J1 Visa Mortgage: Guide to Buying Property on a J1 Visa

J1 Visa has almost the highest approval rate out of all US visas, set at around 88%. Apart from allowing you to travel and work in the US, this visa also gives you an opportunity to apply for a special type of house loan called a J1 Visa mortgage. And no, you didn’t read that wrong; the whole thing is actually true — as a J1 Visa holder, you can get a US mortgage.

In this article, we’ll tell you all there is to know about getting a J1 Visa mortgage. We’ll share with you the most essential information and requirements you need to fulfill to apply for these types of loans. We’ll also tell you about different types of J1 Visa mortgages and give you step-by-step instructions on buying a house with a J1 Visa.

Let’s begin.

What is a J1 Visa?

A J-1 Visa is a non-immigrant visa given to people who are approved to participate in a work-study-based exchange visitor program. The main purpose of this type of visa is to promote cultural and educational exchange between the United States and other countries.

The J-1 Visa is usually granted for the duration of a specific exchange program. Most exchange programs last up to 3 months. However, some programs can last up to 2 years and, on rare occasions, even up to 5 years. 

Can You Get a Mortgage With a J1 Visa?

Yes, all J1 Visa holders can get a US mortgage. No laws restrict J1 Visa holders from buying properties in the US as foreigners and using mortgage loans to finance them. Now, which type of J1 visa mortgage you’ll be eligible for will depend on various factors, including:

• J1 Visa duration (the longer your stay in the US, the more J1 Visa mortgage options you’ll have)
• Your US credit score (the better it is, the better deal you’ll be able to get; however, you can still get a loan without a US credit score)
• Job history in the US 
• Your income

Main Requirements to Get a J1 Visa Mortgage

The exact requirements for a J1 Visa mortgage will differ from lender to lender. This means we can’t, in all honesty, share the specific requirements with you as they will change from case to case. However, for the most part, to get a J1 Visa mortgage, you’ll need to have the following:

• A valid J1 Visa
• A valid passport
• Proof of income, residency, and any financial assets you might own
• 2 years of US credit history (not mandatory, but will help you find a lender faster and get a better deal on your mortgage)
• Social Security Number (SSN) or Individual TaxPayer Identification Number (ITIN); as a J1 Visa holder, you’re eligible to get an SSN, which is much better than an ITIN and can help you get a US mortgage as a foreigner much easier. 
• Enough cash reserves to cover a downpayment on the house (usually between 20%-25%)
• US Citizenship and Immigration Services Employment Authorization Document or USCIS EAD; this document allows you to work in the US with your J1 Visa legally; you can still apply for a J1 mortgage without it, the process will just be more difficult. 

Main Types of J1 Visa Mortgages

The main thing that determines which types of J1 Visa mortgages you’ll be eligible to apply for is your US credit score. That’s why these mortgages are divided into two main groups:

• J1 Visa mortgages with good US credit score
• J1 Visa mortgages with no or bad US credit score

J1 Visa Mortgages With No/Bad US Credit Score

Here are some of the mortgages you can apply for as a J1 Visa holder with no or bad US credit score:

1. Foreign National Mortgage

A foreign national mortgage loan is a non-QM (non-qualified) loan designed to help nonresidents and foreign nationals finance a property in the States. These types of loans aim to provide a way for nonresidents to purchase a house, even if they have slim or no US credit score. 

The typical downpayment for foreign national mortgage loans is between 20%-25%. Interest rates are usually around 1% higher when compared to regular loans. These loans can be used to purchase primary and secondary residences and vacation homes or to invest in rental real estate.

The main requirements for this type of J1 Visa mortgage include the following:

• Valid passport 
• J1 Visa status 
• International or US tax returns
• Bank statements

Are you a J1 Visa holder interested in getting a US mortgage loan? Get in touch with us, to learn how we can help you on your journey.  

2. DSCR Loans 

DSCR or Debt Service Coverage Ratio loans are non-qualified mortgages aimed at helping foreign nationals and nonresidents purchase investment property in the US. The unique feature of DSCR loans is that lenders evaluate borrowers’ ability to repay the loan based on a metric called Debt Service Coverage Ratio (or DSCR for short) rather than income or credit score.

Before approving a loan, lenders will calculate the DSCR score of a property a borrower wants to finance. Most lenders will typically approve the loan if the DSCR score is 1 or higher. Because these J1 visa mortgages are meant for investors, you’ll need to open a US LLC as a foreigner before you can do any business in the States. 

The usual downpayment for DSCR loans is between 20%-25% but can go higher or lower based on US credit score and DSCR score. DSCR loan interest rates are a bit higher than those of regular loans and are usually between 7%-9%.  

