Foreign National Loan to Help Buy More US Homes

Gloria Johnpierre April 27, 2024

Purchasing a home in a new country as a foreign national is a significant financial decision, and one that requires careful consideration. In the current market, with low mortgage rates in the U.S., it may be a great time for foreign nationals to take advantage of these favorable conditions. However, for those without an established credit history in America, securing a mortgage loan can be a daunting task.

Fortunately, there are mortgage lenders in the USA that provide mortgage options to foreign national borrowers with no US credit history at competitive rates. This pertains to individuals who just arrived in the United States on visas, as well as those who are non-resident buyers of U.S. property. 

Concept of a Foreign Mortgage Loan

A foreign national mortgage loan is a type of mortgage loan tailored to meet the needs of individuals who are not citizens or permanent residents of the United States, but are interested in purchasing a property within the country. While these loans may require a larger down payment and carry higher interest rates due to the lack of a U.S. credit history and income, they can still be an attractive option for foreign nationals seeking to invest in the U.S. real estate market.

Foreign nationals who are non-residents have the opportunity to obtain a mortgage through lending programs specifically designed for them, which do not require the provision of a Social Security number, green card, or visa. Moreover, these borrowers need not have a FICO score to demonstrate proof of creditworthiness.

Alternatively, they may demonstrate their creditworthiness through a range of approaches, which may include presenting a credit report from their country of origin or providing other supporting documentation.

ITIN loans or loans for non-permanent resident aliens are the common terms used for non-resident foreign loans. These programs enable non-citizens to purchase real estate within the United States, often without the typical documentation required when obtaining a mortgage.

Advantages of Foreign National Mortgages

Foreign national mortgages offer several unique advantages to borrowers, including

  • capability to obtain financing for investment properties and secondary residences
  • loans of up to $5 million
  • financing of condominiums without warranties
  • availability of loans with low debt service ratio for investment properties
  • endless cash-out
  • and no requirement for a U.S. FICO score (provided evidence of three active and open trade-lines with a two-year history is provided).

To obtain a foreign national mortgage loan in the United States, a step-by-step process may be followed, which includes prequalification, selecting a property, submitting a loan application, underwriting, loan approval, and closing.

The first step is to estimate your budget by determining the maximum monthly payment instead of the home purchase price. Mortgage lenders typically use two methods to calculate this payment, the front-end and back-end ratios, with the former considering all housing costs, including property taxes and homeowner's association dues, and the latter not considering these additional fees.

Second step is obtaining pre-approval for a foreign national mortgage loan is crucial as it provides confidence in the amount of loan that the lender will provide and signals to real estate agents and sellers that the buyer is a serious contender.

To obtain pre-approval for a foreign national mortgage loan, borrowers will need to prepare documents verifying their identity, income statements that demonstrate their ability to make payments on a new home, and evidence of assets, such as stocks or savings accounts, to help with down payment costs associated with buying property abroad. 

It is advisable to seek assistance from an experienced mortgage professional to guide borrowers through the process and help them secure the most suitable loan product for their needs.

Third, for international clients seeking a mortgage in the US, there are additional document requirements beyond the ones mentioned previously. These include a copy of the passport, a valid US visa (unless the country participates in the Visa Waiver Program), completion of an International Credit Report Form provided by the lender, two years of employment history with contact information, and two years of residency history (including address, ownership/rental status, and start and end dates).

Fourth, once you have obtained pre-approval for your international mortgage, you can begin shopping for your home and making an offer. It is recommended to work with a qualified Tampa top realtor or best brokerage firm with experience in international real estate transactions. Your agent will guide you through the home shopping experience and help you find the perfect property. 

After selecting a property, you can make an offer and work with your agent to structure the offer and incorporate contingencies. This is also the stage at which you will provide an earnest money deposit, typically a percentage of the purchase price.

Once you have formalized your offer with a purchase agreement, fifth, you can now begin the mortgage application process with a lender who specializes in foreign national US mortgages. You will need to consider the types of mortgages available, compare their respective rates, settle on a down payment amount, and choose a term length.  

Step 6 involves locking the interest rate on your mortgage loan. Mortgage rates in the United States are subject to daily fluctuations based on the performance of the bond market. Locking your mortgage rate will ensure that your interest rate remains constant until the loan's closing. 

The rate lock process will be facilitated by your loan officer, and it is advisable to secure a rate lock on your loan once you have agreed to the loan estimate and have made the decision to proceed with the lender for your U.S. home financing requirements.

In Step 7, the loan processing and underwriting stage commences after accepting and signing the Loan Estimate. At this stage, you will work alongside a loan processor whose responsibility is to compile and organize your mortgage loan information and application, in preparation for its submission to the underwriter. 

The loan processor ensures that all documentation needed to decide on your loan file is included in the submission to the underwriter, which helps speed up the approval process for your mortgage loan.

Step 8, a real estate appraiser prepares a home appraisal report at the lender's request. The appraiser evaluates the property you are purchasing and determines its worth or fair market value by comparing it with similar homes recently sold nearby. The appraisal process provides protection for both the buyer and lender, as it verifies that the property's value corresponds to the agreed-upon price.

If the appraisal returns with a value lower than the sales price, there are three available options: covering the difference, renegotiating with the seller, or exercising the appraisal clause in the purchase agreement and walking away.

In Step 9, after completing the underwriting process, you prepare for closing. You bring your photo ID, a copy of your Closing Disclosure, and any other final paperwork to the settlement table, along with all necessary funds. Your loan officer or processor should provide you with a copy of the Closing Disclosure at least three business days before signing the mortgage loan documents at your closing. 

The Closing Disclosure document details the precise dollar amounts payable for the different fees and services related to the closing of your mortgage loan. Upon completion of all necessary formalities, including the signing of all documents and the fulfillment of all requirements, you officially become a homeowner. Congratulations on your successful purchase of a house in the USA as a foreign national!

Need Help Buying Your Ideal Home?

Siven Premier is a distinguished real estate agency with a strong presence in Florida, offering a comprehensive range of integrated services. Feel free to contact us directly at 813-330-0084 or visit our website to discover further information on some of the finest Tampa homes for sale.

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