You already know Canadian real estate is expensive. You might already own investment properties in Canada or the United States. Now you are looking further south, at beachfront condos in Playa del Carmen, colonial-era homes in San Miguel de Allende, or resort-area properties along the Riviera Maya.
Mexico offers something Canadian markets simply cannot: affordable coastal properties with strong vacation rental demand and a growing community of Canadian expats and snowbirds. The weather alone draws millions of Canadians every year, and increasingly, those visitors are asking the same question you are: why not own here?
But financing property in Mexico as a Canadian is not straightforward. The ownership structures are different. The financing options are different. The legal framework is different. This guide covers all of it so you can make an informed decision and actually close a deal.
Why Mexico Makes Sense for Canadian Investors
The investment case for Mexico vacation rentals is built on several converging factors.
Affordability. A beachfront condo in Mexico’s Riviera Maya costs a fraction of what you would pay for a comparable property in British Columbia or Ontario. Entry prices for well-located vacation rental units start significantly lower than in Canadian resort markets like Whistler or Mont-Tremblant.
Strong vacation rental demand. Mexico receives over 40 million international tourists annually. Platforms like Airbnb and VRBO have made it simple for property owners to access this demand. Well-managed vacation rentals in popular destinations generate strong nightly rates during high season and solid occupancy year-round.
Growing expat communities. Canadian and American expat communities in Mexico are expanding rapidly. Cities like Puerto Vallarta, Lake Chapala, San Miguel de Allende, and Merida have established Canadian communities with familiar amenities, healthcare access, and social networks. This creates both rental demand and a built-in buyer pool if you decide to sell.
Currency advantage. The Canadian dollar buys significantly more in Mexico than at home. Your purchase price, renovation costs, and operating expenses are all denominated in Mexican pesos, stretching your investment capital further.
Proximity. Direct flights from most major Canadian cities to Mexican resort destinations take 4-6 hours. You can visit your property, enjoy it personally, and manage your investment without crossing an ocean.
For a complete overview of our Mexico-specific lending programs, visit the Mexico property financing for Canadians page.
How Foreigners Own Property in Mexico
This is the most important section of this guide. Mexican law restricts foreign ownership of property within 50 kilometres of the coastline and 100 kilometres of international borders. This is called the restricted zone, and it includes every beach destination Canadians want to buy in.
But there is a well-established legal mechanism that makes foreign ownership possible.
Fideicomiso (Bank Trust)
A fideicomiso is a bank trust where a Mexican bank holds legal title to the property on your behalf. You are the beneficiary of the trust and retain all ownership rights:
- You control the property completely
- You receive all rental income
- You can sell, lease, renovate, or will the property
- You decide when and how the property is used
- The bank’s role is purely administrative
The fideicomiso is established through a Mexican notario (a specialized legal professional with more authority than a Canadian notary) and a Mexican bank. It typically takes 4-8 weeks to set up.
Key fideicomiso details:
- Duration: 50 years, renewable indefinitely
- Annual fee: Typically $500-1,500 USD per year, paid to the bank holding the trust
- Setup cost: $1,000-3,000 USD including notario fees
- Transferable: You can sell the property by assigning the trust to the buyer
The fideicomiso is not a limitation. It is the standard, legally secure mechanism that thousands of Canadians and Americans use to own Mexican coastal property. Every legitimate real estate transaction in the restricted zone uses this structure.
Direct Ownership in the Interior
If you are buying property in Mexico’s interior (more than 50km from the coast and 100km from borders), you can own directly through a Mexican corporation or in some cases personally. Cities like San Miguel de Allende, Guanajuato, and parts of Mexico City fall outside the restricted zone.
Direct ownership is simpler and avoids the annual fideicomiso fee, but most vacation rental properties that Canadians target are in coastal areas requiring the trust structure.
Financing Options for Canadians Buying in Mexico
This is where Mexico differs most from Canadian or US investing. The financing landscape is less developed, but several viable options exist.
Mexican Bank Mortgages
Several Mexican banks offer mortgages to foreign buyers. These include banks with international operations that understand cross-border transactions.
