Buy to let mortgage in Dubai (2026): second home rules, rent and yield after interest

A buy to let mortgage in Dubai is limited to 60 per cent of the property's value for an expatriate and 65 per cent for a UAE national, because the Central Bank of the UAE treats a second or investment home differently from a first home. Those limits are set by Article 3 of the Central Bank's mortgage regulations, Circular 31/2013, in force since 28 December 2013, and the first home limits were raised by Resolution 31/2/2020 on 8 April 2020 without changing the second home limits.

This guide is for investors, living in the UAE or abroad, who want an investment property mortgage in Dubai for a home they will let. It covers how much a bank will lend, whether rent counts as income, what changes when the property is off plan or a holiday home, and what a published gross yield becomes once interest, service charges and vacancy are paid. It is not financial, legal or tax advice.

How much can you borrow on a buy to let mortgage in Dubai?

Article 3 of the Central Bank regulation sets the ceilings by borrower and by purpose. For a first home, Resolution 31/2/2020 allows UAE nationals 85 per cent of value up to AED 5 million and 75 per cent above, and expatriates 80 per cent up to AED 5 million and 70 per cent above. Each borrower can claim only one property in that category.

Every other home falls into the second category. The regulation caps a loan on a "second and subsequent houses or investment property" at 65 per cent of value for UAE nationals and 60 per cent for expatriates, "regardless of value". Al Tamimi and Company, reviewing the rules when they were published in the Official Gazette on 28 November 2013, gave the same figures. In practice this means an expatriate who already owns a home in the UAE, or who buys to let, needs a deposit of at least 40 per cent before fees.

The other limits apply to every mortgage. Total monthly debt payments may not exceed 50 per cent of gross salary and regular income, loans may not exceed 7 times annual income for expatriates or 8 times for nationals, and the longest term is 25 years. Lenders must also test affordability at 2 to 4 percentage points above the current rate, and at the rate that applies after any introductory period.

The regulation does not set a separate band for buyers who live abroad. Banks that lend to non residents publish their own limits, and our guide to UAE mortgages for US and Canadian citizens compares what named banks state. To see what a given deposit buys, use the mortgage calculator.

Can rental income count for a mortgage in the UAE?

Partly, and the rule is narrower than many buyers expect. The Central Bank measures the debt burden against "gross salary and any regular income from a defined and specific source", so rent can qualify as income. Where the property is for investment, the regulation requires lenders to "make a deduction of at least two months' rental income from the DBR calculation". That deduction is the regulator's allowance for vacancy.

How each bank applies it is a matter of credit policy, and the published pages say little. RAKBANK's mortgage FAQ lists "tenancy contracts and title documents for rental properties" among the income documents a salaried applicant can provide, which points to rent from properties the applicant already owns and lets. Emirates Islamic's document lists for residents and non residents, read on 7 November 2026, do not mention tenancy contracts. HSBC's UAE article on renting with a mortgage says that a buy to let borrower "may also be able to secure a mortgage based solely on the rental income" and that a higher deposit may be required, but it does not set out criteria.

None of the bank pages we read says that projected rent on the property being bought will be counted. Plan on the basis that your salary or business income must carry the loan at the stressed rate, and treat existing, registered rent as a possible addition. Our eligibility check shows where the 50 per cent limit falls for your income.

Does an off plan investment property change the loan?

Yes. Article 3 caps a mortgage on property bought off plan at 50 per cent "regardless of purpose", so the second home limits are replaced by a lower one for every buyer, national or expatriate. Until the bank pays its share, the instalments come from your own funds.

Banks lend on off plan units only for selected developers and projects, and the stage at which they will fund varies. Our off plan finance page sets out the typical criteria and lets you check a unit. Remember that an off plan unit earns no rent until handover, so the yield arithmetic below starts only when the keys are issued.

What changes with a mortgage on rental property in Dubai?

