What Is Seller Financing and How Does It Work in Los Cabos?

by Stephanie Kotnik

If you have been searching for properties in Los Cabos and have been unable to access a traditional mortgage in Mexico, there is an option that few agents will explain clearly: seller financing, also known in Mexico as financiamiento directo del vendedor or crédito del vendedor.

It is one of the most powerful tools in this market — and one of the least understood.

What exactly is seller financing?

Seller financing is an arrangement in which the seller of a property acts as the lender. Instead of receiving the full purchase price at closing, the seller agrees to accept a down payment and the remainder in periodic payments over an agreed term, at a fixed interest rate negotiated directly between the parties.

There is no bank involved. There is no institutional approval process. There are no underwriting queues or 60 to 120-day waiting periods for a decision.

The agreement is direct: buyer and seller, documented in a formal purchase agreement and formalized before a licensed notario público under Mexican law.

Is it legally secure?

Absolutely. When properly structured, seller financing carries exactly the same legal weight as a bank mortgage. The seller's security is established through a fideicomiso de garantía — a guarantee trust in which the property itself serves as collateral. This trust is registered with the Mexican Public Registry of Property, making it a formally recorded lien. Both parties are fully protected from day one.

Who can access seller financing?

Any buyer — American, Canadian, European, any nationality. No Mexican credit history is required. No residency is required. The qualification is between buyer and seller, not defined by a bank's underwriting criteria.

AUTHOR: Stephanie Kotnik