Using a personal loan or credit card to fund a mortgage down payment in the UAE breaches Central Bank of the UAE (CBUAE) mortgage regulations, regardless of whether the personal loan itself is obtained legally.
The rule is explicit. Article 2, paragraph 4 of Central Bank Board of Directors’ Resolution No. 96/By Circulation/2019 states: ‘The level of down payment required from the borrower should be drawn from the borrower’s own resources and not from other sources of borrowing (including personal loans or credit cards). The Central Bank expects mortgage loan providers lending policy to be explicit in this regard to ensure the borrower has an appropriate level of financial interest in the collateral.’
The same resolution defines a down payment as ‘up-front payment from the buyer for a portion of the purchase price, which reduces the value of the loan against the property.’ That definition matters: it establishes the down payment as equity the buyer already holds, not borrowed capital.
What counts as a mortgage down payment in UAE rules
Personal loans remain legal in the UAE. Under CBUAE Regulation No. 29/2011 on bank loans and other services to individual customers, a personal loan is defined as one repaid from salary, end-of-service benefits, or other verifiable regular income from a well-defined source. The personal loan limit is set at 20 times the borrower’s salary or total income.
The prohibition is specific: personal loan proceeds cannot be directed toward a mortgage down payment. A borrower may hold a personal loan for other purposes while also holding a mortgage, provided the combined debt burden stays within limits set by the CBUAE.
On that point, the CBUAE’s clarifications on personal loans and mortgage loan regulations cap the maximum Debt Burden Ratio (DBR) at 50 per cent of gross salary and any regular income from a defined source. For retirees, CBUAE guidelines on loans against property reduce that ceiling to 30 per cent of salary or regular income, and banks must apply the lower cap as soon as they become aware a borrower has retired.
Loan-to-value ratios determine the minimum a buyer must self-fund
The CBUAE regulations set maximum loan-to-value (LTV) ratios, which determine how large the self-funded portion must be.
For expatriates buying a first or owner-occupied property, the maximum LTV is 80% for properties valued at Dh5 million or less and 70% for properties above that threshold. For a second home or an investment property, the maximum LTV drops to 60%, regardless of value.
UAE nationals receive slightly more favourable terms under Central Bank Board of Directors’ Resolution No. 31/2/2020, which lifted first-time buyer LTV ratios by 5 percentage points. A UAE national purchasing a first home valued at Dh5 million or less can borrow up to 85% of the property’s value; above Dh5 million, the ceiling is 75%.
Off-plan purchases carry the tightest restriction for all buyers. The maximum LTV is 50%, regardless of the purchaser’s nationality, the purpose of the purchase, or the property’s value. That means the buyer must fund at least half the purchase price from their own resources before completion.
Resolution No. 96/By Circulation/2019 also removed a previous age requirement tied to the date of the final mortgage repayment. Under the amended rules, effective 8 October 2019, the maximum age at last repayment is now set by each mortgage lender in line with its own risk and lending policies.
Buyers planning a purchase should confirm their intended funding source with the mortgage provider before applying: a lender whose policy does not flag borrowed down payment funds is still operating within a regulatory framework that prohibits the practice.