A long term letting in Dubai is registered through Ejari, the Dubai Land Department's tenancy system. The Land Department's Ejari page, updated on 3 November 2026, charges AED 177.75 to register a contract online and AED 220 at a trustee centre, and lets individual owners who own and manage their own property register online. Registration matters to a mortgaged landlord because it is the record a bank, a tax authority at home or a buyer will ask for.

The mortgage is registered separately. The Land Department charges 0.25 per cent of the mortgage value, plus AED 250 for each title deed and AED 10 each in knowledge and innovation fees, according to its mortgage registration page updated on 3 November 2026. Those costs sit on top of the 4 per cent transfer fee and the other purchase costs set out in our guide to the cost of buying property in Dubai.

HSBC's article advises a borrower who plans to let to "state upfront" that intention. The safe course with any bank is to tell it that the home is an investment before the offer is issued, so the loan is priced and documented as an investment loan rather than an owner occupied one.

Can you get a holiday home mortgage in Dubai and let it short term?

A bank finances the property, not the letting model, so a holiday home mortgage in Dubai is an investment property mortgage with the second home limits above. The letting itself needs a permit from the Department of Economy and Tourism.

The Department's holiday homes customer journey guide says owners can register as individuals and operators as licensed companies. It lists the owner's passport or Emirates ID, the title deed, an owner authorisation on the Department's form and a DEWA bill no more than three months old. It sets unit fees of AED 300 per bedroom plus AED 50 per holiday home and AED 10 each in knowledge and innovation fees, capped at AED 1,200 per holiday home a year.

The sources differ on documents. Gulf News, in a guide updated on 14 October 2025, adds a developer no objection certificate where applicable and comprehensive insurance from a Dubai licensed insurer, and says permits run from 3 to 12 months. The Department's own guide, which is undated, does not list either, so check the current requirements on the Department's portal. Neither source mentions a lender's consent; read your mortgage offer for any condition on letting and ask the bank before you apply.

Short term letting also affects tax, as the section on tax below explains, and its income varies more by season than a 12 month lease.

What does a Dubai rental yield become after interest?

Start with a published figure. Cavendish Maxwell put average gross yields in Dubai at 6.6 per cent for apartments and 4.9 per cent for villas and townhouses in the third quarter of 2026, as reported by Khaleej Times on 2 November 2026. The same report found that 21.4 per cent of leases signed in the quarter were at a lower rent than the previous contract, up from 4.8 per cent in the first quarter. In the first quarter of 2026 Cavendish Maxwell had reported 7.2 per cent for apartments and 5 per cent for villas, according to Gulf News, so gross yields eased through the year.

Gross yield is rent divided by price before any cost. The example below converts it into the figures an investor lives on. It is arithmetic on stated assumptions, not a forecast and not a quote for any property.

1. Assumptions. A ready apartment bought for AED 2 million by an expatriate as a second home, 60 per cent financed, so a loan of AED 1.2 million over 25 years at an assumed 4.75 per cent a year. The Central Bank Base Rate was 3.9 per cent on 28 October 2026; your bank's rate will differ.
2. Cash in. A deposit of AED 800,000, the 4 per cent transfer fee of AED 80,000, mortgage registration of AED 3,270 at the Land Department's published rates, and an assumed AED 60,000 for trustee, agency, valuation and bank fees. Total cash invested: AED 943,270.
3. Gross rent. At the 6.6 per cent apartment average, AED 132,000 a year.
4. Operating costs. One month of vacancy, AED 11,000; service charges assumed at AED 18,000 a year; maintenance, insurance and letting costs assumed at AED 6,000. Net operating income: AED 97,000, a net yield of 4.85 per cent on the price.
5. Interest. First year interest on the loan is about AED 56,446. Cash flow after interest is about AED 40,554, or 4.3 per cent on the cash invested.
6. Full repayment. The annual repayment is about AED 82,097, of which about AED 25,651 repays principal in the first year. Cash left after the full repayment is about AED 14,903, a cash on cash return of about 1.6 per cent, with the principal building equity rather than income.

