Can UAE Residents Legally Purchase Property With Zero Down Payment? A Closer Look At Regulations And Loopholes

As Dubai’s property market continues to expand, a growing number of real estate agents are advertising “zero per cent down-payment” deals to attract buyers. These offers can appear enticing -- especially to first-time property seekers -- but UAE law draws a clear line between bank-financed mortgages and developer-led instalment plans. Understanding this distinction is crucial before entering into a long-term financial commitment.

 

Central Bank rules: Down-payment is mandatory for mortgages

 

When a property purchase is financed through a bank or financial institution, the transaction is governed by the UAE Central Bank’s mortgage regulations, specifically Notice No. 226/2013. These rules stipulate a mandatory minimum buyer contribution, commonly referred to as the down payment.

 

The regulations set clear Loan-to-Value (LTV) caps -- meaning the maximum percentage of the property value that a bank may finance. Depending on nationality, property value, and purpose of purchase, the down-payment requirement ranges from 15 per cent to 40 per cent.

 

For UAE nationals:
 

• First home (≤ Dh5m): Up to 85 per cent LTV
• First home (> Dh5m): Up to 75 per cent LTV
• Investment/second home: Up to 65 per cent LTV

 

For expatriates:
 

• First home (< Dh5m): Up to 80 per cent LTV
• First home (> Dh5m): Up to 70 per cent LTV
• Investment/second home: Up to 60 per cent LTV
   

For all buyers purchasing off-plan:

The Central Bank takes a more conservative stance due to the added risks associated with construction timelines and delivery. The maximum LTV is capped at 50 per cent, regardless of nationality, property value or purpose.

Because the buyer must contribute the remaining amount, zero-per-cent down-payment mortgages are not legally allowed in the UAE. Any offer suggesting otherwise does not comply with Central Bank regulations.

 

When zero-down deals ARE possible -- developer plans
 

Although banks must follow strict LTV rules, developers are not bound by the same mortgage regulations when they offer direct payment plans or developer-backed financing. These plans are common in off-plan projects and allow buyers to pay in instalments directly to the developer without bank involvement.
 

Under such schemes, a developer may legally offer:
 

• Zero-per-cent down-payment at booking,
• Flexible instalments during construction, or
• Post-handover payment plans, extending payment for several years after delivery.

Because these arrangements are considered private sale contracts between buyer and developer -- not bank loans -- they fall outside the scope of Central Bank mortgage rules.
 

Buyer caution: Not all zero-down schemes are equal
 

While developer plans can make property acquisition more accessible, they come with important considerations:
 

• Payment schedule obligations: Instalments may be front-loaded or tied to construction milestones.
• Handover conditions: Ensure clarity on the point at which property possession is granted.
• Hidden finance charges: Some developers embed interest-like amounts into instalments.
• Escrow protection: Verify that payments for off-plan properties are made into an RERA-approved escrow account.
• Penalties for delays or default: Read contractual clauses carefully.
   

Due diligence is essential — especially because developer plans may appear easier but typically do not offer the same regulatory oversight as a bank mortgage.
 

The bottom line
 

Zero-per-cent down-payment offers cannot be legally granted by banks under UAE Central Bank regulations. However, developers may legally offer such schemes under private payment arrangements, provided the buyer pays instalments directly to them without engaging a mortgage facility.
 

Buyers should thoroughly understand the financial and contractual implications before committing to such offers. A zero-per-cent down deal may be legal — but that does not automatically make it risk-free.

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