3. Fix and Flip Loans

Fix-and-flip loans for foreigners are a type of J1 Visa mortgage designed to help investors purchase properties in need of renovation. Fix-and-flip loans provide real estate investors with financial backing to buy distressed or undervalued houses, make renovations, and sell them for profit or refinance the original loan. 

Typical interest rates for these loans are usually higher than 10%. These short-term loans (12-18 months) are mostly interest-only and don’t allow the building of equity in the property. They are great for generating high returns in a small amount of time.

4. ITIN Mortgage Loans 

As a J1 Visa holder, you’ll typically be eligible to get a US Social Security Number (SSN). If that’s not the case in your situation or for some reason you didn’t get it, the second best option is an Individual Taxpayer Identification Number or ITIN. 

With ITIN, you’ll not only be able to get a US bank account, pay taxes, and receive payments, but you’ll also be eligible to apply for a special type of J1 mortgage called ITIN mortgage loans. Some of the main requirements for an ITIN loan include:

• Valid ITIN card
• Downpayment between  20%-25%
• Interest rates between  6,5-7,5% (can be a bit higher or lower depending on your US credit score and history)
• Identification documents (valid passport, visa, etc…)

J1 Visa Mortgages With Good US Credit Score

Here are some of the mortgages you can apply for as a J1 Visa holder with a good US credit score:

1. Conventional Mortgage 

Conventional mortgage loans are house loans that are not insured by a government agency. They are usually offered by private lenders such as:

•  Banks
• Credit unions
• Mortgage lenders

The main requirements for a conventional J1 Visa mortgage include:

• Downpayment between 3%-20% (depending on US credit score, overall financial situation and specific lender)
• US job history (typically 2 years)
• A Social Security Number
• Typical interest rate of 6,8% for a 30-year fixed loan

2. FHA Loan

FHA or Federal Housing Administration loans are a type of government-backed J1 Visa mortgage. The main goal of these loans is to provide a financing option for low-to-moderate-income borrowers (people with low Credit scores and income). The main requirements for an FHA loan include:

• Downpayment between 3,5%-15%
• Interest rates of around 7%
• Mortgage Insurance Premiums or MIP; usually around 1,5% of the loan amount
• Loan limit between $450,000 and $1,000,000
• Property must pass the health and safety standards set by the FHA

How to Buy a House With A  J1 Visa Mortgage: X Main Steps to Consider

Are you looking to buy a property with a J1 Visa mortgage? Here are the main steps you should consider to ensure the entire process goes smoothly:

1. Find a Property and Determine Budget

The first step, before you even start looking at a J1 Visa mortgage, is to figure out your budget and find a property you want to purchase. If you want to buy a primary residence, you should look at houses near your job or the location you want to live in. However, if your goal is to buy an investment property, you should check out our guide on choosing the best location for a rental property. It will help you figure out the main factors to look out for and to maximize your returns. 

2. Verify Your Visa and Work Status

As a J-1 visa holder, you’ll probably already have work authorization. If you have it, make sure it’s still valid, and if you don’t, try to get one. 

Most mortgage lenders will look at the time you have left on your J1 Visa. If your visa term is nearing its end, some lenders will require you to provide proof of your intention to stay in the US or your ability to extend this Visa or get a different one.

3. Contact Mortgage Brokers

The best mortgage brokers will find you tailored financial solutions to perfectly suit your exact needs.They usually work with a network of different mortgage lenders and can find you a loan deal that’s better than what you can find by yourself. This will not only help you save money on the mortgage but will also save you a lot of time (this is especially true if you don’t have experience in US mortgages).

4. Get the Documents Ready

After talking to mortgage brokers, the one you choose to go with will tell you what sort of documentation you’ll need to prepare to apply for a J1 Visa mortgage loan. In the above part of the article, we’ve shared with you the most common requirements for this type of loan (i.e., the documentation most lenders will want to see from you). However, it’s important to mention again that the exact documents you’ll need to prepare will depend on the lender. 

5. Get Pre-approval and Prepare Downpayment

After preparing the required documents, most mortgage brokers will advise you to get pre-approval from lenders. What that means for you is that your broker will send your application to different lenders. 

Lenders will review your documents and decide whether they’re willing to give you a loan. Usually, as a part of this review, lenders will want to make sure you have enough money to cover the downpayment, so make sure you have it ready to go. Once you get pre-approval, you’ll know exactly how much money you’ll have at your disposal, making the buying process much easier. 

6. Prepare  for Closing 

Once you’re 100% sure about the property you want to buy, your pre-approval will be turned into approval, which means you can now make an offer for it. Now, the closing costs are the last thing you’ll have to worry about If the seller is satisfied with your offer. Depending on your exact situation, type, and age of the property you’re buying, closing costs can be between 2%-5% of the loan amount.