How to Buy Property in Mexico: A Step-by-Step Guide for Foreign Buyers

Yes, foreigners can buy property anywhere in Mexico, within 50km of the coast, you'll use a fideicomiso (bank trust) that costs $1,200-1,600 USD to set up, with $500-900 annual fees. The complete buying process takes 30-60 days for resales, with 5-7% closing costs and remarkably low 0.01% annual property taxes.

Buying property in a foreign country can feel overwhelming, especially when the legal system and processes are completely different from what you know back home. When I started researching Mexican real estate, I had a hundred questions about how it all works. Here's the comprehensive guide I wish I'd had from the beginning.

Can Foreigners Actually Own Property in Mexico?

Yes, absolutely. This is one of the most common misconceptions. Foreigners can legally purchase property anywhere in Mexico. The only caveat is the "restricted zone", within 50 kilometers of the coast or 100 kilometers of international borders. Since places like Playa del Carmen, Tulum, and Cancún fall within this zone, you'll need to use a special legal structure called a fideicomiso.

Understanding the Fideicomiso (Bank Trust)

A fideicomiso is a bank trust where a Mexican bank holds the legal title to your property on your behalf. Don't let this scare you, it's been the standard practice for foreign buyers for decades, and it gives you full ownership rights including the ability to sell, rent, renovate, or pass the property to your heirs.

Think of the bank as a trustee holding the deed, while you (the beneficiary) have complete control over the property. The system was designed specifically to allow foreign ownership while satisfying constitutional requirements. For more insights on Mexican real estate, visit the Expatslist forum.

The Buying Process: Step by Step

Step 1: Find Your Property

Before you start contacting agents, do your homework. Research neighborhoods, understand typical prices, and get clear on what you want. One important tip: avoid emailing multiple developers and agents simultaneously. This registers you as a client with each of them, which can complicate commissions and make agents question whether you're a serious buyer.

When you do engage a realtor, a good one will ask about your timeline, budget, whether you're buying for investment or personal use, and how much cash you have available. Mexico is primarily a cash market, so financing options are limited.

Step 2: Make an Offer

Once you've found the right property, you'll submit a letter of intent stating your offered price and terms. The seller can accept, reject, or counter. Unlike some markets, prices in Mexico aren't wildly negotiable, developers typically price according to market rates, and individual sellers often have specific price targets they'll wait for rather than accept lowball offers.

Step 3: Reservation Deposit

When the seller accepts your offer, you'll put down a refundable reservation deposit, typically $5,000-10,000 USD. This holds the property for about 15 days while your attorney reviews the title, checks for liens, and examines the purchase agreement.

Step 4: Down Payment

After due diligence checks out, you'll wire the down payment, usually 30% or more of the purchase price. For resales, this goes into an escrow account. For pre-construction purchases, it typically goes to the developer's account according to the payment schedule.

Step 5: Property Inspection

You'll do a walkthrough to verify the property matches what was agreed in the purchase documents. For new construction, this means checking that finishes, fixtures, and features match your contract. Sellers typically have 30 days to address any discrepancies.

Step 6: Closing with the Notario

Here's where Mexican real estate differs significantly from Canada or the US. The closing is handled by a notario público, a specially licensed attorney who acts as an impartial government representative. The notario verifies the legality of the transaction, ensures proper taxes are paid, and registers the property in the public registry.

The notario isn't your advocate or the seller's, they're a neutral party ensuring the transaction follows the law. This is why many buyers also hire their own attorney for additional protection, especially for pre-construction purchases.

Step 7: Title Recording

After closing, the official title gets recorded in the public registry. This process can take several months, but your ownership is effective from the closing date.

Timeline: How Long Does It Take?

For a straightforward resale, expect the process to take 30-60 days from accepted offer to closing. The minimum is about 15 days, but rushing rarely benefits buyers.

Pre-construction purchases work differently. You'll sign on early in the development process and make payments according to a schedule, with final delivery typically 6-9 months out for projects already underway. Early-stage developments can take up to 2 years or more. Learn more about buying property in Mexico on our blog.

Closing Costs: What to Budget

Plan for closing costs of 5-7% of the purchase price. This covers:

Notario fees: Approximately 1% for their services and the legal work involved.

Acquisition tax: About 2% of the property value, paid to the state.

Recording fees: Around 1% to register the property in the public registry.

Fideicomiso setup: Initial bank trust establishment runs $1,200-1,600 USD, with annual fees of $500-900 thereafter.

Legal fees: If you hire your own attorney (recommended), expect additional costs.

Realtor commission: Typically 5-6%, usually paid by the seller but sometimes split or built into the price.

Property Taxes: The Pleasant Surprise

One of the best aspects of owning property in Mexico is the incredibly low property taxes, approximately 0.01% of property value annually. Compare that to the 1-2% or more you'd pay in many parts of Canada or the US. This is one reason sellers can afford to wait for their target price rather than accepting quick lowball offers.

Paying for Your Property

Mexico is a cash-based real estate market. While some financing exists, interest rates run 9% or higher, making cash purchases the norm. You'll wire funds from your bank to Mexican accounts, your realtor can often help with preferential exchange rates.

Important: Even if the property is listed in US dollars, the official transaction is recorded in Mexican pesos. Make sure you understand the exchange rate being used and have everything documented clearly.

Who Protects Your Interests?

Four parties can help safeguard your purchase:

Your realtor: A good buyer's agent works exclusively for you, without conflicts of interest from representing sellers simultaneously.

Your attorney: Optional but recommended, especially for pre-construction. They review contracts and advocate specifically for you.

The notario: Mandatory for all transactions. They ensure legal compliance but don't advocate for either party.

The bank: Holds your fideicomiso and provides institutional oversight of the trust arrangement.

New Construction Warranties

Most developers guarantee one year of repairs for construction defects and minor settling issues. Get this in writing and understand exactly what's covered before you close.

My Advice for First-Time Buyers

Take your time. The Mexican real estate process is straightforward once you understand it, but rushing leads to mistakes. Work with experienced professionals who know the local market, get everything in writing, and don't skip the due diligence phase just to save a few days.

The fideicomiso system has been protecting foreign buyers for decades. Combined with proper legal representation and the notario's oversight, buying property in Mexico is a well-established, secure process, as long as you follow the steps and work with trustworthy professionals. Connect with experienced buyers at Expatslist for guidance.