Upfront Costs of Buying a Flat in Dubai: The 20% Down Payment Is Only 72% of the Cash

At the trading company where I work, no purchase order for imported goods gets approved on the supplier’s price. The costing sheet adds freight, duty, clearance and port charges first, and the number that goes on the books is the landed cost. A flat is bought the same way. The listing price is the supplier’s invoice. What follows is the costing sheet.

What the 80% mortgage rule actually says

The Central Bank’s Regulations Regarding Mortgage Loans (Circular 31/2013, in force since 28 December 2013) set the ceilings. For expatriates buying a first home, the maximum loan is “80% of the value of the property” when the value is under AED 5 million and 70% above it. A second or investment property is capped at 60% “regardless of value”, and anything bought off-plan at 50% “regardless of purpose, value, or category of purchaser”. UAE nationals get 85% and 75% on the first home and 65% after that.

Two other lines in the same article decide whether the 80% is reachable at all. The maximum financing for an expatriate is “up to 7 years annual income”, and the debt burden ratio is capped at 50% of gross salary, with the bank required to “stress test the loan at (2 to 4) percentage points above the current rate of interest”. So a AED 1.2 million loan needs at least AED 171,429 of annual income (AED 14,286 a month) before the DBR test even starts, and the regulation is explicit that end-of-service benefit does not count as a source of repayment.

Note the definition the regulation uses. LTV is measured against “the appraised value of the residential property”, not the agreed price. If the bank’s valuer comes in under the price, the 20% is 20% of the valuation and the difference is cash.

The costing sheet for a AED 1.5 million apartment

Ready apartment, expatriate, first home, bank lends 80%. Every figure below is from the DLD service pages or a bank’s own Key Facts Statement.

The fees alone are AED 115,240, or 7.7% of the price. The down payment is 72% of the cash. That ratio is the point of the article: the question “how much do I need to put down” has a regulatory answer, and the question “how much cash do I need” has a different one, roughly a third larger.

Three notes on the lines. The DLD’s own page splits the 4% as “Seller: 2% of the sale value” and “Buyer: 2% of the sale value”; the Dubai market convention is that the buyer pays all 4%, and the memorandum of understanding will say which. The processing fee and valuation are Emirates NBD’s published KFS figures (other banks differ, and the processing fee is the one line worth negotiating, because 1.05% of AED 1.2 million is a bigger number than any of the government fees). And the DLD’s mortgage registration page lists the same “AED 4,000 service fee + value added tax” for a mortgage registered through a trustee office, so a cautious sheet carries a second AED 4,200 and is pleased if the office does not charge it.

The developer’s no-objection certificate is a real line too. The DLD requires it for a freehold sale, the developer sets the fee, and it is not on any government page, so it stays off the table and on the checklist.

What changed on 1 February 2025

Until early 2025 the sheet above was optimistic in the buyer’s favour. Banks were lending against the fees. The National reported on 25 January 2025 that “banks used to finance 80 per cent of these costs, which was equivalent to 5 per cent of the property value”, taking the effective loan to 85%, and that roughly 70% of secondary-market mortgage buyers used the option. From 1 February 2025, on the Central Bank’s instruction, that stopped. Khaleej Times put the effect on a AED 1 million purchase at “an additional Dh60,000 down payment”.

On the AED 1.5 million example, financing the fees at that 5%-of-value level would have cut the cash to about AED 340,000. The rule change moved it to AED 415,240. The 20% down payment never changed; the cash did, by around AED 75,000.

The mortgage regulation prices the down payment. The transfer day prices everything else, and everything else is now paid from a bank balance, not a loan.

The two lines that keep arriving after the keys

Two charges from the same KFS do not appear on transfer day at all. They arrive monthly, outside the instalment, and unlike the instalment they do not move with EIBOR. Property insurance is “0.01% per month + VAT” on the property value, fixed at approval: AED 157.50 a month on AED 1.5 million. Borrower’s life insurance is “0.018% per month” on the outstanding balance: AED 216 in month one on AED 1.2 million, falling as the loan does. Together they are about AED 373 a month that the mortgage calculator did not show, which over the first year is roughly another AED 4,450 of landed cost.

Running the sheet on any price

The structure holds for any purchase; only the amounts move. Down payment at the LTV the regulation allows for the buyer’s category. Four percent of the price plus AED 4,720 of fixed DLD and trustee lines. A quarter of one percent of the loan plus AED 270. Two percent plus VAT to the agent. The bank’s processing fee and valuation from its KFS, not from the sales call. Add the developer’s NOC when it is quoted.

A goal for a home deposit is the one savings target where the number people write down is reliably a third too small, and it has to sit apart from the emergency fund, because the transfer day empties it. In Masrofna the target is whatever is typed in, so the fix is to type in the landed cost. The regulation tells the bank how much it can lend. The costing sheet tells the buyer how much has to be in the account on the morning of the transfer, and those were never the same number, even before the fees stopped being lendable.