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How Can L-1 Visa Holders Get a Mortgage in the U.S.
International companies with offices in the United States commonly send foreign workers on the company’s behalf to the United States. Once their employees are in the US, these foreigners receive an L1 visa document, which is used to classify foreigners from another company as legal workers in the US.
After having lived in the United States for quite some time, many people decide they want to stay in the country and establish roots in their new home. The first step to doing this is by buying a home to live in — but can L1 visa holders actually get a mortgage loan in the US? How does it work? Is it even possible for a nonresident to get a US mortgage?
In order to answer these two questions and give you further insight on how to do get a mortgage on an L-1 visa, we’ve set up this article. After reading this article, you’ll know what you need to know to get a mortgage loan in the US while on an L1 visa.
Can I get a mortgage loan on an L1 visa?
Yes, it is possible to get a mortgage on an L1 visa. Just because you are not a citizen of the US, does not automatically mean that you can’t apply for a loan. Indeed, you will face several challenges on your way to buying a home that will make the process a headache. However, no one said it was impossible! Other then having the correct documentation, if you follow procedures correctly, nothing should stand in the way of getting a mortgage loan in the US.
How to get a mortgage loan on an L1 Visa
The requirements for getting a loan vary based on your residency status and the kind of visa you are holding. For example, it is much easier for someone holding an L1 visa to get a mortgage loan than it is for other visa holders.
The documentation needed depends on the type, as well as the total amount of the loan you are requesting.
The 4 Things You Need to Get a Mortgage Loan on an L1 Visa
Here’s what you need:
When you decide to apply for a mortgage loan in the US, you need to have at least 2 years of work history in the US. You will have to show your employment history to the lender for you to qualify for the mortgage loan on an L1 visa.
Since you are on an L1 visa, you have probably worked some duration of time in another country for the same company, which will be taken into consideration during your loan application. This is good news!
Aside from your employment history, you need to be able to show 2-year credit history in the US. If you are lucky, your bank in your home country is partnered up with your US bank, which will make this part easier. If your bank is partnered up (as is the case for many Canadian banks) the bank you are getting a mortgage loan from will consider your credit history from outside of the US.
For identification and visa verification purposes, the financial institution will need your passport.
Individual Tax Identification Number
As a person in the US on an L1 visa, you do not have residency status. When you enter the US under an immigration status and work and pay taxes on earnings, you will need to have an ITIN (Individual Tax Identification Number). With the ITIN, you can show the lender your employment history, which the lender will use to determine whether or not your income will continue for at least another three years.
Proof of Assets
You need to prove that you have sufficient assets to cover the down payment and closing costs of the loan. Even if you don’t have assets in the United States, you can still qualify. You have to show that your foreign funds belong to you and that they can be transferred to a US bank account prior to closing. Usually, the bank hires a third party to get foreign bank statements and other documents translated into English.
How to Use a Personal Loan to Pay the Down Payment on Your Mortage
One of the most important considerations when buying a home is the down payment. Most realtors will suggest putting at least 20% down of to total cost of your mortgage, which, in the long run, has benefits for you as the buyer:
- Smaller overall mortgage amount
- Smaller monthly payments for the duration of your mortgage
- Potentially tens of thousands of dollars in savings
So, if you wanted to buy a $200,000 home, you’d ideally put down $20,000 toward the cost of that home upfront.
Many people, though, don’t have savings enough to put down 20% or even 10% when buying a home. Luckily, homebuyers can work around this problem by using a personal loan to cover the cost of their down payments.
