US Mortgages For Nonresidents: A Complete 2024 Guide
The United States has the world’s biggest real estate market, attracting many foreign nationals for one reason or another. Some are solely interested in purchasing an investment property in the US, while others are considering moving to the US and want to figure out their future living situation by taking nonresident mortgage loans.
Whatever the exact reason for looking at US real estate, one question always seems to pop up: Can a non-US citizen Get a Mortgage Loan?
If you’re interested in learning the answer to this and a couple of other questions, along with getting some valuable information on nonresident mortgages in USA, all you have to do is keep reading the article.
Let’s begin!
Can a Non-US Citizen Get a Nonresident Mortgage Loan?
The answer to this question is absolutely yes! There are no restrictions to getting a mortgage loan overseas in the US as a non-citizen, and every foreigner has the same property and ownership rights as regular US citizens. In fact, non-US citizens can get a mortgage loan in the US, even without residency. However, it’s important to mention that having any kind of residence status (e.g., a Green Card, work or student visa, etc.) can increase your chances of getting a loan and help you get a better deal on your mortgage (lower down payment, maybe even lower interest rate, and so on).
Main Requirements for Nonresident Mortgage Loan
Before you begin looking for a mortgage loan in the US as a non-citizen, you should learn all you can about the most common requirements for loan approval. In no particular order, they are:
1. Residence
This is a common requirement for US mortgage loans, and almost every lender will take it into consideration. Depending on your residency status, you’ll be eligible to apply for different types of loans.
Permanent Residents
If you have permanent residency (i.e., a Green Card), you are eligible to get the same types of loans as US citizens. There are no restrictions on any of the financial services, and you’ll be on equal footing with every other US national.
Work Visa Residents
If you are a non-US citizen who moved to the US on a work visa, you’ll automatically be eligible for different types of mortgage loans. The most common types of work visas include:
- H visas (H-1B, H-2A and H-2B)
- L visas (L-1A, L-1B)
- O visas (O-1A, O-1B, etc)
- TN NAFTA visas
As far as other documentation goes, you’ll likely have to prove that you’re legally employed in the US and that your work visa is valid (i.e., it didn’t expire) before you get approved for a mortgage loan. Before applying, you should prepare documents such as:
- Pay statements
- Income and employment verifications
- Your work contract and visa
Student Visa Residents
J-1 and F-1 students can get a mortgage loan in the US. If they have a cosignatory with a steady source of earnings (e.g., one of their parents or other family members), their chances of getting approved for a house loan go up exponentially. However, it’s important to note that even without a co-signer, students with a US visa can get a loan, but the road to get there will be a bit harder.
Nonresidents
There are no restrictions on who can get a mortgage loan in the US, including nonresidents and foreign investors. Because of how developed the financial system in the US is, it’s possible to find lenders that specialize in working with foreign investors and nonresidents. This is in no small part due to the amount of money foreign investors are putting into US real estate. For example, in 2023 alone, foreign nationals spent more than 50 billion dollars on purchasing US real estate. And a percentage of that money, came from mortgage loans.
The easiest loans to get as a foreign national in the US are loans for financing rental properties. Rental income serves as an added layer of insurance and helps ease lenders’ minds that you’ll actually be able to pay off the loan (as long as the rental income is similar to or higher than the amount of money for loan payments). These types of loans are popularly called rental income mortgage loans, and to get one, you’ll first need to open an LLC in the US.
Are you a foreign national looking for a nonresident mortgage loan in the US? Book a free consultation and learn how to get it.
2. Credit Score and History
Another important requirement that most lenders will focus on is whether or not you have a US credit score or history. If you have a US credit score and it’s above a certain threshold (around 600), you’ll be pretty much guaranteed to get almost any type of house loan you apply for.
On the other hand, if you don’t have a US credit score, you’ll still be able to get a nonresident mortgage, but the terms and conditions of the loan will be slightly different. The lenders will look for ways to mitigate risk for themselves and might ask for a larger down payment than normal (between 15% and 25%, usually). Or, in some cases, they will ask for additional documents of your financial stability, like proof of assets or income.
3. Personal Income
The personal income requirement will be different for every lender and will be based on the type and size of the loan. Lenders will usually not examine your personal finances deeply but will mostly focus on evaluating your capacity to repay the mortgage loan and cover the monthly payments. To assess this, most lenders will use a special metric called the debt-to-income ratio or DTI.
Calculating DTI is simple. All you have to do is divide your monthly debt service with your income and then turn it all into percentages. Let’s say you’re making $5,000 monthly, and your loan payments are $1,700 monthly. In that case, your DTI would be:
1,700 / 5,000 = 0,34;
0,34 x 100 = 34%
In this case, the DTI is 34%, or the debt is 34% of your gross monthly income. Remember, the lower your DTI, the more likely the lenders will be to work with you.
4. Money Reserves
Some lenders will require you to show proof of savings to lower risk for themselves and ensure you’ll have enough money to cover the loan payments if something negatively impacts your monthly income (e.g., you get fired from your current job, etc.). This requirement is mostly reserved for nonresidents without a US credit history or score.
Main Types of Nonresident Mortgage Loans
There are many different types of US loans available to non-US citizens. Which one you can apply for depends on your situation, residency status, credit score, and similar factors. The most common types of mortgage for foreigners in USA include:
Foreign National Mortgages
A foreign national mortgage loan is a house loan offered by private lenders. You don’t need a US credit score to apply for it. Because of that, it’s typically viewed as a nonresident mortgage type, with the main goal of helping foreigners without US residency purchase property in the US.
However, we should also mention that these loans are also available to foreign nationals who are US residents but, for one reason or another, didn’t have time to build their US credit score (e.g., someone who just recently moved to the US).
DSCR Loans
Debt-service coverage ratio (DSCR) loans are available to all non-US citizens, regardless of residency or credit score. These loans can only be used to purchase rental properties (i.e., investment properties). If you want to finance your primary residence or vacation home, a DSCR loan is sadly not for you.
Before approving this type of mortgage, lenders will first calculate the DSCR score of a property a borrower is interested in purchasing. If the score is above 1, the lender will more than likely approve the loan. These are investment-only loans, and they use the DSCR metric (essentially potential rental income) as the main requirement to approve or deny the loan (instead of personal income or assets); because of that, they are the easiest to get out of all nonresident mortgage loans.
ITIN Mortgage Loans
ITIN mortgages are a unique type of house loan available to all non-US citizens with an ITIN number. They are primarily used to finance main residences.
Requirements for this type of loan include:
- ITIN number
- Valid passport and copy of it
- Different financial documents (e.g., proof of income or employment, tax returns, etc.)
- Legal permit to enter and stay in the US (through a work or travel visa, Green Card, etc.)
Are You a Non-US Citizen Looking to Purchase a House in the States? NRI Can Help
NRI is a one-stop shop for all foreign nationals looking to buy real estate property in the United States. We can help you every step of the way, including connecting you with mortgage lenders who specialize in working with non-US citizens. And you shouldn’t worry if you don’t have a US credit score; the lenders we work with give out loans, regardless of your US credit score or history.
