How Can Australians Buy a House in USA?

Did you ever ask yourself can Australian buy house in America? If that’s the case, know that you’re not alone. The answer is YES! Australians spend around 2 billion dollars each year purchasing properties in the US. They represent around 4% of the foreign real estate investor market and are an essential part of this 50 billion dollars-a-year industry. 

In this article, we’ll discuss the main things you should know in order to buy US real estate as an Australian citizen. We’ll cover the main reasons behind Australians buying US properties, talk a bit about the Australian communities in the US, and discuss the most popular types of US mortgages for Australian citizens.

Let’s start!

Can an Australian Buy a House in America?

The answer is absolutely YES! In fact, Australians can buy property in the USA without a Visa, Green Card, or even US credit score or history. 

According to the latest statistics on foreign nationals investing in US real estate, Australian buyers represent around 4% of all international real estate investors. With international investment in US real estate being a 50-billion-dollar-per-year industry, these 4% roughly translate to around 2 billion dollars a year. 

So, Australians can not only buy property in the US but are doing it to the tune of 2 billion dollars annually. 

Australian Communities in the US

According to the latest data, around 100,000 Australians live in the US. Their tightly-knit communities are spread out all over the country, with the most popular places being:

• Los Angeles
• San Francisco
• Washington D.C. 
• New York

Although not a lot of Aussies move to the US permanently, many visit the States as tourists. The most recent data shows that in 2022 alone, more than 600,000 Australians visited the US, while in 2023, the number of Australian tourists was around 550,000. Additionally, around 4,000 Australian students move to the US each year to pursue a degree in higher education. 

Why Buy US Real Estate From Australia? Top 3 Reasons

There are many reasons why Australians buy property in the US. Fortunately, for all of us, we can boil them down to the following:

Buying Investment Property 

Many Australian investors buy US property because it’s cheaper and can get higher returns. For example, an average house in Australia costs more than 600,000 US dollars and can generate around $1,500 in rent per month. 

On the other hand, in the US, the average cost for a single-family home is around $450,000 and can generate around $2,000 in monthly rent (it can generate a lot more, but let’s keep the numbers on the low side for this example). What do these numbers mean for a long-term investor? Let’s take a look:

• In Australia, a property worth $600,000 will generate $180,000 in 10 years
• In the US, a property worth $450,000 will generate $240,000  in 10 years

Now, obviously, we’re not accounting for inflation or potential changes in both countries’ real estate markets and the global economy, which could happen. Instead, we just want to emphasize that with the current market conditions (as of August 2024), the numbers in the US are much better, and not just for long-term investments in single-family properties.

Investing in multi-family properties, short-term rentals, looking for fix and flips, or even ground-up construction can also lead to higher returns in the US than in Australia. The best part is that no matter what sort of US investment property you’re looking to buy, you’ll always be able to find a tailored financing solution for your specific situation. And, because of the good relationships between these two countries, Australians don’t need a Visa, Green Card, or a US credit score to get in on the deal, find a customized mortgage loan, and invest in US real estate.

Buying a Primary Residence

The data about how many Australians move to the US each year is inconclusive. The best estimates show that between 500 and 3,000 Australians leave their native country and move to America on a permanent basis each year. A lot more visit the US for different reasons, including education, work, or tourism, but that’s a different story. 

Now, Australians who permanently move to the US want to make that transition as smooth as possible. One of the best things that can help with that is buying a primary residence. Having a place to call your own and not wasting money on rent is an excellent way to secure your future in the US. Luckily for you, even if you don’t have the cash on hand to buy US real estate as an Australian, there are many financing options available to Australian citizens. We’ll discuss the best US mortgage types for Australian citizens in more detail below, but for now, let’s move on to the 3rd leading reason why Australians buy US property.

Buying a Vacation Property

More than 600,000 Australians visit the US each year as tourists. Some don’t want to stay in a Hotel or Airbnb. Instead, they want to own a vacation home in the US. The best part of having a vacation home in the US is that it can easily be turned into a short-term rental. The property can generate passive income, and if the numbers are good, it can end up paying for itself in the long run. 

How Can Australian Buy a House in America?

There are two main ways of buying property in USA from Australia:

• With an international mortgage loan (around 58% of all foreign buyers in 2023 bought US properties with a mortgage loan)
• With an all-cash purchase (around 42% of all foreign buyers in 2023 bought US properties with cash)

Of the two options, the first one (i.e., mortgage loans) is not only more popular with foreign investors but it makes it possible for more people to purchase US real estate. Why? 

