Navigating the world of mortgages can be difficult, especially if you are a non-US citizen wanting to buy property in the United States. Several considerations come into play, including visa status, residency, and the property’s planned use.
Can non-US citizens obtain a mortgage loan?
Fortunately, special mortgages exist to meet the unique demands of non-US individuals.
In this article, we’ll go over the five primary types of foreign national mortgage loans to help you choose the right one for you. So, whether you’re an expat, a foreign national, or have a certain visa type, understanding these loans will help you navigate the home loan process more smoothly.
Can A Non-U.S. Citizen Get A Mortgage Loan?
The short answer is yes. Non-US nationals can qualify for foreign national mortgages, however the process differs from that of US citizens.
That being said, there are numerous mortgages available for foreigners in the United States, but the best one for you will be determined by a number of variables, including your immigration status, work status, credit history, length of stay, and so on.
5 Different Types Of Foreign National Mortgages
As discussed, various types of mortgages for foreign nationals are tailored specifically to meet the unique needs of individuals from outside the U.S. These loans are designed keeping in mind the peculiarities of their financial profiles, credit histories, and residency statuses.
To aid foreign nationals and non-residents in understanding their options, let’s take a look at the four types of non-U.S. citizen mortgage loans.
Foreign National Conforming Loans
Foreign national conforming loans meet the underwriting guidelines established by Fannie Mae and Freddie Mac.
Fannie and Freddie, often known as GSEs (government-sponsored entities), purchase mortgages in the secondary market from banks and mortgage lenders, freeing up funds for banks and lenders to issue new loans.
They’re known as “conforming loans” since they must meet Fannie and Freddie’s rules. Foreign national applicants will find that conforming loans have the lowest interest rates of any mortgage product on this list.
Conforming loans are suitable for financing a primary home, a second home, or investment properties. Foreign national borrowers must provide documentation of their W2, pay stubs, tax returns, and/or business financials when self-employed.
Conventional Loans For Foreign Nationals
Conventional loans, like conforming loans, usually have a 30-year fixed-rate term. They are not, however, government-backed and do not have to meet Fannie and Freddie’s qualifications. Foreign nationals who qualify for conventional loans usually have a steady income, strong credit, and enough assets to secure borrowing.
FCTD’s most prevalent conventional loans for foreign national applicants are jumbo and non-qualified loans.
Jumbo Mortgage Loans
Jumbo loans begin at $726,201 in basic areas and $1,089,301 in high-cost areas. Jumbo loans are slightly more expensive than Fannie/Freddie loans since they are not guaranteed by the US government.
Non-Qualified Mortgage (NonQM) Loans
Foreign nationals who cannot provide regular W2s and paystubs might use Non-Qualified Mortgages (NonQM) loans to document their income. NonQM lenders offer programs that use bank statements or asset-based schemes to establish income and ability to repay.
Dscr Loans For Foreign National Investors
DSCR (Debt Service Coverage Ratio) loans are another alternative for foreign nationals looking to finance investment properties. Borrowers qualify based on their financial history (if they have credit in the United States), liquidity, and the property’s cash flow, rather than the W2s, pay stubs, and tax returns required for conforming loans.
Bank Portfolio Foreign National Loans
Bank portfolio loans are mortgages granted by banks with the intention of keeping the loans on their books—or in their loan portfolio—until maturity, which could be 5, 7, or 10 years. Banks typically need borrowers to establish a depository connection with them before offering a mortgage.
FCTD has assisted several foreign national borrowers in acquiring U.S. properties through short-term hard money bridge loans before refinancing with a bank portfolio lender.
In California, we see numerous Asian buyers who develop a banking relationship and then use their new US-based bank to refinance their hard money bridge loan.
Hard Money Bridge Loans
As I mentioned in the bank portfolio section above, international investors can utilize a short-term hard money bridge loan to quickly get into acquiring an asset and then refinance into longer-term financing.
FCTD does exclusively hard money lending, so we understand how to get these loans fast for a buyer needing to act fast, or for a borrower needing short-term financing to pull money out of one investment property to use as a down payment on a new property.
Conclusion
The many varieties of foreign national mortgage loans provide foreign investors and end users with numerous financing choices for real estate in the United States.
Conforming loans have the lowest fees and rates, but they also need the most income and financial verification. Jumbo mortgages, NonQM loans, and bank portfolio loans provide flexible programs that a foreign national may require to work around their specific circumstances.
Finally, when institutional finance is unavailable, hard money bridge loans can be a viable alternative until the borrower qualifies for long-term financing.
Also Read: How To Prepare Your Home To Sell
Faqs
Are There Any Restrictions On The Kind Of Properties Foreign Nationals Can Buy With These Loans?
Foreign individuals can use these loans to buy most types of residential properties, including single-family homes, as well as condominiums, and townhouses. However, other types of properties, such as investment properties or those located in specific geographical locations, may be subject to restrictions.
What Are The Normal Loan Terms For Foreign National Mortgages?
The terms of foreign national mortgage loans vary depending on the lender’s regulations and the borrower’s financial circumstances. However, these loans frequently have shorter durations, ranging from 15 to 30 years, and may have flexible interest rates.
Do Foreign People Need To Have Credit History In The United States To Qualify For These Loans?
While having a credit history in the United States can help, foreign nationals may not always be eligible for these loans. Lenders may look at alternative forms of credit history, such as international credit reports or confirmation of regular payments on other obligations.
Are there any additional fees or costs for foreign national mortgage loans?
Yes, foreign nationals may face additional fees and costs when getting these loans, such as higher interest rates, greater down payments, and fees for currency conversion or wire transfers.