Pre-Construction Payment Schedules in Cabo: What to Expect in 2026

I have reviewed dozens of pre-construction payment schedules across Los Cabos developments over the past several years, and the single biggest mistake I see buyers make is signing a contract without fully understanding how the money flows. Pre-construction purchases can save you 10-25% off completed pricing — but the payment structure, escrow protections, and developer obligations vary wildly from one project to the next.

Why Pre-Construction Purchases Dominate the Cabo Market

Pre-construction buying in Los Cabos is not a niche strategy — it is how a significant portion of the market operates. According to the Mexican Association of Real Estate Professionals (AMPI) Baja California Sur chapter, pre-construction sales accounted for approximately 35% of all foreign buyer transactions in the Los Cabos corridor in 2025.

The appeal is straightforward:

• Price advantage: Buy at today's pre-construction price, take delivery at tomorrow's market value. In a market appreciating 8-12% annually (per Colliers International Mexico data), the math is compelling.
• Customization: Early buyers often select finishes, floor plans, and unit locations before they are locked in.
• Payment flexibility: Spread your purchase over 18-36 months instead of paying everything at once.
• Newer product: You are getting a brand-new unit with modern design, current building codes, and full developer warranties.

I have personally walked through pre-construction projects in Quivira, Diamante, Rancho San Lucas, and Cabo del Sol where early-phase buyers locked in prices 15-20% below what the same units were listed at by the time the project was 60% sold. That is real money — on a $600,000 condo, we are talking about $90,000 to $120,000 in savings.

The Three Most Common Pre-Construction Payment Structures

Every developer sets their own payment schedule, but most fall into one of three patterns. Understanding these structures is essential before you sit down at the sales table.

The 30/30/40 Structure

This is the most buyer-friendly structure I see in established Los Cabos developments. It works like this:

• 30% at contract signing: Your initial commitment. This amount secures your unit and locks in your price.
• 30% at construction midpoint: Typically triggered when the project reaches a defined milestone — foundation complete, structural work finished, or a specific percentage of completion.
• 40% at delivery: The final payment, made when the unit is complete, inspected, and ready for escritura (title deed) transfer.

On a $500,000 unit, this means $150,000 up front, $150,000 at midpoint (often 8-12 months later), and $200,000 at delivery (another 6-12 months after that). Your total capital is deployed over 18-24 months rather than all at once.

I recommend the 30/30/40 structure because it limits your exposure during the riskiest phase — early construction — while still giving the developer enough capital to build. If something goes wrong, you have only 30% at risk initially, not 50%.

The 40/30/30 Structure

More developer-friendly, but still common, especially with mid-size builders:

• 40% at signing
• 30% at midpoint
• 30% at delivery

The higher upfront commitment gives the developer more working capital to begin construction. I see this structure most often with developers who are not backed by institutional financing and rely more heavily on buyer deposits to fund the build. It is not necessarily a red flag, but it does mean you have more money at risk earlier in the process.

The 50/50 Structure

The most aggressive structure — and the one that requires the most due diligence:

• 50% at signing
• 50% at delivery

Half your purchase price goes to the developer before a single wall goes up. I have seen this structure with both established luxury developers (who can afford to offer it because their reputation attracts buyers) and with smaller builders (who need the cash flow). Context matters. If a developer with a 20-year track record in Cabo asks for 50% up front, the risk profile is very different from a first-time developer making the same ask.

Developer Financing vs. Bank Financing

One of the biggest advantages of pre-construction in Cabo is that developers essentially provide interest-free or low-interest financing during the construction period. Let me be clear about what this means — and what it does not mean.

How Developer Financing Works

Developer financing is not a mortgage. It is a structured payment plan that allows you to pay the purchase price in installments during the construction period. Key characteristics:

• Interest rates: Range from 0% (common as a launch incentive) to 6-8% (for extended payment plans beyond the standard construction timeline)
• Term: Matches the construction period, typically 18 to 36 months
• No credit check: The developer is not lending you money — you are paying for a unit that has not been built yet
• Full payment at delivery: Any remaining balance is due when the unit is completed and ready for title transfer
• No ongoing mortgage: Once you take delivery and pay in full, you own the unit outright through your fideicomiso

Some developers in developments like El Tezal offer extended payment plans that continue for 12-24 months after delivery, but these are less common and typically carry interest charges.