Typical terms:
- Loan-to-value: 50-70% (meaning 30-50% down payment)
- Interest rates: Higher than Canadian rates, often in the range of 8-12%
- Currency: USD or MXN denominated (USD is recommended for Canadians to reduce currency risk)
- Amortization: 15-20 years
- Term: Usually full amortization (no balloon payment)
The qualification process examines your global income and assets. Mexican banks will review:
- Proof of income (employment letters, tax returns, or corporate financials)
- Bank statements showing sufficient assets
- Credit report from your home country
- Down payment verification
Mexican bank mortgages are straightforward but carry higher costs than what you are used to in Canada. The higher interest rates reflect Mexico’s broader economic environment, not necessarily higher risk on your specific property.
Canadian Cross-Border Financing Programs
Some Canadian lenders and specialized cross-border programs offer financing for Mexican property purchases. These programs understand Canadian investors and are designed to work with the fideicomiso structure.
LendCity’s team connects Canadians with cross-border mortgage financing programs specifically designed for Mexican property purchases. This includes working with lenders who understand the fideicomiso structure, notario process, and Canadian tax implications.
Developer Financing
Many Mexican developers, particularly in new construction condo projects, offer their own financing. This can be attractive because:
- Lower down payment requirements during construction (often structured as progress payments)
- No bank qualification required
- Terms negotiated directly with the developer
- Financing built into the purchase price
The risks include developer-specific credit risk (what if the developer goes bankrupt?) and potentially less favourable terms compared to bank financing. Always have a Mexican lawyer review developer financing agreements before signing.
Self-Directed RRSP and TFSA Considerations
Some Canadians explore using self-directed registered accounts to invest in Mexican real estate. This is a complex area with significant tax implications.
The reality: Directly holding foreign real estate in an RRSP or TFSA is generally not permitted under CRA rules. There are indirect structures (like holding shares in a corporation that owns the property), but these add complexity, cost, and tax risk.
Before pursuing this path, consult a cross-border tax accountant who understands both CRA rules and Mexican property ownership. The penalties for non-compliance with registered account rules are severe.
Cash Purchase and Refinance Strategy
Many Canadian investors buy Mexican properties with cash and then refinance later. This approach:
- Makes your offer stronger (no financing condition)
- Closes faster (Mexican bank mortgages take 60-90 days)
- Lets you secure the property first, finance later
- Works well if you have home equity in Canada
You can refinance your Canadian properties through residential mortgage financing or multi-family mortgage financing programs to free up cash for a Mexican purchase. This uses your Canadian lending relationships and lower Canadian interest rates to fund a Mexican acquisition.
Vacation Rental Income Potential
Mexico’s vacation rental market is mature and well-supported by platforms like Airbnb, VRBO, and Booking.com. Here is what to expect.
Revenue Drivers
Seasonality. High season runs from December through April when Canadian and American snowbirds flood Mexican resort areas. Nightly rates during high season can be double or triple low-season rates. Semana Santa (Easter week) and Christmas/New Year are peak periods.
Location within the destination. A beachfront unit commands significantly higher nightly rates than one 10 blocks from the beach. Walkability to restaurants, shops, and attractions affects both rates and occupancy.
Property quality and amenities. Pool access, rooftop terraces, modern kitchens, and reliable internet dramatically affect booking rates. Vacation renters in Mexico expect a certain standard, and properties meeting or exceeding that standard outperform.
Professional management. Properties managed by professional vacation rental companies consistently outperform owner-managed properties. Professional managers handle:
- Listing optimization and pricing strategy
- Guest communications and reviews
- Cleaning and turnover
- Maintenance and repairs
- Local compliance and tax filing
Management fees typically run 20-30% of gross rental income. This sounds steep, but the increased bookings and higher nightly rates usually more than offset the cost.
Realistic Income Projections
Be cautious with income projections from developers or real estate agents. They often show best-case scenarios. A conservative approach:
- Assume 60-70% annual occupancy (not 85-90% that sellers project)
- Use average nightly rates across all seasons, not just high-season peaks
- Deduct management fees, cleaning costs, platform fees, utilities, and maintenance
- Account for the fideicomiso annual fee and Mexican property taxes
- Budget for furniture replacement and unit refresh every 3-5 years
When the numbers work conservatively, you have a strong investment. When they only work at peak projections, you are taking on more risk than you might realize.
Legal Considerations
Mexican real estate law differs significantly from Canadian law. Here are the critical elements.
