Did you know that foreign nationals can buy property in the United States? If you are a foreign national, you can purchase any real estate, including residential property, commercial property and land in the U.S. Moreover, you can also take out a mortgage to finance your purchase. There are U.S. lenders like MBANC which can help you qualify for a mortgage.
The term international or foreign national refers to two types of clients: non-resident foreigners who are non-U.S. citizens permanently residing outside the United States, and resident foreigners who are non-U.S. citizens, recent immigrants (less than two years) or non-immigrant visa holders residing in the United States for more than six months.
At MBANC, our foreign national mortgage program is designed for the non-U.S. citizens who want to purchase or refinance a second home, vacation home, or investment property in the United States, and requires no U.S. credit history to apply.
Why Invest in U.S. Real Estate?
U.S. real estate has always been an attractive investment opportunity. As Forbes describes the U.S. housing market, “with a carefully governed banking system, a deep history of private property rights, great beaches and mountains, political stability, rich traditions, an entrepreneurial culture, and a central, easily accessible location in the world, what’s not to like?”
According to the National Association of Realtors’s research, during April 2022–March 2023, 84,600 of foreign buyer home purchases accounted for 2.3% of the dollar volume of home sales, or $53.3 Billion. Out of them, 51% resided in the United States or were non-immigrant visa holders, and 50% of foreign buyers purchased a property for use as a vacation home, rental, or both.
In that period, most foreign buyers were from China (13% of foreign buyers and $13.6 B), Mexico (11% and $4.2 B), Canada (10% and $6.6 B), India (7% and $3.4 B), and Colombia (3% and $0.9 B). Top U.S. destinations chosen by the foreign buyers included: Florida (23%), California (12%), Texas (12%), North Carolina (4%), and Arizona (4%). 15% of foreign buyers bought homes worth more than $1 million.
At the moment, the U.S. housing market is going through the same issues as other real estate markets worldwide—high mortgage rates, high home prices, limited supply of homes for sale, and a strong dollar. However, markets are cyclical, now may be the perfect time to keep an eye on the opportunities that come up and prepare for the moment when the tide turns.
How Foreign National Mortgage Works
Foreign national mortgage, or a non-QM loan, is a good option for someone who may not live in the United States but wants to purchase or refinance a U.S. property. Non-QM mortgage is an unconventional mortgage for foreign nationals who don’t fit the ‘Qualified Mortgage’ or conventional loans requirements.
The foreign national mortgage program works for individuals who live and work in the United States and want to purchase a property but do not meet requirements of the traditional lenders. These often include a social security number or a green card. MBANC is a non-QM lender, so our requirements are more flexible.
The DSCR mortgages are a good option for the non-U.S. citizens who want to invest in U.S. real estate. The DSCR mortgages are another type of a non-QM mortgage which requires no income documentation.
Depending on the mortgage product that works for you and the lender you choose, you will be offered different product terms. As an example, here are the key highlights of the MBANC’s Foreign National Mortgage Program for individuals who live and work in the United States and want to purchase a second home or vacation property:
- Loan amounts up to $2million. Cash out refinance up to $1 million.
- Second home, vacation home, investment property (short or long term rental) only.
- Single family homes, condominiums, and 2-4 unit homes are eligible.
- No social security number, green card, or visa required.
- No credit score required.
- Down payment as low as 25%.
- Keep your monthly payments low with our 10-year interest-only program.
How to Qualify for a Mortgage?
Is it easy for a foreign national to qualify for a mortgage? Below, we compiled a list of three key criteria that U.S. lenders use to assess whether a foreign national can qualify for a mortgage.
The first factor any lender considers is usually your income. If you are employed, a lender would require proof of income. For example, MBANC would request an official letter from your employer demonstrating your current monthly salary, YTD earnings and total earnings for the past two years.
If you are self-employed, you will need to demonstrate at least two years of tax returns or an official letter from your certified public accountant. The letter must include your income for the last two years and YTD income.
If necessary, an independent certified translator must translate all relevant documentation.
If you are a real estate investor, you can qualify for a DSCR mortgage solely based on your property’s projected rental income. No proof of personal income is required. In this case, you need to demonstrate that income from your investment property is higher than its expenses, including loan repayment. If you wonder how to do it, speak with one of the MBANC loan officers today, we can help you figure it out.
A good credit score makes mortgage approval much easier, but if you do not have a U.S. credit history, you can still get a mortgage. Choose a non-QM lender. For example, MBANC can accept foreign credit references in place of U.S. credit history.
Foreign national borrowers pose a higher risk to lenders and so are required to make a larger down payment, normally 30% and above (please note, MBANC only requires 25%). Foreign national buyers also need to be able to cover closing costs, and provide several months of reserves, assets, or a credit reference letter from a bank or financial institution.
Assets can include stocks, bonds, retirement plans, liquid cash, etc. All funds being used must be transferred to a USD account used for mortgage.
What Documents Foreign Buyers Need
When purchasing property in the USA, foreign buyers have to provide a similar set of documents to the U.S. citizens who wish to obtain a mortgage. For a foreign national mortgage for a second or vacation home purchase or refinance:
- A foreign passport, U.S. visa, or driver’s license, if applicable
- A Social Security number or Individual Taxpayer Identification Number, if applicable.
