed homes are realistically selling closer to US$550,000, or there is a large supply of similar homes for sale, the lender will normally review the request using more conservative numbers.

A practical request leaves room for construction overruns, legal costs, registration expenses, selling costs, property taxes, maintenance, market changes, and the time needed to sell or refinance.

Loan-to-Value for Construction Requests

Loan-to-value, often called LTV, compares the requested amount with the realistic value of the property offered as security.

For example, a US$200,000 request against a property realistically valued at US$500,000 equals 40% LTV.

US$200,000 ÷ US$500,000 = 40% LTV

For stronger completed homes in marketable locations, requests around 30% to 40% of realistic value can often be easier to structure. Some stronger files may support a higher amount, sometimes approaching 50%, but that depends on the complete file and lender requirements.

Construction, development, and land requests often need more conservative numbers because part of the value depends on work that has not yet been completed. The lender may focus more heavily on current value, completed work, remaining cost, and the practical likelihood of finishing the project.

Read what loan-to-value means in Costa Rica.

Permits, Water, and Infrastructure Need Attention

A lender needs to understand whether the project can be legally and practically completed. The exact review depends on the property and stage of construction, but incomplete legal or technical information can delay a request or make it harder to structure.

Relevant information may include:

• Construction permits and approved plans, where applicable
• Water availability, existing connection, meter status, or provider information
• Electricity availability and current connection status
• Municipal, zoning, or land-use information when relevant
• Access, easements, drainage, retaining walls, and site-work details
• Environmental or technical requirements that apply to the particular property
• Current title, ownership details, and corporate records when a corporation owns the property

A water letter or other water confirmation can be important, but it does not automatically confirm that every connection, permit, infrastructure, construction, or provider requirement has been completed. The exact document and intended use need review.

Construction on a hillside or sloped property also requires careful attention to drainage, retaining work, road access, erosion control, and the condition of completed improvements. These are practical issues that can affect cost, future use, and marketability.

The Construction Budget Must Match the Work

A lender will want to understand exactly what the funds will be used for and whether the remaining budget is realistic.

A useful construction budget explains:

• What work has already been completed and paid for
• What work remains
• Expected costs for labor, materials, permits, utilities, site work, and professional services
• Builder, contractor, architect, or engineer information where relevant
• The expected construction timeline
• Funds the borrower will contribute personally
• A reasonable contingency for delays or cost overruns
• Whether the project needs one advance or may require staged draws

A lender may be cautious when the requested amount does not match the remaining work, the budget has no contingency, or the borrower is relying on future investor money, presales, refinancing, or a future sale that is not yet documented.

A clear, realistic budget is more useful than an overly polished presentation with numbers that do not explain the actual work needed to complete the project.

Construction Draws Are Not Automatic

Some construction requests may use staged advances, often called draws, instead of providing all funds at once. A draw structure is not automatic.

Whether draws are possible depends on the lender, property, current value, construction stage, remaining budget, title, legal structure, and signed loan documents.

A lender may want evidence that earlier work has been completed before considering a later advance. Depending on the file, that may include photographs, invoices, contractor updates, site visits, permit information, budget updates, or other support.

A borrower should not assume that every draw will be released on a preferred date simply because work is scheduled. The lender may need to confirm the current status and whether the property continues to support the agreed structure.

Title, Existing Debt, and Ownership Structure

GAP uses first-lien security only. An existing mortgage, private loan, lien, annotation, unpaid tax, or legal claim does not automatically prevent review, but it needs to be disclosed early.

Existing debt may need to be paid out through the appropriate closing process before a new lender can register in first position. The payoff amount, release requirements, title position, and final legal structure need review by the appropriate Costa Rica attorney or notary.

When a corporation owns the property, the lender may need current corporate records, signing authority, shareholder information, corporate identification, and confirmation that the company is in good standing. Outdated or incomplete corporate records can delay the file.

Most smaller GAP loan requests are secured by a registered first-position mortgage on the Costa Rica property. Some lenders may prefer a trust structure. The closing attorney or notary handles the legal documents, registration, and closing work.

The Repayment Plan Matters

The property is security. It is not the repayment plan.

A lender needs to understand how the borrower plans to make payments during the term and repay the principal at maturity. A possible repayment plan may involve a completed sale, refinance, business income, rental income, sale of another asset, investment liquidity, or another realistic source.

