Complete Mortgage Guide — Saudi Arabia

How Mortgages Work in Saudi Arabia

The Saudi Central Bank (SAMA) sets the repo and reverse repo rates, closely following the US Federal Reserve due to the Saudi riyal’s peg to the US dollar. This means Saudi mortgage rates move in lockstep with US rate changes. The real estate financing market has grown rapidly since 2017 as part of Vision 2030’s goal to increase home ownership to 70%. SAMA regulates all financing providers through comprehensive lending standards

Use our mortgage calculator to see how different rates and terms affect your monthly repayments.

Types of Mortgages Available

Saudi Arabia offers both conventional and Islamic (Shariah-compliant) financing. Islamic products dominate and include Murabaha (cost-plus financing — the bank buys the property and sells it to you at a higher price, paid in instalments), Ijara (lease-to-own), and Musharaka Mutanaqisa (diminishing partnership). Fixed-rate products lock in the profit rate for the full term or a portion. Variable-rate products are linked to SAIBOR (Saudi Arabian Interbank Offered Rate). The Real Estate Development Fund (REDF) provides profit-free financing for eligible Saudi citizens

Read our mortgage types comparison for a detailed side-by-side analysis of each product.

How Much Can You Borrow?

SAMA requires that total monthly debt obligations (DBR — Debt Burden Ratio) do not exceed 55% of gross monthly income, with the housing finance instalment ideally below 40%. Banks conduct salary assignment verification (tahweel) — your salary is assigned to the lending bank for the duration of the loan. A SIMAH credit check (Saudi Credit Bureau) is mandatory for all applications

The maximum loan-to-value in Saudi Arabia is Up to 90% for primary residences for first-time buyers with REDF support. Through commercial banks, typical LTV is 70-85% depending on the property type and borrower profile. Off-plan properties may have lower LTV limits. SAMA’s regulations cap LTV at 90% for residential properties. Loan terms extend up to Up to 25-30 years, with 20-25 years being common. REDF financing terms vary by product. Maximum borrower age at maturity is typically 60-65 for salaried workers.

The Application Process

Check REDF eligibility through the Sakani portal first. For bank financing, provide national ID (Huwiyya), salary certificate from employer, bank statements (last 3 months), SIMAH credit report consent, and property details. Salary assignment (tahweel) to the lending bank is required. Property appraisal is conducted by the bank. REDF applications are processed through the Sakani platform. Bank approval typically takes 1-3 weeks. The contract is registered with the Ministry of Justice

Costs and Fees

Real estate transaction tax (RETT) of 5% on the property purchase. Bank financing typically includes an arrangement fee of 0-1%. Property valuation fee of SAR 1,500-3,000. Life insurance (takaful) is required and added to monthly payments. Early settlement charges of up to 3 months’ profit may apply. REDF financing is profit-free for eligible applicants, representing a significant saving

What Makes Saudi Arabia’s Mortgage Market Unique

Saudi Arabia’s mortgage market has been transformed by Vision 2030. The REDF provides profit-free financing of up to SAR 500,000 for eligible Saudi citizens, which is essentially a zero-interest loan — an extraordinary benefit that makes Saudi Arabia one of the most affordable markets for nationals. The mandatory salary assignment (tahweel) is a distinctive feature where your employer transfers your salary directly to the lending bank, which provides security for the lender but requires you to maintain your account with that bank throughout the loan term

Refinancing Your Mortgage

Refinancing is possible but less common than in Western markets. The salary assignment requirement means switching banks involves administrative complexity — your employer must re-assign your salary to the new bank. SAMA allows early settlement with a penalty of up to 3 months’ profit. Compare offers from multiple banks before committing, as rate differences between lenders can be significant. The REDF subsidy cannot be transferred — if you already have REDF support, refinancing the commercial portion separately may be possible

Read our refinancing guide for a step-by-step walkthrough.

Government Schemes and Support

Sakani is the government’s comprehensive housing support platform, offering free land allocation, REDF profit-free financing up to SAR 500,000, subsidised mortgage products, and ready-built affordable homes. The programme targets Saudi nationals and has supported hundreds of thousands of families. Eligibility depends on marital status, age, and current property ownership. REDF also offers a guarantee programme that enables higher LTV borrowing through partner banks

Check our government grants guide for the latest programmes and eligibility details.

Tips for Getting the Best Deal

Check Sakani first — if you are a Saudi national, the REDF profit-free financing is the best deal available anywhere. Compare Islamic financing products carefully — Murabaha and Ijara have different structures with different tax and legal implications. Ensure you understand the salary assignment requirement before committing — it limits your banking flexibility. If rates drop significantly, investigate early settlement terms and whether refinancing makes financial sense after accounting for penalties and fees

Next Steps

Use our mortgage calculator to model different scenarios, read our property buying guide for the full purchase process, or browse Saudi Arabia FAQs for quick answers.