Home Financing For Foreign Nationals
Foreign nationals have a serious incentive to buy property in the United States. The U.S. dollar is strong, and home values are rising steadily, making home purchases, either as a residence or investment property, an increasingly-attractive option.
And many foreign buyers are jumping at the opportunity. According to the National Association of REALTORS (p. 10), foreign buyers purchased a total of $153 billion worth of residential property from April 2016 through March 2017, with nearly $75 billion purchased by non-resident foreign buyers. The total number was up from a total of $102 billion, with $43.5 billion by non-residents the previous year.
In the same period for 2011, the total was only $66 billion. As you can see, there has been a striking increase over the past seven years!
So what do all these numbers tell us? They tell us that you don’t have to be an official U.S. citizen to purchase a home in the United States.
They also hint that financing options for foreign nationals are more accessible than you might have thought!
Home Financing for Foreign Nationals
The Two Basic Types of Foreign Nationals
Before you move forward with financing and home purchasing, you need to understand your official status as a foreign national. The United States government, as well as the Federal Housing Administration (FHA) will provide different options depending on your official status.
In general, there are two broad categories of foreign nationals…
Lawful Permanent Resident Alien
If you are a lawful permanent resident alien, you will essentially have the same financing options as most U.S. citizens. You can get financing for a home with as little as 3.5% down, and you may not even need to have a credit rating in the United States to be eligible. To verify your status as a lawful permanent resident alien, you’ll need to bring documents from the Bureau of Citizenship and Immigration Services, which is a section of the Department of Homeland Security. To apply for an FHA mortgage, you will need these documents.
Non-Permanent Resident Alien
As a non-permanent resident alien, you still have many options available. Many foreign nationals who work on assignment in the U.S. will be under this category. To qualify for an FHA-backed mortgage, the property in question will need to be your primary residence and you’ll have to have a verifiable two-year credit history. You’ll also need to produce an Employment Authorization Document that shows you are eligible to work in the U.S. If your authorization will expire in the next year, it is possible for the lender to assume that a continuation of legal status in the U.S. will be granted.
Why is Home Financing Difficult for Foreign Nationals?
Despite the massive dollar amounts in property purchased by non-residents, there are still some important hurdles that foreign nationals need to overcome when seeking a home mortgage in the U.S. Unfortunately, your options may be limited. Without a social security number, U.S. credit score, proof of residence, or verifiable employment history, some financing options may be unavailable.
One significant challenge faced by foreign nationals is the lack of an American credit history. Most of the lending in this country is done with the assistance of credit scores from national organizations, but if you are new to this country, it’s likely you have a very small credit history, if you have a documented history at all.
It is possible, however, to have a credit report constructed from various sets of information, such as payment histories with the utility company, landlords, and other bills. While this type of credit underwriting can cost more (due to the labor of verifying this information) it can be the key to getting an affordable mortgage. Remember, if you are getting a mortgage in this way, it’s essential that you stay on-time and current with all of your bills, including phone, utilities, and rent.
Why is Documentation Required?
You have strong overseas assets, a consistent and sizable income, and a vibrant relationship with the American business community. Anyone can tell that you are a capable borrower that should easily qualify for a loan. So why is so much documentation required?
Much of it has to do with the nature of U.S. lending. In the United States, the vast majority of lending orbits around credit scores, which are used by lenders to measure and manage risk. American borrowers use scores from Equifax, TransUnion, and Experian to qualify for loans, but as a foreign national, you likely don’t have these scores.
This means that lenders have to find alternative means to verify a person’s creditworthiness. To help mitigate risk, the lender may also require a more substantial downpayment.
There is also the hard fact about recovering assets in the event of a default. When a lender gives money to a foreign national, it can be extremely difficult, if not impossible, to recover finances should the account go into default. While foreclosure sales can help, it’s often not enough to recover the cost of the loan. For this reason, banks often require significant down payments or large cash deposits held on reserve within the U.S. before they will proceed.
Despite the challenges, there are many options available, especially when you work with a qualified mortgage professional.
Common Sense Underwriting Helps Foreign Nationals Get an Affordable Home Loan
When you work with our experienced team, you’ll get the full benefit of our common-sense approach to mortgage underwriting. We don’t just look at scores and documents, we look at the full picture to understand your creditworthiness.
When you work with us, we can help you get home financing, even if you have no Social Security number, green card, or visa. In fact, we can help you get financing with no FICO score, and will accept foreign credit reports to help you get approved. All we need is a valid passport, a second form of ID, and income documentation to start the process.
You’ll get reliable financing for loans up to $5 million, and we consider each application on a case-by-case basis.
By applying a common-sense approach to mortgage underwriting, we look beyond the numbers to determine your true creditworthiness. Our personalized, dedicated lending strategy helps you navigate the complexities of financial structures, resulting in high loan amounts for unique properties.
Contact us today for more information!