Are foreign nationals eligible for mortgage loans?

Purchasing a home in the US as a foreign national is no easy feat (particularly if you require financing)—but it’s entirely possible!

Unlike immigrants who are living here and working toward a permanent home in the US, foreign nationals live and work in their home countries, with short stints to the US, usually either for business or vacations purposes. In such cases, the federal requirements for proving your ability to repay a loan are comprehensive and challenging to meet. Why? Because assessing the risk posed by a borrower who lives in another country is still new territory for many mortgage lenders.

With no social security number, no credit score, and no verifiable income in the US, foreign nationals occupy a uniquely challenging category of would-be homebuyers. Not to mention, the pandemic has made the road rockier still, as international travel remains considerably limited. Nonetheless, knowledge is power when it comes to getting that loan!

Foreign national mortgage loans: the basic requirements

The minimum requirements for foreign national loans have changed in the past few years, which means more competitive terms and rates than the ones traditional banks had offered not long ago. In general though, expect to pay a down payment of at least 20-25%, and be asked to foot the bill for at least two appraisals.

Although the rules pertaining to foreign national loans vary, here’s what you’ll typically need in order to fulfill the basic requirements:

• Citizenship, elsewhere. This applies to all borrowers on the loan, which means that no borrower can be a non-permanent resident applying with a foreign national.
• Proof of creditworthiness. In spite of your lack of credit score, you’ll need to demonstrate creditworthiness. Lenders may request a credit reference letter or two from a financial institution in your home country. However, if your down payment is high enough, some lenders may simply require that the funds appear in a US bank before closing time.
• Primary residences are off the table. Since foreign nationals live and work outside the US, purchasing a primary residence is not permitted. Rather, lenders will treat the transaction as an investment property. It’s worth noting that the rates and down payment requirements for investment properties are usually higher than other types of home purchases.
• Proof of income, employment, or assets. The foreign national loan application process usually requires letters from employers and tax consultants who can show a two-year income history, along with proof of income converted to US dollars and translated to English. Other lenders will instead require a minimum of one year’s worth of bank statements in order to analyze your flow of qualifying income.

Bottom line: perhaps the biggest challenge facing foreign nationals who wish to buy property in the US is finding a lender willing to work with them and take on the extra risk. Options might include 1) international banks with US branches and 2) private non-bank and wholesale lenders (such as mortgage brokers) who work with a wide network of lenders to serve a more diverse cross-section of potential borrowers. Finding a specialized mortgage broker may just be the answer you’re looking for. Happy hunting!