The Notario Process
In Mexico, a notario publico is a government-appointed legal professional who validates and records all real estate transactions. The notario:
- Verifies clear title
- Ensures the property has no liens or encumbrances
- Calculates and collects transfer taxes
- Records the transaction with the public registry
- Establishes the fideicomiso with the bank
The notario is not your personal lawyer. They are a neutral party required by law. You should also hire an independent Mexican real estate lawyer to represent your interests, review contracts, and advise on the structure.
Trust Fees and Ongoing Costs
Owning through a fideicomiso involves ongoing costs:
- Annual bank trust fee: $500-1,500 USD
- Property tax (predial): Relatively low compared to Canada
- HOA fees: If buying in a condo, monthly fees cover common area maintenance
- Insurance: Property and liability insurance is recommended but not always required by lenders
- Capital gains tax: Mexico taxes capital gains on property sales, with some exemptions available
Tax Obligations
As a Canadian owning Mexican rental property, you have tax obligations in both countries:
- Mexico: Rental income is taxable in Mexico. You can choose to pay a flat tax on gross income or file a detailed return deducting expenses. Most investors use the flat tax method for simplicity.
- Canada: You must report worldwide income including Mexican rental income on your Canadian tax return. You can claim foreign tax credits for taxes paid in Mexico to avoid double taxation.
Work with a cross-border tax professional who understands both jurisdictions. For Canadians also investing in the US, the same professionals who handle Canadian financing for US properties often have expertise in Mexican tax structures as well.
Many Canadians start with How Canadians Can Invest in US Real Estate the Smart Way before expanding to Mexico, as the US market has more established cross-border financing programs.
The Purchase Process: Step by Step
Step 1: Research and property selection. Visit your target market in person. Walk the neighbourhoods. Talk to other Canadian owners. Check Airbnb for actual rental rates in the area. Use our investor resources portal to start your research.
Step 2: Engage professionals. Hire a Mexican real estate lawyer (independent from the seller’s agent), identify a reputable notario, and connect with a financing broker if you are not paying cash.
Step 3: Make an offer. Offers in Mexico are typically accompanied by a deposit (usually held in escrow by the notario or a title company). The offer-to-close timeline is longer than in Canada, typically 60-120 days.
Step 4: Due diligence. Your lawyer verifies title, checks for liens, confirms zoning, reviews HOA documents (for condos), and ensures the seller has the legal right to sell. This step is critical. Title insurance exists in Mexico but is less common than in Canada. Thorough due diligence by a qualified lawyer is your best protection.
Step 5: Fideicomiso setup. If buying in the restricted zone, the notario initiates the bank trust. This requires obtaining a permit from Mexico’s Ministry of Foreign Affairs, which takes 3-6 weeks.
Step 6: Financing finalization. If using a mortgage, submit your application and complete the lender’s requirements. Mexican bank mortgages take 60-90 days to process.
Step 7: Closing. The notario conducts the closing, collects funds, pays transfer taxes, and records the transaction. You receive your fideicomiso documentation confirming your beneficial ownership.
Step 8: Set up for rental. Furnish and photograph the property, engage a property manager, and list on vacation rental platforms. Most properties can be rental-ready within 2-4 weeks of closing.
Common Mistakes Canadians Make
Skipping the independent lawyer. The notario works for the transaction, not for you. Always have your own lawyer review everything before you sign.
Trusting developer income projections. Developers sell properties, not investment advice. Run your own numbers using actual Airbnb data for comparable properties in the area.
Ignoring currency risk. Your mortgage may be in USD, your income in MXN, and your reporting in CAD. Triple currency exposure adds complexity. Understand how exchange rate movements affect your returns.
Not visiting in person. Never buy a Mexican property sight unseen based on a developer presentation. Visit the area, see the property, and understand the neighbourhood.
Choosing price over location. A cheap property 20 minutes from the beach in a developing area might look attractive on paper but struggle to generate bookings. Location drives vacation rental income more than any other factor.
Forgetting about the exit. Know who your eventual buyer will be. Properties in established areas with strong foreign buyer communities are easier to sell than those in emerging areas where the buyer pool is smaller. Compare this to the established markets available through Canadian domestic mortgage financing where resale liquidity is rarely a concern.
If you’re exploring multiple cross-border markets, our guide to Mexico Real Estate Investing for Canadians provides a broader overview of investment opportunities beyond just vacation rentals.
Frequently Asked Questions
Can Canadians legally own beachfront property in Mexico?
How much down payment do I need for a Mexican property?
What is a fideicomiso and how much does it cost?
