Home Loans for Foreign Nationals
Even as a foreign national, there may be a time when you will want to settle down, have your own home – and stop living off on rent. Still, if you were not born in the United States, there is a good chance that you will not be approved by the traditional bank – and there goes your plan to settle down.
There are a few options for you to take out a home loan. However, you just need to know where to look. With this article, we hope we will be able to provide some insight on the matter.
What Is a Foreign National
A foreign national is a person that is living in a particular host country but is not a citizen. Different countries will have their own definition of a foreign national – but in the United States, a foreign national is someone that:
- Is a citizen of a different country
- Was born outside of the U.S.
- Has not made an application to become a U.S. citizen through naturalization
These people generally come in the U.S. on a short-term work visa, or on any kind of visa that will have to be renewed once every few years.
Can Foreign Nationals Get Home Loans?
Many foreign nationals live with the impression that they cannot get a home loan. In a way, this is neither true nor false. Granted, you may not be able to get a loan from a traditional bank, as they have some fairly strict rules. In the event that your loan is approved, it is very likely that you will have to wait a long time until you can get your money.
Thankfully, in the United States, there are many lenders that are willing to give you a home loan – as long as you can prove that you wish to remain in the United States and that you have the means necessary to build a life here.
Home Loans for Foreign Nationals
Home loans for foreign nationals represent a particular kind of loan that allows non-citizens to buy property in the U.S. – no matter if it is for living or investing in it. This type of loan has some requirements that are slightly different from those of a traditional lender – and is generally given much faster. In most cases, regardless of the borrower, such an alternative lender will have your funds ready in 2-3 days after you made your request.
Considering that home loans for foreigners are pretty much given on a “risk factor,” you may expect interest rates that are fairly high. Most of these loans do not have collateral, nor do they have any kind of security – which is why lenders grab that security in any way that they can.
There are some general criteria that you will have to follow if you want to take out a home loan for foreign national – but none of those requirements are really so complicated. In fact, they are much simpler than you might think.
First things first, if you have obtained permanent residency, you will need your social security green card and your green card number. With the right lender, the application process will work just as smoothly as it would with your average U.S. citizen.
If you haven’t obtained permanent residency, don’t fret – you may still get a loan. You may not have a green card, but you still have your social security number. In this case, you may become eligible for a loan if you produce a work permit – also known as EAD (Employment Authorization Document). The lender must be able to verify that you have the possibility of working and living in the United States for the next three years at least.
Home Loan Options for Foreign Nationals
If you are looking for a home loan as a foreign national, then there are several options for you. Each of them will have its own rates, which is why you are advised to do some proper balancing of their features before you settle. Here are the top choices:
BBVA Compass, or also simply referred to as “Compass Bank,” has a few good options for foreign nationals. Among these options is the Corporate Foreign National Mortgage, which can be given to any foreign citizen that is under the employment of a U.S. company.
Aside from that, you may go for their Construction and Renovation/Permanent Financing loan. You will be provided a singular application, the loan, and the closing, no matter if you go for the construction loan or a permanent one.
North Star Funding
North Star Funding is quite convenient for foreign nationals, as it permits for an LTV up to 90% – which also means only a 10% down payment on loan amounts that go as high as $5,000,000.
You may also go for $10,000.000, but in this case, you would have to go for a lower LTV. The exact percentage would depend on the sum that you have been approved for.
Citadel Servicing has no income verification program, which is why it is such a good option for foreign nationals looking for a house in the States. They allow for a maximum 75% LTV, which means that you will have to come up with a 75% down payment. You may also get a loan that is as high as $3,000,000.
What other aspects make this an attractive option for foreign nationals? Well, in this scenario, there aren’t any reserves required, no penalties for paying early, and a multitude of interest-only options available.
Impac Mortgage is mostly popular among foreign nationals for their iQM Foreign National Mortgage Program. It does not require your FICO score, so you can borrow even if you have no credit. However, if you do have a FICO score, an ideal would be 620 (although you will not necessarily be rejected simply because you have a lower credit score).
