Funding a Turkish property with US home equity: why a lira mortgage rarely pays and what works instead

Turkish banks lend in lira

Some Turkish banks do offer home loans to foreigners, including buyers who do not live in Turkey. Those loans are in Turkish lira. Private individuals resident in Turkey have not been allowed to borrow in foreign currency since 2009, and a dollar mortgage from a Turkish bank is therefore not a normal consumer product.

That is the biggest difference from the eurozone countries Americans often compare Turkey with. In Spain or Portugal you borrow in the currency the property is priced in. In Turkey your loan sits in a currency that is neither your income nor, usually, the currency the price was negotiated in, and that affects both the rate and the risk.

The rate, strictly as orientation

The Turkish central bank has held its policy rate at 37 percent since a cut in January 2026, most recently at its meeting of September 10, 2026, with September inflation at 29.7 percent. The next decision falls on October 22, 2026; most forecasters lean toward a small cut to 36 percent, Goldman Sachs expects a hold. Home loans sit above the policy rate: market sources put 2026 rates for foreign buyers at around 40 percent a year, with 30 to 50 percent down and terms of 10 to 15 years rather than the 30 you know from home.

Treat those figures as a picture of the market, not an offer. What a bank offers depends on your income, your commitments, the property and that bank's policy at the time. But set them against the 7.40 percent that Freddie Mac reported for a 30-year fixed US mortgage on October 15, 2026, and the gap is so wide that the monthly payment makes no sense for most buyers. A buyer who has the deposit a Turkish bank asks for tends to ask why they would borrow the rest at that price.

The currency risk that no rate captures

You earn in dollars and repay in lira. When the rate moves, the dollar cost of every payment moves with it, and it keeps doing so for the whole term. The lira has a long record of weakening: the central bank's indicative selling rate went from 41.84 lira to the dollar on October 15, 2025 to 49.42 a year later, a loss of about 18 percent in twelve months, even with the policy rate above 35 percent throughout.

For someone with dollar income a weaker lira makes the repayments cheaper, but the direction cannot be predicted: against the high interest rate stands a currency that can also move the other way. The same applies to the property itself. The price is often discussed in dollars or euros, while the official value in the deed is in lira. Keep the two apart when you run your numbers.

What US buyers do in practice

Most Americans in Turkey pay without a Turkish mortgage. The three routes we see most often:

• Savings. Money that is already available. Simple and interest-free, but it is capital that is no longer liquid.
• Borrowing against your US home. A home equity line of credit, a home equity loan or a cash-out refinance. Your US home is the collateral, the rate is a US rate, and it is a full underwriting decision with income, credit score and appraisal. US lenders secure loans on US property, so the Turkish home never enters the picture; you arrive in Turkey as a cash buyer.
• A combination. Savings for the closing costs and part of the price, US borrowing for the rest.

Two IRS points belong in this decision. First, interest on home equity debt is deductible only when the money buys, builds or substantially improves the home that secures the loan; a HELOC spent on a house in Turkey does not qualify, and the 2025 tax law made that rule permanent rather than letting it expire. Second, the equity you draw is not income, so there is no tax on the draw itself. The risk sits at home: if the payments are not kept up, it is the US home that is at stake. People sometimes also look at retirement accounts; an early IRA or 401(k) withdrawal before 59½ normally costs income tax plus a 10 percent penalty, the USD 10,000 first-time-homebuyer exception applies to IRAs only, and it is far from clear that a foreign vacation home would qualify. Take that question to a CPA before you touch it.

Developer payment plans

On new builds, developers sometimes offer payment in instalments. That can look attractive, but it is not a bank mortgage and the terms vary widely. Have the terms, the building guarantees and the moment ownership passes into your name reviewed by a Turkish attorney before you pay anything.

Moving the money

There is no US limit on sending your own money abroad; your bank will ask about the purpose and source of a large wire, and transactions above USD 10,000 are routinely reported. On the Turkish side the dollars must be sold to a Turkish bank, which issues the currency purchase certificate the land registry requires, and the resulting lira amount becomes the declared price. Plan the conversion: on a six-figure sum the spread between a bank's rate and the interbank rate is often the largest cost after the title fee. The Turkish bank account you open is a foreign account for FBAR purposes once your foreign accounts together exceed USD 10,000, and Turkish banks report US holders under FATCA.

What this means for your plan

Start with the amount you can raise without a Turkish loan: savings plus any room on your US home. Deduct the closing costs, including the title deed fee of 4 percent of the declared value. Guides describe that as split equally between buyer and seller, 2 percent each, but in practice the buyer often pays it all; budget the full 4 percent to be safe, and remember that the declared value cannot be below the municipal value. What is left is your realistic search range.

Then allow for the running costs: property tax, insurance, maintenance, possibly a service charge, all in lira and all rising with Turkish inflation. Owning a vacation home abroad does not by itself go on a US tax return; renting it out does, as our rental guide explains.

Questions US buyers ask

Further reading

• Buying a vacation home in Turkey as a US resident
• Residence permit and citizenship through Turkish property
• Start a personal mortgage scan