Two lessons follow from the arithmetic. When the borrowing rate is close to the net yield, leverage adds little to income and increases the risk. And the costs between gross and net, here 2.6 percentage points, decide the result, so ask for the building's actual service charge and its rent history before you offer. At the Central Bank's stress test of 2 points above the assumed rate, the monthly repayment would rise from about AED 6,841 to about AED 8,291.

How is rental income from Dubai property taxed?

In the UAE, an individual's rent from property held personally is generally outside corporate tax. Cabinet Decision No. 49 of 2023, issued on 8 May 2023 and effective from 1 June 2023, excludes real estate investment income from the business activities that are taxed, where the activity is not conducted, and is not required to be conducted, through a licence. There is no personal income tax on that rent.

The licence point matters for holiday homes. Hadef and Partners, summarising the Federal Tax Authority's guide of 24 October 2024, wrote that a Department of Economy and Tourism document allowing short term holiday home leasing counts as a licence for this purpose, while an Ejari registration is an administrative record. A licensed short term let may therefore be a business, tested against the AED 1 million turnover threshold in the same decision. Take UAE tax advice before you choose short term letting.

Your home country may tax the rent regardless. The IRS states that "Federal law requires U.S. citizens and resident aliens to report their worldwide income", in a tax tip published on 21 March 2023. HMRC's SA106 notes for the 2025 to 2026 tax year say a UK resident is "taxable on your overseas rental income, even if you do not bring that income to the UK", and that finance costs on a let residential property give a basic rate tax reduction rather than a deduction. The interest line in the example above may therefore be worth less at home than it appears. Confirm the position with an adviser in your country, and see our guides for buyers from the United States, Canada, the United Kingdom and India.

What it means for investors

A buy to let mortgage in Dubai is a smaller loan than a first home mortgage. An expatriate needs at least 40 per cent of the price in cash for a ready second home, and 50 per cent for off plan, plus fees. Plan the deposit before the search.

Rent helps less with approval than many investors assume. The regulation allows rent as income but requires a deduction of at least two months on an investment property, and no bank page we read promises to count projected rent. Your other income has to carry the loan at the stressed rate.

The yield case should be made net. At the third quarter 2026 averages, an apartment's 6.6 per cent gross yield fell to 4.85 per cent net in our example, and to 4.3 per cent on the cash invested after interest. Leverage works when the net yield clearly exceeds the borrowing rate; at today's rates that margin is thin on average stock, so asset selection and service charges matter more than the loan.

For an investor in the Americas, the dirham is fixed against the US dollar, with the Central Bank buying at 3.673 and selling at 3.672, so there is no currency gap between a dollar income and a dirham loan. The Base Rate is anchored to the US Federal Reserve's interest rate on reserve balances, which is why it rose to 3.9 per cent on 17 September 2026 after the Federal Reserve moved, so dirham mortgage rates follow US policy. A US owner reports the rent at home, as the IRS states, and owners in Canada and Latin America have their own reporting rules, so the home country adviser should see the numbers first. Family offices weighing commercial rather than residential income can read our guide to income property in the UAE.

What we recommend

1. Decide whether the home is your first UAE home or a second or investment home, because the loan to value limit changes from 80 or 85 per cent to 60 or 65 per cent.
2. Ask each bank in writing whether it will count existing rent, projected rent, or neither, and how it applies the two month deduction.
3. Run the example above with the building's real service charge, a realistic vacancy and a stressed rate before you make an offer.
4. Tell the bank before the offer is issued that you will let the property, and register every lease on Ejari.
5. For a holiday home, confirm the Department of Economy and Tourism requirements, the lender's position on short term letting and the UAE tax treatment before you buy.
6. Take home country tax advice on the rent and the interest. Confirm the current position with the authority before relying on it.

Castilion Estates, the trading name of Castilion Realty L.L.C., is licensed by RERA as a mortgage broker (ORN 46392) and is not a lender. Its mortgage desk compares banks for investment purchases, and you can start with the mortgage application.