Getting a Mortgage for Non-U.S. Citizens

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Getting a Mortgage for Non-U.S. Citizens

One of the pillars of the American dream for many foreign-born people residing in the country is property ownership. However, some non-US nationals believe they will never be able to get a mortgage, which puts a significant obstacle in their way.

However, resident foreign buyers—those in the country as recent immigrants or those with visas for work, school, or other reasons—are more likely to buy a house with a mortgage, according the National Association of Realtors (NAR). The NAR said in its 2020 report, “Profile of International Activity in U.S. Residential Real Estate,” that 62% of resident foreign purchasers obtained mortgage financing from American sources.

Undoubtedly, if you are not a citizen, purchasing a property might be difficult. But as the NAR research demonstrates, it’s quite common for lenders to provide credit to non-citizens, including individuals who have no prior credit history in the country.

Even non-citizens who are legally residing abroad may be eligible for government-insured mortgages, which have the benefit of requiring low down payments. These mortgages must be accompanied by the necessary documentation, such as a valid social security number, green card, and two years of verifiable income. Here is what non-citizens need to know in order to get approved for a house loan in the United States.

Key Takeaways

  • Non-citizens may own a house in the United States, although it requires some additional effort.
  • For a foreigner, getting a mortgage might be the most difficult process; this will partially rely on their residence status.
  • Foreign nationals with a green card or non-permanent residents with a valid work visa often have an easier time qualifying for a U.S. house loan.
  • If a non-citizen meets certain requirements, the Federal Housing Administration (FHA) will provide them a mortgage with the same terms as normal purchasers.
  • In order to construct a U.S. credit report history, it is necessary to develop contacts with institutions that are present in the country.
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Home Ownership and Residency Status

One thing to bear in mind is that one’s residence status has a significant impact on the criteria for obtaining a house loan. The majority of debtors typically belong to one of the following categories:

  • green card holders who are residents for life (Form I-551)
  • non-permanent occupants who possess a working visa (E1, E2, H1B, H2A, H2B, H3, L1, and G1-G4)
  • “Foreign nationals” who don’t live in the United States on a regular basis

Generally, it’s much easier to get a loan if you fall into one of the first two categories. That’s because mortgage giants Fannie Mae and Freddie Mac—which buy the majority of home loans on the secondary market—have pretty much the same guidelines for green card and work visa holders as anyone else.

The lender must confirm the applicant’s legal residence, which is the key restriction. However, since foreigners don’t meet Fannie or Freddie requirements, lenders must continue to hold onto these loans. This method involves the bank taking on more risk, therefore a sizable down payment is more likely to be needed.

FHA Loans

Remember that another option for non-American citizens is the Federal Housing Administration (FHA), which has comparatively low credit score standards and needs a down payment as low as 3.5%. If the borrower provides documentation of legal permanent residence in the United States, it gives the same loan conditions that it does to other purchasers.

You must utilize the property as your principal residence and provide a valid Social Security number and Employment Authorization Document if you’re a non-permanent resident looking for an FHA mortgage. This implies that non-residents who just intend to sometimes use the residence are not eligible for financing from the agency. A mortgage calculator is a useful tool for creating a monthly payment budget.

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Documentation Hurdles

Demonstrating to the lender that you meet its risk profile is the key barrier to obtaining any mortgage. Giving your job history, credit history, and evidence of income are required. Because the majority of Americans have a credit history in the country and a backlog of W-2 forms and tax returns that detail their earnings over the years, this procedure is quite simple for them.

But for someone who hasn’t been in the nation for very long or doesn’t reside in the U.S. for the most of the time, things may be a bit more difficult. For instance, without a credit report from one of the three main bureaus—Equifax, TransUnion, or Experian—how can you demonstrate your creditworthiness?

If you already work with a foreign bank that has locations in the United States, you are at a distinct advantage. It will already have a record of your money, so even without an American credit report, it could be more likely to place a wager on you. Fortunately, big, international banks dominate the mortgage market, so there’s a strong possibility you’ve already had an account with one of them.

Additionally, as an alternative to using the three main U.S. credit agencies, some lenders could be ready to acquire credit reports from other countries. According to Experian, this may be a costly procedure and is often only open to citizens of Canada, the United Kingdom, Ireland, Australia, India, Brazil, Mexico, and another 14 Western European nations.

You should consider FHA loans for another reason if you don’t have a lot of experience working in the United States. If you don’t have U.S. tax records, the FHA will accept proof of foreign work.

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Lenders to Consider

Finding lenders that commonly deal with non-U.S. citizens can save you a lot of trouble since some lenders may have borrowers jump through more hoops than others to acquire a loan. The best place to start is definitely if you’ve done business with an international bank that operates in this country.

Another option are credit unions. These nonprofit financial service providers often give rates that are quite competitive, and depending on where they are located, they could have financing programs specifically for those with green cards and visas.

Can I Get a Mortgage If I’m Not a U.S. Citizen?

Yes, you could be qualified for a mortgage in the US if you’re a legal permanent resident and satisfy certain standards.

Should I Use an International Bank for My Mortgage?

If you wish to purchase a house in the United States but reside overseas, it could be simpler to get a home loan through your foreign lender if they have operations in North America rather than a local bank in the United States.

Can I Qualify for an FHA Loan?

Like conventional mortgages, FHA-backed loans are accessible to non-US nationals who fulfill certain criteria.

The Bottom Line

Non-citizens may get conventional and FHA home loans from many banks and mortgage firms if they can demonstrate their domicile, employment history, and financial stability. Lenders that often deal with this group have a tendency to be more lenient when it comes to the required documents.

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