So, for example, let’s say you’re buying that $200,000 dollar house mentioned above and let’s say your mortgage is for 40 years (or 480 months) at 3% interest. Including monthly interest, your monthly payment would be $716. Let’s see how that breaks down:
$716 x 480 = $343,665
But, if you were to pay $20,000 down (10%) and had a mortgage of only $180,000 at the same rate and for the same length, your monthly payment would be only $644. That breaks down to:
$644 x 480 = $309,299
That’s a savings of $34,366! But what will the personal loan used for the down payment cost you? Well, let’s say the personal loan for $20,000 came with an 8% interest rate and was for 36 months. The monthly payment would come out to about $627 and the breakdown would be:
$627 x 36 = $22,562
So, on a $20k loan at 8% for 36 months, you’d pay $2,562 in interest, which, when subtracted from the $34,366, nets you $31,804 in savings over the lifetime of your mortgage.
How to Get a Personal Loan for a Mortgage Down Payment as an L1 Visa Holder
As an L1 visa holder in the United States, you are likely already accustomed to navigating the complexities of international employment and residency status. When it comes to homeownership, the process of securing a mortgage can introduce additional challenges, particularly when considering a personal loan for the down payment. Here’s a guide to understanding the nuances and steps involved in leveraging personal loans for this purpose.
Step 1: Verify Your Residency Status with Lenders
Begin by ensuring potential lenders are comfortable with your L1 visa status. This visa allows you to work in the U.S. for a branch of your current employer or a parent/subsidiary, and it can typically be renewed up to a total of seven years for L1A and five years for L1B holders. Since you are not a permanent resident, you’ll need to find a lender who understands your residency status and is willing to work with you.
Step 2: Assess Your Financial Position
As with any loan, lenders will look at your debt-to-income ratio (DTI) and credit score. On an L1 visa, you might face more stringent DTI requirements or higher interest rates. Ensure your financial house is in order by maintaining a solid credit history and a stable job with a reliable income, which will help to reassure lenders of your ability to repay the loan.
Step 3: Establish or Strengthen Your U.S. Credit History
Credit history can be a hurdle for L1 visa holders, especially if you’re new to the country. Begin establishing a credit history as soon as possible by obtaining a U.S. credit card, paying utilities, or securing a small credit-building loan. Consistently make timely payments to bolster your credit score.
Step 4: Gather Essential Documentation
You will need to provide documentation such as your L1 visa, proof of legal U.S. residency, employment authorization, and verification of employment from your U.S. employer. Additionally, prepare to present tax returns, pay stubs, bank statements, and any assets or liabilities you hold. This information will demonstrate to lenders your financial reliability.
Step 5: Understand the Loan Specifications
When selecting a personal loan, aim for one without pre-payment penalties. This gives you the flexibility to pay off the loan early without incurring extra costs, which can be particularly advantageous if your visa status changes or you choose to return to your home country.
Step 6: Consider the Impact on Your Mortgage Approval
Be mindful of how a personal loan for your down payment will affect your mortgage application. The additional debt could increase your DTI ratio, potentially affecting your mortgage terms or approval. Engage with mortgage lenders early to ensure that the use of a personal loan for your down payment is not a disqualifying factor.
Step 7: Execute the Loan Application
Once you have found a suitable lender and fully understand the terms, apply for the personal loan. Ensure that all information is accurately portrayed and that you are clear on the repayment schedule.
Step 8: Plan for the Long Term
With the fluid nature of visa statuses, it’s crucial to have a long-term financial plan. Consider what will happen if your L1 visa is not extended or if you transition to a different vis
Once all is said and done…
After providing all of the above documentation and having your loan approved, you have the same access to mortgage credits as a United States citizen does. This means you are eligible for the same credit rates and down payments as US citizens. However, if it is a Jumbo loan, you need to consider making a higher down payment.
As you can see, nothing can stand in your way of getting a mortgage loan in the United States with an L1 visa. The only obstacle is to prove to the lender that you fit their risk profile and are not a financial threat to the organization. If you follow the 4 steps outlined above have mentioned above, you will get your mortgage loan in no time!
We hope this article has helped you to figure out how to get a mortgage loan in the United States with an L1 visa. If you have any further questions or experiences you want to share about acquiring a loan, please feel free to contact us. We wish you the best of luck during your journey on getting a mortgage loan and building your perfect home in the US!