Is It Possible to Buy Property in Dubai Using a Mortgage Without a Down Payment?

Cash or mortgage? This is the first question you should ask yourself if you are going to buy a house in the United Arab Emirates. If the answer is a mortgage, here comes the next question: under what conditions can you get a loan and can it cover the entire cost of the property? How to buy property in Dubai without down payment?

Read on to find out more about down payment in the UAE, and whether it is possible to buy an apartment or a house in Dubai without it.

• Conditions for Selling Property in Dubai
• Down Payment When Buying in Instalments
• Down Payment When Buying Using a Mortgage
• Background

Conditions for Selling Property in Dubai

Is buying a property in Dubai available for foreigners? A foreigner who is thinking about buying property in Dubai needs to know at least two things. Firstly, foreign citizens can only buy apartments, villas and townhouses in specially designated freehold zones. Fortunately, there are several dozen such zones, and the list includes all the most important areas of the metropolis.

Secondly, if you buy an apartment or a house in instalments or on credit, you cannot do it without a down payment. The developer or the bank will require an advance payment, also known as a down payment. How much is down payment for a house in Dubai? Does zero down payment for property exist in Dubai? The amounts are different, but zero down payments simply do not exist in the Dubai real estate market.

Secondly, if you buy a flat in instalments or on credit, you cannot do it without a down payment. The developer or the bank will require an advance payment. The amounts are different, but zero down payments simply do not exist in the Dubai real estate market.

Down Payment When Buying in Instalments

Can I purchase a property in Dubai in instalments? If you buy an off-plan real estate in Dubai, developers will often offer the option of paying for future housing in instalments. There are payment options before you get your keys. In other cases, you can pay for housing for several more years after the house has already been built.

How much is Dubai mortgage down payment in this case? Whichever payment schedule you choose when you purchase an apartment or a house, you will be asked to make a down payment — from 5 to 20% of the purchase amount.

Whichever payment schedule you choose when you purchase a flat or a house, you will be asked to make a down payment — from 5 to 20% of the purchase amount. 

Down Payment When Buying Using a Mortgage

What about home loan down payment in Dubai? If you get a mortgage in Dubai, you cannot avoid down payment for the house. Local banks likely would not mind giving 100% loans, as they did before, but they cannot. The UAE Central Bank has set the following limits:

So, can you get a mortgage in Dubai? According to the decision of the Central Bank, the buyer must pay the remaining amount for the house as a down payment. In addition, the bank, most likely, will take a percentage for drafting of the mortgage agreement and a fixed fee for property valuation. The Dubai Land Department charges the transaction registration fee. Keep all these expenses in mind before starting the process of buying a property.

What do you need to get a mortgage for a property in Dubai? The table shows the minimum requirements of the Central Bank; conditions on down payment in specific banks may vary from these figures.

What else is important to know if I want to buy a house in Dubai? Banks do not usually give mortgages to those who earn less than 15,000 dirhams ($4,100) per month. Loan payments for a house should not be more than half of the monthly income.

Background

When and why did Dubai introduce a mandatory down payment when applying for a mortgage? Why buying a house in Dubai without down payment is impossible?

At the end of the 2000s, following unprecedented growth in the Dubai real estate market, a crisis struck. In 2008-2010, prices per square metre dropped more than twice. The emirate was on the verge of default. The introduction of mortgage limits was one of the measures to save the market.

In December 2012, the Central Bank announced that housing loans should cover no more than 50% of the first purchase and no more than 40% of all subsequent real estate transactions. This "ceiling" was planned for foreigners. For UAE citizens, they wanted to limit mortgages to 70 and 60% of the contract amount.

Banks were outraged by these serious restrictions. Therefore, in 2013, foreigners were allowed to take up to 75% on the first purchase of real estate worth up to 5 million dirhams. Those who were buying a second apartment or house got up to 60%.

In March 2020, at the height of the pandemic in the Emirates and around the world, the Central Bank slightly eased the requirements for mortgage loans. Since then, the minimum down payment on a mortgage for foreigners has been 20%. That's why zero down payment mortgage doesn't exist in Dubai.

In a Nutshell

All in all, can you buy a property in Dubai? This article tells about the UAE mortgage requirements and necessity of down payment. Can you buy a property in Dubai with zero down payment? No, down payments are mandatory when buying property in Dubai. If you buy housing in Dubai on credit or in instalments, you have to keep the mandatory down payment in mind. In the case of instalments, the down payment is between 5% and 20% of the purchase amount. Can you buy a property in Dubai as a foreigner? Foreigners who get a mortgage in Dubai should be ready to pay at least 20% of the cost of an apartment or house right away. If we are talking about expensive housing in the city, or a property that isn’t your first, the down payment is even higher.

Cover photo: Amir Hanna (Unsplash)