I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank GogolCan an Illegal Immigrant Buy a House?
Updated on October 12, 2023
Written by
Written by
Reviewed by
Rohit Mittal
Reviewed by
Rohit Mittal
Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.
See all posts Rohit Mittal
At a Glance: Undocumented immigrants can buy houses in the United States, despite legal and financial obstacles. Around 31 percent of the undocumented population in the US, or over 3.4 million people, owned homes in 2014. Undocumented immigrants can use an Individual Tax Identification Number (ITIN) mortgage, which allows them to pay taxes and qualify for a home loan. They can apply for an ITIN number, save for a down payment, gather necessary documentation, and apply for an ITIN mortgage. While ITIN mortgages typically require a higher down payment and may have higher interest rates, homeownership is a real possibility for undocumented workers.
For many, purchasing a home is a big part of the American dream. It can lead to prosperity, stability, and the increased ability to pass on what you worked for to the next generation. It may come as a surprise, though, that many undocumented immigrants hope this dream becomes their reality, too.
Read on to learn more, or check out our video Can an Illegal Immigrant Buy a House?
Can Illegal Immigrants Buy Houses in the U.S.
While there are legal and financial obstacles to overcome, undocumented immigrants can, in fact, buy a house in the United States. According to the Migration Policy Institute, in 2014 there were more than 3.4 million undocumented immigrants who owned homes. That’s 31 percent, or nearly a third, of the US undocumented population.
They pay taxes on these homes as well. Despite rhetoric about undocumented immigrants taking benefits but not paying taxes, the data shows that this is simply not the case. The Institute on Taxation and Economic policy analyzed the above-mentioned data on undocumented property ownership and estimated that undocumented immigrants had contributed as much as $3.6 billion in property taxes alone.
How is it Possible for Undocumented Immigrants to Buy Houses?
There is no law that says non-US residents cannot own property in the United States. In fact, foreign investors or businessmen and women frequently own homes or property in the US, just as their US equivalents can also own property in other countries.
Purchasing a home in any country require significant resources, though–resources that undocumented immigrants usually don’t have access too, but that doesn’t mean illegal immigrants can’t own property in the U.S.
While some undocumented immigrants might be able to simply purchase a home with cash, most use a little-known investment tool known as an ITIN mortgage. An ITIN is an individual tax identification number and was created as an alternative to a Social Security Number so that foreign nationals who owned businesses or property in the US could pay taxes on those assets. But undocumented immigrants can also acquire an ITIN and are then able to open bank accounts, pay income tax—and qualify for a mortgage on a home.
Below, we’ll detail the typical process for an undocumented immigrant to qualify for a mortgage and start on the path toward homeownership. There are legal and financial obstacles to overcome but homeownership for undocumented workers is certainly a real possibility.
How Can an Illegal Immigrant Buy a House?
Below, we’ve listed the key steps an undocumented immigrant might take to purchase a home in the United States.
Apply for an ITIN Number
An ITIN is similar to a Social Security Number, including its format, but can only be used to pay taxes. The ITIN number doesn’t allow the bearer to claim Social Security and it cannot be used for identification outside the tax system.
To apply for an ITIN, download and fill out Form W-7 or “Application for IRS Individual Taxpayer Identification Number.” This file is easily downloaded from the IRS website, and there is also a version of the form in Spanish. The applicant will need to give his or her name, address, country of citizenship, date of birth, place of birth and signature. After all that is filled out, the form should be sent directly to the IRS center for ITIN Operation in Austin, Texas with a completed tax return. Within six weeks, the applicant should receive their 9-digit ITIN.
Save for a Down Payment and Get Documentation Ready
Once you have an ITIN number you can apply for ITIN loans. These loans can be accessed by undocumented immigrants and are available from companies and banks across the US.
Because of the extra risk involved, most ITIN loans will require that you make a higher-than-average down payment in cash. The down payment will often be between 15 and 20 percent and could go as high as 30 percent. In addition, the borrower will also probably be asked to provide some additional documentation, including the following:
- Pay stubs for the last month or other proof of income.
- A documented employment history in the same position for the last two years.
- Two years of tax returns with the same ITIN.
Apply for an ITIN Mortgage
ITIN mortgages are lesser-known lending practices that many undocumented immigrants use to purchase a home. In practical terms, an ITIN mortgage is almost identical to a standard mortgage. You agree to take on the loan at a certain rate of interest and make monthly payments. The loan is against the value of your home, which means that the lender has the ability to repossess it if you fail to make payments.
Some home loan companies offer ITIN mortgages throughout the US. You can find some of these companies pretty easily by searching the internet.
Another good option might be a smaller, local bank or credit union. Local banks and credit unions often have more competitive rates than their larger corporate cousins. Some credit unions might also have lending programs specifically tailored to immigrant borrowers.
Generally, an ITIN mortgage will require a 20 percent down payment and will be a 30-year fixed-rate mortgage. There will be no penalties for paying off the loan early. While a fixed-rate mortgage means that the rate won’t adjust over the lifetime of the loan, unfortunately, the interest rates for ITIN mortgages are often higher than those for more typical mortgages. ITIN loans often carry with them a rate of 7 or 8 percent—nearly double a more typical 30-year mortgage rate of 4 percent.
Read More
Final Thoughts
Homeownership has many benefits—benefits that can be made accessible to undocumented immigrants as well. It won’t necessarily be easy, and there are legal and financial obstacles to overcome. But homeownership helps promote stability and builds wealth over time. In addition, it is one of the ways undocumented immigrants contribute to the budget and economy of their communities.
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.