Traditional Bank Financing

If you need a mortgage to finance the portion not covered by the payment schedule, your options in Mexico are more limited than in the US:

• Mexican bank mortgages: Available from banks like HSBC Mexico, Scotiabank, and Santander. Loan-to-value ratios of 50-70%. Interest rates of 8-12%. Requirements include proof of income, Mexican tax ID (RFC), and a qualifying property appraisal.
• US cross-border lenders: Companies like Global Mortgage and MoXi specialize in financing Mexican property purchases for US buyers. Terms are generally more favorable than Mexican bank loans.
• Home equity line of credit (HELOC): Many buyers tap equity in their US property to fund their Cabo purchase. This is often the most cost-effective financing approach.

For a deeper comparison of pre-construction vs. resale, see our dedicated analysis.

Pre-Construction Discounts: How Much Can You Actually Save?

The discount you receive on a pre-construction purchase depends on four factors:

1. Phase timing: Earlier phases offer deeper discounts. Phase 1 buyers in a multi-phase project typically save 15-25% off the projected completed price. By Phase 3 or 4, discounts narrow to 5-10%.
2. Developer reputation: Established developers with a track record (like those behind Quivira, Diamante, and Rancho San Lucas) can charge closer to market because their delivery risk is lower. Newer developers offer steeper discounts to attract buyers.
3. Market conditions: In a hot market — which Los Cabos has been since 2020 — discounts compress because demand is strong even at higher pre-construction prices.
4. Unit selection: Premium units (higher floors, ocean views, corner positions) command smaller discounts. Interior-facing units and lower floors see deeper pre-construction pricing.

Based on my review of projects across the Los Cabos corridor over the past three years, here are realistic discount ranges:

• Luxury resort developments ($1M+): 10-15% pre-construction discount
• Mid-range condos ($400K-$1M): 15-20% pre-construction discount
• Emerging areas (East Cape, Pacific Side): 20-25% pre-construction discount

A Colliers International Mexico report from Q4 2025 found that pre-construction buyers in Los Cabos who purchased in Phase 1 between 2021 and 2023 saw average appreciation of 32% by delivery — roughly 12-15% per year compounded, before accounting for the pre-construction discount itself.

Escrow Protection: The Question You Must Ask Before Signing

This is the part of the pre-construction conversation where I get very direct: not all developers in Los Cabos use escrow accounts, and the ones that do not are asking you to trust them with hundreds of thousands of dollars based on their word alone.

What Proper Escrow Looks Like

In a properly escrowed pre-construction purchase:

• Your payments go into a segregated account managed by an independent third party (typically a title company like Stewart Title Mexico or a Mexican fiduciary institution)
• The developer can only draw funds from escrow upon meeting defined construction milestones verified by an independent inspector
• If the project is canceled or the developer defaults, your funds are returned from escrow
• The escrow agent provides regular accounting to both buyer and developer

When There Is No Escrow

Without independent escrow, your payments go directly into the developer's operating account. This means:

• Your funds may be commingled with the developer's other business expenses
• If the developer runs out of money, your deposit may already be spent
• Recovery in case of default requires a lawsuit — an expensive and time-consuming process in Mexico
• You are relying entirely on the developer's financial health and integrity

According to my conversations with real estate attorneys in San Jose del Cabo, roughly 40% of developers in the Los Cabos corridor use independent third-party escrow. The other 60% either hold funds internally or use what I call "affiliated escrow" — an account managed by a company related to the developer, which is not truly independent.

My advice: if a developer refuses to use independent escrow, that is not necessarily a deal-killer — but it should dramatically increase the level of due diligence you perform on their financial stability, track record, and contract terms.

What Happens If the Developer Delays or Defaults

Construction delays are a reality in Los Cabos development — supply chain issues, permitting complications, labor shortages, and weather events can all push timelines. The question is not whether delays happen, but how your contract protects you when they do.

What Your Contract Should Include

A well-drafted pre-construction purchase agreement should include all of the following provisions. If any are missing, push back before signing:

1. Defined completion date: A specific month and year, not vague language like "approximately 24 months."
2. Grace period: A reasonable buffer, typically 6 to 12 months, during which the developer can deliver late without penalty.
3. Delay penalties: Financial consequences if the developer exceeds the grace period. Common structures include interest payments (0.5-1% per month) on the buyer's deposited funds, or a fixed penalty per month of delay.
4. Buyer exit clause: If delays exceed a defined threshold (often 12-18 months beyond the original date), the buyer can cancel and receive a full refund of all payments made.
5. Force majeure definition: Specific events that excuse delays (natural disasters, government actions, pandemics). This clause should be narrowly defined — "supply chain challenges" or "market conditions" should not qualify.

