Can F1 Student Buy a House and Get a Mortgage Loan in the US? – Full Guide
The US hosts the largest number of international students of any country in the world. Estimates show that more than 1 million foreign students live and study in America. This is partly due to the fantastic quality of the country’s higher education institutions.
To give you a small example of how good and prestigious US universities are, 11 of the top 20 universities in the world are located in the States. That’s why, when given the chance, foreign students jump on the opportunity to move to the US and earn a higher degree there.
Now, the question is, apart from studying, are there other things or opportunities that foreign students in the US should be aware of and can take advantage of? But first, let’s answer:
What is an F1 Student Visa?
An F1 visa is a non-immigrant student visa that allows foreign students to move to the US and stay until their studies are done. Just note that the F1 visa is only for full-time academic studies and is usually issued for a period of up to 5 years. It’s one of the most popular visas out there and was issued around 450,000 times in 2023 alone.
Apart from going to school, the holders of an F1 visa are also able to work in the US, but only under specific conditions:
- Only 20 hours per week during the school term;
- In a full-time capacity during the summer break.
Can F1 Student Buy a House in the USA?
The answer to this question is an absolute YES! International students can buy a house in the US. No laws or regulations restrict foreigners from purchasing real estate property in the US. In fact, according to the latest 2023 statistics, the US is the most popular country in the world for foreign real estate investors.
Because of all of that, the most important question here is not: can international student buy house in USA, but rather, can f1 students afford to buy a house in the US? The answer is yes, but only after you carefully consider things like your budget and financing options available to foreign students. (What financing options?) I guess we forgot to mention that, so here we go.
Thanks to the highly developed financial system in the US, international students can easily contact F1 visa mortgage lenders (a specific type of lender who specializes in providing financing options to foreign nationals (including students). This means that as long as you have an F1 visa, enough budget to cover the initial expenses (i.e., the down payment), and your parents are okay with it, you can easily get approved for a loan.
And, once you’ve become a property owner, nothing stops you from renting it. Because you’re technically not working to earn an income from the property, this doesn’t violate the F1 limitations of only being able to work 20 hours per week. All you have to do is file an individual tax return (1040 or 1040NR) and report the money you’ve made.
Now, with that basic information out of the way, let’s start digging deeper into the subject and discuss some of the main reasons why should an f1 student buy a house in the States.
Want to become an owner of your first piece of US real estate as an international student? Contact us or book a call to learn more.
Why Should an F1 Student Buy a House in US?
As an F1 student, you’ll spend four years in the US. There are exceptions to this, of course. For example, if you’re pursuing a degree that takes longer than four years to get or if you’re pursuing a Master’s or PhD that can take less than four years. Whatever the case might be, you’ll either get to the US by receiving a scholarship or having your parents cover the entire cost of schooling. But, no matter what happens and how you get there, you’ll definitely have to pay for housing (i.e. rent, the single biggest expense that affects the cost of living in the US). And if your budget is tight, or if your parents want to teach you a valuable life lesson, you might need to get some kind of job to cover those expenses.
Considering four years of college and a rent of between $1500 and $2000 (can vary based on the location) per month, you’re looking at around 48 months of rent payments. Let’s do the math on this:
48 x $1,500 = $72,000
48 x $2,000 = $96,000
On the lower end, you’ll be spending approximately $72,000 on rent during your time in the US as an international student. You can obviously lower this amount by living with multiple roommates or managing the difficult task of getting into a college dormitory. Now, consider this: could there be a more financially savvy way to utilize your money or the money you got from your parents?
The answer is simple: It’s better to pay for the mortgage than to rent (if you can afford the initial costs). And why is that exactly? Let’s take a look.
International Student Buying House in USA: Main Benefits
The US real estate market is large and diverse, meaning there’s something to find that will suit every pocket. It’s a country where you can find luxury properties worth millions of dollars and affordable and very comfortable houses for under 300K. And one thing real estate properties in the US have in common, regardless of value, is appreciation. This perfectly leads us to the first advantage for international students buying house in USA:
Real Estate Goes Up in Value
Just in the last ten years, the value of an average US property has gone up almost 50%, or to be exact, 48,55%. This means that if you bought a property for half a million 10 or so years ago, that same property would now be worth at least $750,000.
On average, the appreciation rate for real estate in the US is between 3% and 5%, although there have been times when the value of properties rose by more than that. This means that the absolute worst-case scenario is — after four years of paying for a mortgage instead of renting (for the duration of your studies), your property will be worth between 12% and 20% more than you originally paid for it. This percentage can be doubled, depending on the state or even the neighborhood your property is located in, market trends, and some other things.
The Culture of Roommates Makes It Easy to Find Tenants
According to the most recent estimates, 79 million people in the US live with roommates in non-romantic and non-family households. This trend also includes the majority of students in the US, where most of them live with roommates (16% of students reported living with two other people, and around 42% say they are living with three roommates).
So, based on that information alone, you won’t have difficulties finding roommates. And what do you need roommates for? Well, it’s simple, to help you pay for your mortgage loan, of course. You can even make money from the property if you play your cards right.
