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Foreign nationals living and working in the U.S. on a visa often have some trouble buying homes. They usually have to prove in many ways they can afford a mortgage before they get access to credit. The credit industry in the U.S. has stringent rules in place to govern and guard the economy. How can a foreign national buy a home with a mortgage in this day and age?
Whether you have an employment-based visa or an EAD (Employment Authorization Document), we’ll give you options to consider. One of them is an EAD mortgage. This is how it works.
Table of Contents
First, let’s look at what an Employment Authorization Document (EAD) is. Do all visa holders need one? What if you only work for a short time? Here’s what you need to know.
An EAD is issued in the form of a card that is about the same size as a credit card. The EAD contains your personal details, immigration-based information, an EAD number, and the terms and conditions of your employment.
The card also has information about its validity period. Most cards expire within one or two years. You’ll need to renew it within 6 months of its expiration date to allow enough processing time for your new EAD. Note, an EAD will also lose its validity if its visa expires before the EAD itself can expire.
Some visa holders have the privilege to work included in the conditions of their visa. Other visa holders don’t get that privilege automatically included. If it isn’t automatically included, those visa holders need to apply for an EAD.
If you don’t get automatic employment authorization with your visa, you will need an EAD before you may be employed in the U.S. So, employment-based visa holders don’t need an EAD. Certain F1 visa holders also don’t need an EAD if they work less than 20 hours per week on campus, if they work 40 hours per week on campus during recess, or if they work on Curricular Practical Training (CPT) programs.
Visa holders are at the mercy of the USCIS (U.S. Citizenship and Immigration Services). They can apply for the renewal of their visas but the USCIS decides whether they get new visas. It is therefore sometimes hard to plan beyond the validity of your visa. Then you may also need an EAD before you may take up employment, limiting your ability to earn income.
All these factors have a large influence on how you plan your life. So a big question is, can you buy a house in the U.S. when you are a visa holder with an EAD?
There are no laws in the U.S. that prohibit visa holders from buying a house. As long as you and the seller can come to terms, you can own a property. There are some legal processes involved when you buy a house to get the title transferred to your name, but legal professionals can sort that out on your behalf.
It would be easier if you have enough money to buy the house with cash. But most people aren’t in a position to do that and rather opt to buy a house through a mortgage. A mortgage is a form of debt. It has an interest rate and you need to repay the debt over a set period. Mortgages generally require a down payment of a certain percentage of the total value of the home. In some cases, the down payment may be as low as 3.5% of the total value of the home. Only certain people are eligible for these types of mortgages, however.
If you have an EAD, it most probably means you are in the U.S. for reasons other than working. Perhaps you came as a family member of someone who has an employment-based visa. The fact remains, though, you need an EAD before you may work to earn an income here. EADs don’t last forever. They need to be renewed, and it’s also dependent on your visa status.
Can you then get an EAD mortgage to buy a home? Technically, there isn’t something called an EAD mortgage, but for the purpose of this article, we’ll call it such to avoid any confusion.
The good news is you can get a mortgage even if your employment authorization is dependent on an EAD. But you must still convince a lender to approve a mortgage for you first. It’s exactly like applying for a loan, and when you get an offer you must first see if you can afford it.
Let’s look at some mortgage options for people with an EAD.
You’re probably relieved to know you can get a mortgage even if you are a foreign national working on an EAD. The next step is to look at how to get an EAD mortgage.
Here are some options for you to consider.
The first obvious option is to look for mortgages from big banks. This is a good option if you have a great credit score. Big banks can offer low interest rates on their mortgages. But, traditional lenders like banks often don’t want to give credit to foreign nationals. We explain the reasoning behind this in more detail below.
The Federal Housing Administration (FHA) helps stimulate the U.S. housing industry. They help people get approved for mortgages they would not usually get from traditional lenders. An FHA loan requires a down payment of only 3.5%.
Only people who are authorized to work in the U.S. are eligible for FHA loans. So you are eligible for an FHA loan as long as you have a valid visa and EAD. Citizens and people with employment-based visas are automatically eligible for FHA loans.
Banks don’t typically like to lend to visa holders. They are afraid that visa holders will leave the U.S. before they have settled their debt. Visa holders sometimes don’t have a credit report in the U.S. and that makes it hard for the banks to judge someone’s ability to repay the loan. Visa holders often also don’t have the right paperwork to qualify for loans. All these reasons make banks wary of lending to visa holders.
Clearly, it could be challenging to get a mortgage on an EAD. Having a proper down payment will definitely increase your chances. Not only is it required, but being able to give cash upfront shows some credibility to the lender. What can you do if you don’t have enough money to make a proper down payment but want to buy the house of your dreams?
You can consider getting a personal loan from Stilt! Stilt offers personal loans for whatever you need—even for a down payment on an EAD mortgage. You can borrow up to $25,000 at an APR that currently starts at 7.99%. Even internationals with the right paperwork are eligible for personal loans with Stilt.
This is how it works.
Apply online for the loan amount you need. Submit your best possible application to get the best possible loan offer.
You’ll receive feedback within 24 hours of your application. Please supply any additional required information. Soon you’ll get your loan offer and a promissory note. Sign and return that note if you want to accept the loan.
The loan will be disbursed into your U.S. bank account within 2-3 business days. Set up your repayment option online. An autopay option will help you pay on time every month.
It’s that simple! Now go make that down payment and buy the house you want.
Foreign nationals often struggle to get mortgages in the U.S., but people on an EAD actually have some good options. One of the biggest things you’ll need to have in place is a down payment.
Don’t let a down payment stop you from buying a home if you don’t have the cash available. You can take out a personal loan with Stilt today to make your down payment and buy the house of your dreams.
NOTE: U.S. workers are being drastically affected by the current outbreak of COVID-19. To skip to the section of this...