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 through a tax credit. 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 481 of 2025, 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.
- 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?
Yes, if they meet the requirements: a new home within the brackets, primary residence and financing with an authorised bank. Banks usually require legal residency in Panama to grant the mortgage.
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 and Law 481 of September 9, 2025; Executive Decree 36 of September 17, 2026 (MEF).
- Ministry of Housing and Land Management (MIVIOT).
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