A future sale or refinance can be part of the plan, but neither should be assumed. Construction can take longer and cost more than expected. A finished property may take longer to sell than expected, and a future lender may require a lower LTV or different documentation.

A loan renewal is also not automatic. The existing lender may decide not to continue, and a new lender may not be interested in replacing the loan at maturity.

Read why a repayment plan matters for a private loan.

What Can Make a Construction Request More Difficult?

• A requested amount that is too high for realistic current value
• Value based mainly on an optimistic future sale price
• Remote land, weak access, limited usable area, or poor resale demand
• Unclear title, ownership, corporate records, or signing authority
• Existing liens, annotations, unpaid taxes, or unresolved legal issues
• Missing permit, water, survey, access, drainage, or utility information
• An unfinished project with no realistic completion budget
• A builder or contractor arrangement that is unclear
• No contingency for delays or cost overruns
• No practical payment plan or principal repayment plan

These issues do not always mean a request cannot move forward. They may mean the amount needs to be lower, more information is needed, the legal structure needs to change, or a concern needs to be resolved before legal work and closing costs advance further.

What to Prepare Before Contacting GAP

You do not need every document perfectly organized before the first conversation. Clear starting information helps GAP identify what is most important first.

• A Google Maps, Waze, or WhatsApp location pin
• A Folio Real and Plano Catastro, if available
• Current property, access, driveway, construction, and surrounding-area photographs
• Details of the current construction stage and work completed
• Construction plans, permits, water information, and utility details where relevant
• An itemized remaining budget and expected timeline
• The requested loan amount and exact use of funds
• Details of any mortgage, lien, annotation, tax balance, or legal issue
• Corporate records and signing authority if a corporation owns the property
• A clear explanation of payment sources during the loan term
• A practical principal repayment plan and backup exit

Lawsen Tellier, Director of Operations, can help explain what is most important first and what can be gathered as the review develops.

Start With the Property and the Numbers

If you are exploring construction financing in Costa Rica, start with the property location, current construction stage, realistic current value, requested amount, remaining budget, legal position, payment plan, and repayment plan.

Loan requests start at US$50,000. GAP reviews qualified requests from borrowers of any nationality, does not require or pull a credit score, and uses first-lien security only. Qualified property-backed loans can often close in about 2 weeks after GAP has a complete file and due diligence is finished, but no closing date is guaranteed.

Start your loan request here. You can also contact GAP through WhatsApp at +506 4001 6413.

Frequently Asked Questions

Can I get a private construction loan in Costa Rica?

Possibly. A private lender may consider a construction request when the property, title, realistic value, construction stage, permits, budget, payment plan, repayment plan, and legal structure make practical sense together.

Does GAP require or pull a credit score for construction financing?

No. GAP does not require or pull a credit score. The property, legal position, realistic value, requested amount, construction details, payment plan, repayment plan, and lender requirements still need to make sense together.

Can construction loan funds be released in draws?

Possibly. Some lenders may consider staged advances, but a draw structure is not automatic. It depends on the lender, property, title, construction stage, budget, value, documents, and signed loan terms.

Do I need permits before requesting construction financing?

The exact documents depend on the property and stage of work. A lender may need to review permits, plans, water information, access, title, budget, and other legal or technical details before considering financing.

How much can I borrow for a construction project?

It depends on the realistic current value, completed work, location, title, access, permits, remaining budget, requested amount, and repayment plan. Construction and land requests normally require more conservative loan-to-value than a stronger completed home.

Can raw land be used for construction financing?

Possibly, but raw land is generally more difficult collateral than a completed home. Location, legal and physical access, water, electricity, drainage, usable area, permits, realistic resale value, and buyer demand all matter. Raw land normally supports a lower LTV.

How quickly can a construction loan close?

Timing depends on the property, title, construction stage, permits, budget, lender review, legal work, banking, and closing requirements. Qualified property-backed loans can often close in about 2 weeks after GAP has a complete file and due diligence is finished, but no closing date is guaranteed.

This article is for general information only. It is not a loan offer, legal advice, financial advice, tax advice, real estate advice, construction advice, or a promise of financing. Construction financing, loan availability, loan amounts, rates, terms, costs, draw schedules, and closing timing depend on the individual property, borrower file, lender requirements, due diligence, and signed documents.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)