Panama's preferential interest regime was rewritten twice between April 2025 and September 2025, and the version in force took effect on 1 January 2026. The ceiling dropped, the durations changed, and a lot of what people still repeat about it is simply the old law. Here is what applies now.
Two Laws in One Year
The preferential interest regime that had governed Panamanian mortgages since 1985 was replaced by Law 468 of April 2025. Its entry into force was then postponed to 1 January 2026, and before that date arrived it was amended again by Law 481 of September 2025. The regime in force today is the product of all three steps, which is why so much of what circulates online is out of date.
The headline change is the ceiling. The benefit now applies only to homes whose price does not exceed B/.120,000, including land and improvements. Under the previous regime the ceiling reached considerably higher, which means a large share of the properties that qualified two years ago no longer do.
The tramos, their rates and their durations were adjusted by the amendments and are the detail most likely to be quoted wrongly. Ask the bank for the tramo, the exact subsidised rate and the exact number of years in writing, before signing a promise of sale. Do not rely on a figure from a news article, including this one.
Primary Residence, and Only One
The subsidy is restricted to the borrower's primary residence. Beneficiaries must be Panamanian citizens or foreigners holding permanent residence. Investment properties, second homes and rentals are outside the regime entirely.
Trying to hold a second property through a relative to stay eligible is not a grey area; it is grounds for sanction if detected. Converting the subsidised home into a full-time short-term rental also voids the benefit. If the plan is to rent the unit out, this is not the financing route.
The state subsidises the lower of the tramo rate or up to 85% of the rate the bank offers. That second cap matters: it means the benefit is tied to the bank's own rate, so shopping the mortgage is still worth doing even inside the subsidised regime. Our guide to getting a mortgage in Panama covers how the banks assess applicants.
The Payment Jumps When It Ends
Every tramo has a fixed, non-renewable term. When it expires the borrower moves to the bank's commercial rate and the monthly payment rises — often substantially, given market rates. This is the part buyers consistently fail to plan for, because the sales conversation happens around the subsidised payment.
Before signing, ask the bank to give you two figures: the payment during the subsidised period and the payment the day after it ends, at today's commercial rate. If the second number does not fit your budget, the property is too expensive regardless of how comfortable the first years look.
One further detail worth knowing: if the property's appraised value later rises above the tramo ceiling — a renovation is the usual cause — the benefit can be lost going forward. Improving a subsidised home is not free of consequences.
Above $120,000 Is Most of the Market
With the ceiling at B/.120,000, most apartments in central Panama City fall outside the regime. That does not make them unfinanceable — it means the mortgage is a straightforward commercial loan and the analysis shifts to the down payment, the term and the rate you can negotiate.
It also shifts the arithmetic toward the total cost of ownership. Property tax under the Family Tax Patrimony regime, maintenance fees and closing costs all affect what the property really costs per month, and they are more predictable than a subsidy that expires. We work through the property tax side in our guide to how property tax is calculated in Panama.