It’s simple—you’ll only need enough money to cover the downpayment (usually between 15% and 25% of a property’s value) instead of having to pay for the entire house upfront. And, on top of that, you don’t need a Green Card, any type of Visa, or even a US credit score to get a US mortgage as an Australian. 

For example, if you’re looking to buy an average US house for around $450,000, you don’t need half a million in your bank account. If you have enough to cover the downpayment (between $67,500 and $112,500 or 15%- 25%), you can easily get a US mortgage loan as an Australian. 

We understand this is still a lot of money for some people. And if you’re one of those, don’t worry. America’s real estate market is unique because it has something for every pocket. Even though the average house price is around $450,000, you can still find many places in the US where houses cost under 300K and generate more rent than a property worth twice as much in Australia could.

Now, to help you get started buying property in USA from Australia, let’s discuss some of the most popular US mortgages available to Australians. 

US Mortgage for Australian Citizens: Two Most Popular Loan Types

We’ve already talked about how Australians don’t need a US credit score, Green Card, or any type of Work Visa to get a mortgage loan in the US. However, there are some requirements for Australians to get a US mortgage, with the main ones being:

• a valid Australian passport 
• proof of income or income statement from Australia
• enough money for a downpayment

If you have those three, you’ll be pretty much guaranteed to get a US mortgage. Now, the question that still remains is — what types of mortgage loans can Australians get in the US? The answer is not that simple and will depend on the specific type of investment or purchase you’re interested in making. Different types of investments will require different kinds of loans. 

For example, if you’re looking to fix and flip a house, you should probably look for fix-and-flip mortgages. These loans don’t have prepayment penalties, which makes them ideal for a quick cash turnover. On the other hand, if your goal is to buy a long-term rental property, you should look into DSCR loans, rental income loans, etc. These will come with prepayment penalties but will otherwise be structured to accommodate your goals as a long-term investor. 

So, to get back to the original question — what types of mortgage loans can Australians get in the US? The answer is any type of loan that fits your needs. Because of how developed the US financial system is you’ll likely be able to find the exact loan type or a customzied financial soultuion that’s just right for you. This is what makes the US real estate market perfect for different types of investors, but it also makes it impossible to cover all the different types of US mortgages available to Australians. There are simply too many of them. That’s why, for the sake of brevity, we’ll just focus on the two most popular loan types:

Foreign National Mortgage Loans

The first and most popular financing option for many foreigners buying US property is the titular Foreign National Mortgage Loan. This type of US mortgage is designed to help Australians without a US credit score or history purchase a property in the States. 

Foreign national mortgage loans can be used to finance different types of properties, including:

• A main residence
• A vacation property
• A rental property (including commercial, short or long-term rentals)

Regarding requirements for this type of loan, it’s important to mention that they can vary depending on the exact lender. But for the most part, as an Australian, you’ll need to have 

• A valid passport 
• A valid US Visa (if you’re planning on staying in the US longer than 90 days, otherwise you won’t need one)
• Payslips or W-2 forms (if you are currently working in the US)
• Individual Tax Identification Number or ITIN 
• Downpayment between 15%-25% (depending on the specific lender)

DSCR Loans 

Another popular US mortgage for Australians is the DSCR loan. This investor-only loan is designed to help Australians buy rental properties in the United States. The main eligibility criteria for this loan is the so-called DSCR score or debt-to-service ratio. Lenders use this metric to evaluate how much money a property can generate. A DSCR score of 1 means that a property can generate enough money to cover the loan payments, a score of 1,5 means that there’s enough for the loan payments and a bit more on top, and so on.

To learn more about this and how to calculate the DSCR score, check out our linked article. We believe it’s the best resource you can find online as we truly delve into the nitty-gritty of the subject matter.   

For our purposes here, all you need to know is that the higher the DSCR score, the better the deal you’ll be able to get on your loan. Additionally, we should mention that some lenders will calculate the DSCR rate using short-term rental estimates, which can be favorable to those looking to leverage DSCR loans for Airbnb investing. We share this to emphasize that even in the seemingly strict structure of a DSCR loan, there is still enough room to create a customized financial solution that best suits your investor goals.

Now, let’s talk about some of the main requirements for DSCR loans, noting that they can change depending on the lender:

• DSCR score of 1
• Downpayment between 25-30%
• Form 1007
• A credit score of 620 or higher (Depending on the lender. A lot of them won’t require you to have a US credit score)
• Cash reserves to cover 6-12 loan payments (depending on the lender)