First-time homebuyers in Dubai are showing strong interest, but many enter the market without fully understanding their financial obligations. This often leads to budget shortfalls emerging later in the purchasing process, when additional costs such as transfer fees, bank charges, and cash-flow constraints become apparent.

Understanding Upfront Costs for Buyers

For expatriates looking to purchase properties priced under AED 5 million, banks typically require a minimum down payment of 20%. For example, on a property costing AED 1.5 million, the upfront cost would be AED 300,000. However, this amount is just the beginning of the financial obligations that buyers need to consider.

Buyers must also account for a 4% transfer fee to the Dubai Land Department at the time of registration, alongside mortgage registration fees that amount to 0.25% of the loan value, as well as valuation fees, trustee office charges, and other administrative costs. Agency commissions and VAT are additional expenses that need to be settled in cash. Elie Namaan, CEO of Ellington Properties, warns that many buyers underestimate the rapid accumulation of these costs, emphasizing the importance of comprehensive budgeting beyond just the down payment.

In total, first-time buyers should prepare to have between AED 360,000 and AED 400,000 available at completion for a property costing AED 1.5 million, depending on their financing methods and specific lender fees.

Managing Cash Flow During the Buying Process

Many first-time buyers are also grappling with the challenge of paying rent while saving for a home. Residential rents in Dubai saw a significant increase in 2024 and 2025, resulting in diminished savings capacity for potential homeowners. Namaan remarks that managing overlapping housing costs is often the greatest financial hurdle, as it’s not solely about the down payment, but also balancing rent, transaction fees, and mortgage eligibility.

Experts recommend that buyers maintain a cash reserve equal to at least six months’ worth of housing costs. This precaution can provide a buffer against delays in mortgage approvals, discrepancies in handover timelines, or misalignments with lease expirations.

Income Requirements for Mortgage Approval

In the UAE, mortgage eligibility is largely determined by the debt burden ratio, which restricts total monthly debt repayments to 50% of a borrower’s gross income. For properties valued between AED 1.5 million and AED 2.5 million, a monthly income of approximately AED 30,000 to AED 40,000 is typically required, varying with factors like loan tenure and interest rates.

Buyers nearing the upper threshold of this ratio may qualify for a mortgage but could face limitations if interest rates rise or if household expenditures increase. Those who keep their debt burden below the maximum threshold usually experience less risk when interest rates shift or economic conditions fluctuate.

The Mortgage Landscape in 2026 and Beyond

As we look towards 2026, banks are expected to adopt a more cautious lending stance. Loan-to-value ratios for expatriate first-time buyers in the AED 5 million category are likely to be maintained at around 80%, depending on each borrower’s credit profile and job stability.

Fixed-rate mortgages, particularly those with terms ranging from two to five years, are gaining traction among buyers seeking predictability in payments. While maximum loan tenures remain at 25 years, lenders are increasingly focusing on the sustainability of long-term income rather than simply extending borrowing capacity.

Navigating the path to first-time homeownership in Dubai is possible with careful budgeting, realistic financial assessments, and the ability to manage unforeseen financial challenges. Buyers should shift their focus from just meeting down payment requirements to a holistic understanding of all ownership costs involved.