For example, let’s say your mortgage payments are $2,000 a month. If you find two roommates to live with and charge them each $800 monthly, that’s $1,600. This brings your loan payments down to a measly $400 per month, making your family extremely proud of you!
And the best part is, you won’t have to pay for a property manager because you’ll live in the house (presumably until your studies are done) and can serve as an in-house landlord. You can ensure that your roommates/tenants are well-behaved and are not causing damage to your property. This leads us to the 3rd benefit of international students buying house in USA.
You Don’t Have to Pay Property Manager Fees
One of the main costs that international real estate investors have to deal with is property management. Luckily for you, as a student in the US and a tenant in your own property, you won’t have to pay those types of expenses, as you will be the one:
- Finding tenants,
- Making sure the rent is paid on time
- Ensuring your roommates/tenants are not problematic
Doing this will only benefit you in the long run, as you will have the opportunity to learn about rental properties while also going to college and preparing yourself for the future. You can look at this as an additional real-life business experience that not many of your college classmates will be able to get. Essentially, being a part-time landlord to your college roommates will give you an edge when you finally finish your studies and enter the job market. And, speaking of completing your studies, here’s what you can do with your property after.
Four Years Are Done, What Now?
What happens after four years of studying in the US will depend on many factors. If you like it there, maybe you’ll try to find a way to stay, get a job, etc. Most international students want to stay and work in the US, but not all of them are able to. The most recent numbers show that around 46% of all international students get to stay in the US after they’ve successfully finished college. Taking into account that there are millions of international students in the US, this percentage point translates into hundreds of thousands of people.
Or, you could take what you’ve learned and return to your home country to finally enjoy some quality time with your parents after being away for four years. Ultimately, it will be up to you and the opportunities you were able to create for yourself.
And, as far as your property goes, well, it will be worth more than you paid for it due to the steady real estate appreciation rate in the US. This will give you a couple of options, including:
- Selling the property for profit
- Keeping living in it and building equity (in the case you stay in the US)
- Go back to your home country, but keep renting it
The third option is a really good one, especially because of the roommate culture we’ve discussed before. Around 42% of students live with at least three roommates. So, if you can get three tenants to pay, let’s say, $700 per month, that comes down to $2,100, meaning that you can keep building equity in the property and using OPM (other people’s money) to pay for your mortgage loan.
International Student Buying House in USA: 3 Main Steps to Consider
If your parents have decided to help you buy a house in the US and make an additional investment into your future (apart from paying for tuition or covering your other expenses), you should be grateful for that. But above all, you should take this once-in-a-lifetime opportunity very seriously. The best way you can do that is to read through the following steps and carefully consider them before you embark on your journey to becoming the youngest real estate magnate in the US.
1. Check out Property Prices Near Your University
The main goal here is to find a property that’s close to your future school and that you can afford. Check out local listings around your college campus and in a wider area of, let’s say, 2-3 miles. You’re looking for something that’s driving distance from your campus, that fits your budget, and that can house more than a single person (ideally at least 3).
2. Get in Touch With F1 Visa Mortgage Lenders
The best thing about buying a property with a mortgage is that it allows you to look at houses that would otherwise be outside of your price range. The only thing you have to think about is having enough cash to cover the down payment, which is usually between 15% to 25% of the property’s value. So, if your budget for a down payment for a mortgage loan is $50,000, you can look at houses valued between $250,000 and $330,000. If you have more money or are able to get a better mortgage deal (let’s say with only a 10% down payment), you can even end up looking at properties worth $500,000 or more. The best part is that you don’t need to have a US credit score or history to apply for house loans.
We can help you secure the best mortgage deals! Book a free call to find out more.
There are many types of loans that will be available to you through F1 visa mortgage lenders, including:
- Foreign national mortgage loans
- ITIN mortgage loans
- DSCR mortgage loans
- Rental income mortgage loans
- Hard money loans
3. Figure Out Your Budget
Let’s be honest here: as a student, the only thing you can do to actually get enough money for a down payment is to check in with your parents, present them with the idea, and see how they feel about it. If they can afford it and think it’s a good idea, you’ll be able to get the ball rolling and start figuring out your budget. This will be the most common case unless you’re one of those advanced people who started working at an early age and have already saved up a substantial amount of money.
Interested in Making Your First Move on the US Real Estate Market? Check out NRI!
NRI is a one-stop shop that helps international students like yourself get their start in the US real estate market. We’ll be with you every step of the way:
From connecting you with our network of real estate agents with international experience to helping you find the best mortgage lenders and then some.
If you’re currently studying in the US or are about to embark on such a journey, talk to your parents and get their opinion. If they give you the go-ahead, contact us so we can figure out how to make your time in the US the most profitable time of your life. Remember, going to a university isn’t just about spending money to make money in the future. It can also be an opportunity for personal growth, learning how to manage properties and build equity, and gaining valuable business experience, all of which can be achieved through real estate investment.
