The In-Depth Answer

Financing for foreigners is available in Mexico, but it complicates the process and is expensive. For example a "good" mortgage rate is around 12%. Additionally, it can increase your closing costs by 2% to 6%, which is on top of the regular closing costs of up to 6%. Although a lender will occasionally provide a loan with as little as 20% down, most require around 40% down. 

Here are a few alternatives:

Most of our clients who need financing choose to refinance or obtain a second mortgage on a property they own in the US or Canada to have the cash they need to purchase in San Miguel de Allende. The process of obtaining financing is much easier outside of Mexico and the interest rates are much lower.

Occasionally there are sellers who are willing to finance with an interest rate similar to mortgage rates in the US or slightly higher. On a few occasions we have seen sellers willing to finance for 7 to 15 years, but most sellers are only willing to do some type of "bridge" financing for one to five years. It may be an amortized loan only for the term, amortized payments based on a 20 year loan with a balloon payment due at the end of the term, or an interest only loan with a balloon payment due at the end of the term. Additionally, most sellers will only finance for 50% or less of the value of the property. This means the buyer needs to have at least 50% of the purchase price to put down.