- Proof of current address.
- Financial statements or credit reference letter from the applicant’s foreign bank.
- Proof of income (bank statements, tax returns from the applicant’s home country).
- Asset statements.
- Proof of reserves.
- Proof of funds for a down payment.
Documentation required for a DSCR loan for an investment property purchase or refinance is different because no proof of income is required. However, proof of homeownership in the country of origin will need to be provided and two credit reference letter(s) from verified financial institutions in the applicant’s home country.
How to Buy Property in the U.S. as a Foreign Buyer
1. Choose a Location
You may already have a location in mind. Perhaps it’s somewhere close to your friends or family or where you went on holidays before and loved. Or, if you are a real estate investor, a location that will bring you healthy ROI.
If you have no idea where to start, contact us today online or over the phone to speak with one of our experienced mortgage experts. They have years of experience supporting buyers like you and will help you find the prime location for your needs. You can also browse articles on our blog, such as guides to real estate investment in California or Florida.
2. Gather a Team of Professionals
Buying or investing in real estate requires one to have access to specialized knowledge and advice to avoid costly mistakes. We strongly recommend to our international buyer clients that they get advice from the following U.S.-based professionals:
- A buyer’s agent with a CIPS (Certified International Property Specialist) designation.
- A real estate attorney (or broker, depending on the state).
- A property inspector.
- A financial advisor and accountant.
- A tax advisor and attorney.
- A lender that specializes in foreign national financing.
Don’t worry if you don’t know where to start. Make sure you choose a lender who specializes in foreign national real estate transactions, like MBANC, and they will help you with access to the network of real estate professionals with expertise in foreign national financing.
3. Get an Individual Taxpayer Identification Number (ITIN)
Foreign buyers cannot purchase real estate until the Internal Revenue Service (IRS) issues a Tax Identification Number (ITIN). So you need to obtain one. The IRS assigns an ITIN to those ineligible for a Social Security Number, which includes many international buyers and investors. To acquire this number, contact a Certifying Acceptance Agent (CAA) to fill out Form W-7.
4. Get Pre-Approved for a Mortgage
Unless you plan to pay with cash, you need to get pre-approved for a mortgage with a U.S. lender. If you have a green card or a social security number, you may be able to qualify for a conventional mortgage. However, if not, look for non-QM lenders specializing in working with foreign nationals, such as MBANC.
Pre-approval is straightforward with MBANC. Contact us online or over the phone and one of our experienced mortgage experts will take you through the process. We will ask you to submit documentation—please see the Documents Foreign Buyers Need section above.
We will then evaluate your documents to assess your ability to make a down payment and cover the closing costs. Once pre-approved for a mortgage, you can start shopping for a property.
5. Shop for a Property
You have identified the location and can now search for properties with your agent, leveraging their local market knowledge. We advise our foreign buyer clients to visit and view properties in person. If not possible, conducting a tour via a video call is an excellent alternative.
Once you find a property, work with your agent to determine a fair price to submit an offer. Remember to do your due diligence. Verify the condition and value of the property by conducting a home inspection with an independent inspector to uncover any issues.
Conduct an appraisal to ensure that your offer is commensurate with the property’s worth. If the appraisal or inspection unearths any issues, re-open negotiations.
6. Apply for the Mortgage
Once you have found a property, you move to the next step—completing the mortgage application. This is where the expertise of your lender and their customer service approach become essential. Ideally, you want to be working with a lender who guides you through the process, helps with any unexpected challenges and, ultimately, ensures the transaction goes smoothly.
After you submit your mortgage application, your lender’s underwriters determine whether you are eligible for mortgage. This process usually takes between one and two weeks. If everything goes well and you are approved for the loan, you will receive a commitment letter from the lender outlining the loan terms and tenure.
When your mortgage application is approved, you need to sign the loan documents and pay any closing costs. The property will then be transferred to your name.
How to Find the Right Mortgage Lender
To choose the right lender, you need to do your research and consider your circumstances, for example, which documents you have or what down payment you can afford. If you do not have a social security number or green card, this will significantly impact your choice. Other important considerations include:
- Closing costs.
- The range of mortgage products available.
- Commissions and fees.
- One-off taxes. Local taxes and property rates.
- The application and buying process, speed, and what customer service you can expect.
- Lender’s reputation and reviews.
- Currency exchange rates.
- Property maintenance and security costs.
Above all, make sure you choose a lender who specializes in foreign national real estate transactions, and who have great reviews for customer service. You want a lender who will help you with access to the network of real estate professionals and who can expertly guide you through the property buying and financing process, ensuring everything goes smoothly.
We have been a premier consumer direct lender since 2005. Our founders are leaders with over 100 years of experience combined and closed deals in the billions of dollars in total. Our proprietary process delivers proven results.
Getting a mortgage with MBANC is different compared to other lenders. At the outset, you are working with a knowledgeable, understanding, qualified loan agent to find the best solutions for your mortgage needs. Excellent client reviews on Google are a testament to our customer focus.
We let you know upfront exactly what paperwork we need so you don’t waste your precious time. An average approval with us takes just 17 days. We are completely transparent regarding the terms of your loan. Get in touch with us today and we will guide you through the options available to you.