Do I need to pay taxes in both Mexico and Canada on rental income?
Can I use my RRSP or TFSA to buy Mexican property?
How long does it take to close on a Mexican property?
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.
Written by
LendCity
Published
February 15, 2026
Reading Time
11 min read
Amortization
The period over which a mortgage is scheduled to be fully paid off through regular payments of principal and interest. In Canada, common amortization periods are 25 or 30 years, though the mortgage term (when you renegotiate) is typically 1-5 years.
Down Payment
The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes.
LTV
Loan-to-Value ratio - the mortgage amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower). An 80% LTV means you're borrowing 80% and putting 20% down. Lower LTV generally means better rates and terms.
Equity
The difference between a property's current market value and the remaining mortgage balance. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. Equity builds through mortgage payments, appreciation, and property improvements.
Multifamily
Properties with multiple dwelling units, from duplexes to large apartment buildings. Often offer better cash flow and economies of scale.
Refinance
Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.
Interest Rate
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.
Title Insurance
Insurance that protects against losses from defects in title to a property, such as liens, encumbrances, or ownership disputes.
Property Management
The operation, control, and oversight of real estate by a third party. Property managers handle tenant screening, rent collection, maintenance, and day-to-day operations.
Due Diligence
The comprehensive investigation and analysis of a property before purchase, including financial review, physical inspection, title search, and market analysis.
Turnover
The process and cost of preparing a rental unit for a new tenant after the previous tenant moves out, including cleaning, repairs, marketing, and vacancy time. High turnover rates significantly reduce profitability through lost rent and preparation expenses.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
Operating Expenses
The ongoing costs of running a rental property, including property taxes, insurance, maintenance, property management fees, utilities, and repairs. Subtracting operating expenses from gross rental income yields the net operating income.
Zoning
Municipal regulations that dictate how properties in specific areas can be used, including residential, commercial, industrial, or mixed-use designations. Zoning bylaws affect what investors can do with properties, including rental restrictions, multi-unit conversions, and home-based businesses.
Condo Fees
Monthly fees paid by condo owners to cover building maintenance, insurance, common area utilities, reserve fund contributions, and amenities. Also known as strata fees or maintenance fees, these directly reduce cash flow and are a critical consideration when analyzing condo investment opportunities.
Capital Gains Tax
Tax owed on the profit from selling an investment property, calculated as the difference between the sale price and the adjusted cost base. In Canada, 50% of capital gains are included in taxable income, though recent changes have increased the inclusion rate for amounts over $250,000.
Property Tax
Annual tax levied by municipalities on real estate based on the assessed value of the property. Property taxes fund local services and are a significant operating expense that investors must account for in cash flow projections.
Comparable Properties
Similar properties in the same market area used to establish fair market value or rental rates through comparison of features, location, condition, and recent sale or rental prices. Analyzing comps is essential when determining offer prices and setting competitive rents.
Airbnb
An online marketplace connecting property owners with short-term guests. In real estate investing, Airbnb is commonly used as shorthand for the short-term rental business model, which involves higher operational demands but potentially higher returns than long-term rentals.
Condominium
A type of property ownership where an individual owns a specific unit within a larger building or complex, sharing ownership of common areas with other unit owners. Condos offer lower entry prices but come with monthly fees and potential rental restrictions that affect investment returns.
Fideicomiso
A Mexican bank trust allowing foreigners to own property in Mexico's restricted zone within 50 km of coast or 100 km of borders. A Mexican bank holds legal title while the foreign buyer retains full beneficial ownership rights.
Restricted Zone
In Mexican property law, land within 50 km of coastline and 100 km of international borders where foreigners cannot directly own real estate. Foreign buyers must use a fideicomiso or Mexican corporation.
Notario
In Mexico, a licensed public official who authenticates real estate transactions, collects taxes, and ensures legal compliance. A notario is not an independent attorney; investors should hire their own lawyer separately.
Currency Risk
The potential for financial loss from fluctuations in foreign exchange rates. Canadian investors holding US or Mexican properties face currency risk because values and rental income in foreign currencies change in Canadian dollar terms.
Common Area Maintenance
Expenses for maintaining shared spaces in commercial properties, including lobbies, parking lots, landscaping, and hallways. CAM charges are typically passed through to tenants as part of net lease structures.
Hover over terms to see definitions, or visit our glossary for the full list.