How it works
The buyer signs the mortgage with an authorised bank. During the preferential period they pay a reduced rate and the State compensates the bank for the difference with the market rate, usually through a tax credit; Executive Decree 36 of 2026 also allows bank transfers and public debt bonds. The State covers the lower of the bracket rate and up to 85% of the rate the bank charges (article 6 of Law 468, as amended by Law 481). For the buyer the effect is a lower payment in the first years, when it weighs most. Once the period ends, the rate returns to the bank’s and the payment rises.
The current brackets
| Price of the new home | Region 1 (Panamá and Panamá Oeste) | Region 2 (Colón and rest of the country) |
|---|---|---|
| Up to B/. 50,000 | Maximum rate 5% for 8 years | Maximum rate 5.5% for 8 years |
| B/. 50,000.01 to 80,000 | Maximum rate 4.5% for 7 years | Maximum rate 5.5% for 8 years |
| B/. 80,000.01 to 120,000 | Maximum rate 4% for 7 years | Maximum rate 4% for 7 years |
Brackets of Law 468 of 2025 (article 7), with bracket 3 amended by Law 481 of 2025, and regulated by Executive Decree 36 of 2026. “Maximum rate” is the percentage the State covers; the actual payment depends on the rate each bank offers. The period is not renewable.
Requirements
- New home: first sale, with a recent occupancy permit. Resales are excluded.
- Price within the brackets: up to 120,000 balboas in either region.
- Primary residence: the buyer must live in it. The benefit is per person and for a single home.
- Nationality or residency: Panamanians or foreigners with permanent residency, under article 3 of Law 468 of 2025.
- Financing with an authorised bank that processes the subsidy before the Directorate General of Revenue.
An example
A 100,000-balboa home in Region 1 falls into the third bracket: maximum subsidy of 4% for seven years. If the bank charges 6%, the buyer pays 2% during that period. With 95,000 balboas financed over 30 years, the payment is around 351 balboas a month in the subsidised years and rises to about 570 when the subsidy ends. That jump is what should be calculated before signing.
What changed from the previous law
- Law 3 of 1985 set the subsidy as percentage points over a bank reference rate. The new law removes that reference rate and sets maximum subsidised rates per bracket.
- Two regions are introduced with different conditions, more favourable outside Panamá and Panamá Oeste.
- Periods are shortened: they could reach 10 years before; now they are 7 or 8, non-renewable.
Frequently asked questions
What is preferential interest in Panama?
A state subsidy that reduces the mortgage rate for 7 or 8 years for anyone buying a new home of up to 120,000 balboas as their primary residence. The State compensates the bank for the difference with a tax credit.
Can a foreigner get preferential interest?
Only with permanent residency: article 3 of Law 468 of 2025 limits the subsidy to Panamanians and foreigners with permanent residency, plus a new home within the brackets, primary residence and financing with an authorised bank.
What happens when the preferential interest period ends?
The rate returns to the bank’s normal rate and the monthly payment rises. The period is not renewable, which is why the future payment should be calculated before signing.
Related articles
- Buying property in Panama as a foreigner
- Property tax calculator
- Horizontal property in Panama: how a PH works
Sources
- Presidency of the Republic, enactment of Law 481 of 2025.
- Law 468 of April 24, 2025, Official Gazette 30264-A, which replaces Law 3 of 1985.
- Law 481 of September 9, 2025, Official Gazette 30361-C, which amends articles 1, 6 and 7 of Law 468.
- TVN, Executive Decree 36 of September 17, 2026 (MEF) and its subsidy management and payment scheme.
- Ministry of Housing and Land Management (MIVIOT).
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