There are multiple options for which you may go with this lender, not just that one. To make sure that you only choose the best one, you may want to review the features of each program. This way, you will know for certain that it will suit your needs.
If you are looking for home loans for foreign nationals that are slightly higher than the average loan of the kind, then you may want to go for Amerifund. Their minimum loan amount is $500,000 – and can go all the way up to $2,000,000. This is a good option if you are looking to buy a fancier home.
Bear in mind that with a loan this big, you should expect at least a 300% down payment – which means the LTV will be somewhere around 70%. You might also want to make sure that the state you are in is one in which Amerifund Activates.
Acc Mortgage also has a program with home loans for foreign nationals that is very attractive for those that do not want to show (or can’t show) proof of their income. The program provides financing of up to 75%, which means that 25% will be up to you to bring.
With this program, you will not have to provide any proof of income, nor will you have to prove that you are employed. All you need is a credit score of at least 640 (if you have a credit score), an unexpired visa, and a copy of your passport. With this loan, you may get a loan up to $2,000,000.
These lenders are only a select few of the multitude that can help you with a loan. There are many more from which you can choose, all with different rates and different loan amounts. You just have to do your “shopping carefully,” and then take the right steps to get pre-approved for your mortgage. If you work with the right people, it should not be difficult.
Why U.S. Banks Don’t Like to Lend to Foreign Nationals
As a foreign national that has been living in the U.S. for quite some time, you might be thinking at this point: why shouldn’t I be able to get a loan and buy a house? I’m planning to stay, aren’t I? Well, it’s not that simple – mostly because banks can’t simply take your word for it.
This is why we go to alternative lenders – because banks will not give us what we want. And as much as it may be getting on our nerves, there are a few good reasons why banks don’t lend to non-us citizens:
Foreign Nationals Don’t Have Credit History
In the United States, banks trust what they see. They see a report from people borrowing and making their payments on time – and it’s safe for them to assume that they will probably make their payments on time here as well.
However, when it comes to foreign nationals, they generally have nothing to go on. No credit score in the United States – which means they cannot be sure whether they are trustworthy or not. And because they do not want to take that risk, they don’t lend.
Foreign Nationals Can Leave at Any Point
In the end, a foreign national is nothing more than this: a person that came in the country to work – and who may go back to their home country at some point. It does not matter if they do it because their visa expired or because they got homesick. The truth is that they can leave at any time – and the loan will be defaulted on. It is also very complicated to track a person and get their money back after they have left the country, which is why banks simply prefer not to take the risk.
Non-US Citizens Don’t Have Co-Signers
In most cases, as a measure of security, banks ask for a co-signer when taking out a loan. These are the people that would “take the fall” for you in the event that you default on the loan. And in most cases, this co-signer will have to be from the United States – particularly if you are a foreign national.
The problem here is that once foreigners come to the U.S. to work, they do not know many American citizens – at least none that are willing to lay down their credit score for them. In their absence, foreigners will try to apply without a co-signer – which is usually why their request gets denied.
Foreign Nationals Lack the Paperwork
There are many forms and pre-approval documents that are needed for a foreigner to be approved a loan – and, most of the times, they don’t have these documents. They need proof of long-term employment, authorizations – and many more – proof that can’t be available to every foreigner. This is why banks tend to close the door on these borrowers
Private Home Loans for Foreign Nationals
If you are looking to buy a house, your best option would be to get a loan. Since private home loans are the most convenient option for foreigners, you might want to choose one that suits your budget and possibilities the best. Each loan is different, so you might want to choose wisely.
When determining whether you are eligible for a loan or not, a lender will usually look at the following aspects:
- Your monthly income
- Your credit history
- Your credit score
- Your employment status
- Your residency status
- Your job history
How much they take each aspect into account is debatable, as each lender will be different. You just have to look for the one that blends around your needs the most. Once you find the best lender, apply right away.
As a foreign national, it might seem difficult to get a home loan – but even so, it is not impossible. You just have to know where to look. Once you find the right lender, you should be able to buy your perfect home and finally live the dream.