Home Financing Options for Foreign Nationals

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As a foreign national, purchasing a home in the United States can be challenging, particularly if you need mortgage financing. Foreign nationals differ from immigrants in that immigrants are people who are living and working in the U.S. with the eventual goal of it becoming their permanent home. Foreign nationals reside in their home country with short stays in America for business or vacations purposes.

How Many Foreign National Purchas Homes Every Year?

From 2017 to 2018 foreign nationals purchased 266,754 homes in the United States. ‘That’s down about 20% from the previous year, according to data from the National Association of Realtors. About 72% of the home purchases were done with cash. That might because as a result of the Great Recession, ‘it’s become a heavily-regulated lending environment, especially for foreign nationals.

The federal requirements that lenders must prove a buyers ability to repay their loan make mortgage lending to foreign nationals more challenging. Having to verify the credit history and income and assets ratios for a borrower who lives in another country is inherently riskier, and many mortgage lenders ‘aren’t willing to take that risk. Even when all information is verified, lenders often require down payments over 50%, a relatively complex foreign credit report verification, and the added scrutiny and cost of numerous appraisals.

There is good news, though! It’s getting a bit easier!  Alternative lenders with more lenient terms and requirements for foreign nationals are providing innovative new programs.

What do Lenders Mean by “Foreign National?”

It’s essential to understand the mortgage ‘industry’s definition of a foreign national, which is much more stringent than the legal definition often used for immigration purposes. The legal definition of a foreign national is “a person who is not a citizen of the United States and who is a citizen of a foreign country,” but that can include people who have green cards. Sometimes they are referred to as permanent resident aliens. These types of immigrants are eligible for conventional mortgage financing and don’t require any specialized mortgage programs to buy a home in the United States.

When it comes to mortgage lending, though, a foreign national is defined as a person who lives in another country and visits America for brief periods of time to conduct business, or enjoy a vacation. To be eligible for a foreign national loan, the buyer must be a legal resident of another country and live and work there.

What ‘You’ll Need to Qualify for a Loan as a Foreign National

Citizenship in another country

Credit reference letters

No primary residences in the U.S.

Proof of employment, income or assets

Of course, your personal situation is important. Our mortgage representatives are always available to answer your questions and walk you through the process of obtaining a mortgage as a foreign national. We are just a phone call or e-mail away.

 

Note: Opinions expressed are solely my own and do not express the views of my employer