Developer Default Scenarios

The worst-case scenario: the developer runs out of money and cannot complete the project. This has happened in Los Cabos — not frequently, but enough that buyers need to prepare for the possibility.

If this happens and your funds are in escrow, you have a clear path to recovery. If your funds went directly to the developer, you are in a significantly weaker position. Your options include:

• Filing a claim with the notario who protocolized the contract
• Initiating legal proceedings through the Mexican court system
• If the developer entered bankruptcy (concurso mercantil), filing a claim as a creditor
• Negotiating with a replacement developer who may take over the project

None of these are fast or cheap. Prevention — through proper due diligence and contract protections — is worth far more than any legal remedy after the fact.

Pre-Construction Due Diligence Checklist

Before committing to any pre-construction purchase in Los Cabos, work through this checklist with your attorney and real estate advisor:

1. Developer track record: How many projects have they completed in Los Cabos? On time? To specification? Visit completed projects and talk to existing owners if possible.
2. Financial stability: Is the developer funded by pre-sales alone, or do they have institutional backing (bank construction loans, private equity)? Projects funded entirely by pre-sales carry more risk.
3. Permits and licenses: Verify that the developer has all required building permits, environmental impact approvals (MIA), and land use certifications. Your attorney can confirm these through the municipal planning office.
4. Escrow arrangements: Independent third-party escrow? Internal account? What are the drawdown conditions?
5. Contract review: Have your own attorney (not the developer's attorney) review the full purchase agreement in both English and Spanish. Focus on completion dates, delay penalties, exit clauses, specification guarantees, and assignment rights.
6. Construction timeline: Is the projected timeline realistic? Ask your attorney or a local construction professional to assess. A 200-unit beachfront tower does not get built in 12 months.
7. Fideicomiso compatibility: Confirm that the development's lots or units have clear title and can be conveyed via fideicomiso at delivery. Unresolved land title issues have delayed deliveries in the past.

For a comprehensive overview of all active developments, visit our Los Cabos developments page with 82+ projects across all five regions.

The Assignment Strategy: Selling Before Delivery

Some buyers use pre-construction as a pure investment play — buying at a pre-construction discount, holding through the appreciation during the build phase, and assigning (selling) their purchase rights to another buyer before delivery. This avoids the closing costs of a full purchase and the ongoing costs of ownership.

Here is how assignment (cesion de derechos) works in practice:

• You purchase a pre-construction unit and make payments per the schedule
• Before delivery, you find a buyer willing to purchase your contract rights at a higher price
• The developer facilitates the assignment, transferring the purchase agreement to the new buyer
• You receive the difference between your purchase price and the assignment price
• The new buyer takes over remaining payments and closes when the unit is delivered

Assignment fees charged by developers range from 0% to 5% of the purchase price. Some developers restrict assignments until a minimum percentage of the purchase price has been paid (commonly 40-60%). Others prohibit assignments entirely — check your contract.

Based on market conditions in 2025-2026, I have seen successful assignments in Quivira and Diamante where buyers captured 15-25% returns on their capital deployed over 18-24 months. That said, this strategy carries liquidity risk — you need to find a buyer, and there is no guarantee the market will cooperate.

Red Flags in Pre-Construction Contracts

After reviewing contracts across dozens of Los Cabos projects, here are the red flags that should give any buyer pause:

• No defined completion date: Vague language like "estimated delivery" or "approximately" is unacceptable. You need a hard date.
• No exit clause for excessive delays: If the developer can delay indefinitely without penalty and without giving you an exit, walk away.
• Non-refundable deposits regardless of circumstances: Your deposit should be refundable if the developer fails to deliver within a reasonable timeframe.
• Specification changes "at developer's discretion": If the contract allows the developer to substitute materials, fixtures, or design elements without your approval, you may end up with a very different product than what you were sold.
• No independent escrow option: Combined with a first-time developer or one with limited track record, this is a high-risk combination.
• Pressure to sign immediately: "This price is only good today" or "we only have one unit left at this rate" — high-pressure sales tactics are a warning sign, not a negotiation strategy.

For buyers comparing completed properties against pre-construction options, our pre-construction vs. resale guide breaks down the full analysis.