Understanding Foreign National Mortgage Loans
Non-U.S. residents or non-resident aliens often find it difficult to get conventional mortgages for purchasing a property in the USA – primarily because they lack U.S credit history and scores. But does it mean they cannot get a U.S. mortgage to buy a property in the USA? Not at all. mbanc offers multiple loan programs that allow foreign national borrowers to get financing.
Table of Contents
- Can a Foreign National Buy a House in the USA?
- 3 Basic Criteria for Getting Foreign National Mortgage Loans
- Can Non-Resident Aliens Get a Mortgage?
- Documents Required for Non-Resident Alien Mortgage in the US
- What is the Process for Applying for a Mortgage as a Non-Resident?
- Frequently Asked Questions
Can a Foreign National Buy a House in the USA?
Yes! A foreign national can easily acquire a U.S mortgage loan for buying a property in the United States. You are not required to be a U.S citizen or have a Green Card to purchase real estate here. However, what may serve as an obstacle is getting a mortgage as a non-resident since you don’t have a U.S credit history or social security number.
Additionally, buying a property as a non-resident is different from that of a resident. For instance, you will be required to put down a larger deposit than an American citizen would need, but the documentation involved is usually less extensive. You can easily navigate the process with the proper guidance, and mbanc has an incredible team of loan officers who are experts at foreign national loans.
3 Basic Criteria for Getting Foreign National Mortgage Loans
Now that we know that non-residents can buy property in the USA let’s look at the three essential requirements you need to qualify for a mortgage.
1) Income – Or Not?
The first thing any lender will consider before approving your loan is your income. Luckily, mbanc requires only an official letter of verification, completed by your employer, to completely calculate and use your income for qualification. If you are self-employed, you must have at least two years of tax returns to show. However, not all loans require income documentation. Foreign national borrowers can also qualify using mbanc’s DSCR loan qualification methods. This allows you even foreign national borrowers to purchase or refinance investment properties, using the current or even projected rental income from the investment property without any other income documentation.
2) Credit Worthiness
A good credit score can make mortgage approval easy, but it’s standard for non-residents to not have a U.S. credit history. However, you can still get a mortgage with no U.S. credit. Mbanc provides foreign national mortgages and can finance your property with foreign credit references. mbanc will verify two tradelines or lines of credit that foreign borrowers have maintained in their country of residence, via letters from official sources or proof of 12 months of repayments. This simple answer allows mbanc to verify a foreign borrower’s credit worthiness without a U.S. credit score.
Foreign national borrowers pose a slightly higher risk to lenders, and as such are required to bring more money into any purchase deal. For assets, a foreign national will be required to have at least 25% of the purchase price for a down payment, along with cash to cover closing costs, and several months of reserves. Assets can be shown in almost all forms, including stocks, bonds, retirement plans, liquid cash, etc. All funds being used must be transferred to a USD account for the purpose of the mortgage.
Can Non-Resident Aliens Get a Mortgage?
Yes, as a non-resident, you are eligible to apply for a mortgage. You have the option of applying for what is known as a “non-QM loan” to get financing as a foreign national.
What are Non-QM Loans?
A non-QM loan is considered as the best mortgage option for non-resident aliens as the mortgage doesn’t follow the guidelines set by Fannie Mae and Freddie Mac. This type of mortgage is specially designed for foreign nationals who don’t fit into the ‘Qualified Mortgage’ or conventional loans requirements box. mbanc is one of the top non-QM lenders in the United States, especially when dealing with foreign nationals due to their wealth of experience in the arena.
For investors, mbanc’s DSCR loans are a perfect example of hassle-free, non-QM loans. Instead of submitting a long list of unending documents and payslips, all you need to prove is that your investment property can support its expenses and is capable of repaying the loan. There are methods of qualifying for a secondary residence if you are looking to purchase a property for personal use, and you can qualify using any almost income that you receive from your country of residence.
Needs List for Foreign National Borrowers:
It is important to know exactly what you will need to provide when applying for a mortgage. Each different program has a different list of items that are required, so once you have decided which qualification method you are using, refer to the lists below to see what you will need.
1. Passport from your country of citizenship, and a valid VISA to enter the USA if required.
2. Proof of all assets that will be used in the transaction. Need 2 months of statements for any account shown – these account(s) must cover down payment, closing costs, and reserves. Any accounts used for EMD’s must be shown.
3. Proof of your primary residence – a third-party document with an address that matches the primary residence on the application e.g., lease agreement, utility bill, financial statement.
4. Two Credit Reference Letter(s) from verified financial institutions in the borrower’s country of origin –
- Each letter of reference must state the type and length of the relationship, how the account is held, payment amount, outstanding balance and status of account including a minimum 12-month payment history.
- A single reference source may provide verification of multiple accounts. Individual account details must be provided.
- The letter must mention the borrower by name, and the name, title & contact information of the person signing the letter must be included.
• A letter from employer on company letter head providing current monthly salary, YTD earnings and total earnings for the past 2-years. Letter from employer must be on company letterhead, including address and company web address, Employer to be independently verified (LexisNexis, D&B, Google, other). An independent certified translator must translate all docs.
• Must be self-employed for a minimum of 2 years evidenced by a letter from the borrower’s CPA or local equivalent (the “Accountant”) on Accountant letterhead. The letter must include income figures for each of the last 2 years and YTD income. A business license (where required) and organization documents should be provided; and
• A copy of the accountant’s current license is required. The Business & Accountant must be independently verified; and
• An independent certified translator must translate all documents
What is the Process for Applying for a Mortgage as a Non-Resident?
The process for applying for a mortgage as a non-resident is just like the process for residents.
1. Get Pre-Approved for a Mortgage
To get a pre-approval with mbanc, you must submit documentation such as your passport, employment letter, and proof of assets.
Mbanc will evaluate your bank statements and investment account statements to assess your ability to make a down payment and cover the closing costs.
2. Find a Property
Once pre-approved for a mortgage, you can start shopping for a property. Remember that you may need to put down a larger down payment than residents, typically 25% of the purchase price. For investment properties, use mbanc’s Invest software to measure how the property will perform as a short-term rental investment.
3. Apply for the Mortgage
Once you have found a property, you must complete the mortgage application. Contact a loan officer at mbanc to be walked through the process and have the documentation needs provided to you. This is critical, as mbanc’s experts will explain exactly how to approach the transaction.
4. Underwriting and Approval
After your mortgage application has been submitted, mbanc will have its in-house underwriters determine whether you are eligible for the loan. 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 mbanc outlining the loan terms and tenure.
5. Close on the Loan
After your mortgage application has been approved, you will need to sign the loan documents and pay any closing costs. The property will then be transferred to your name.
Applying for a mortgage as a non-resident can be as simple and easy as applying as a permanent resident. Mbanc is an experienced mortgage lender that is experienced in handling non-resident US mortgage applications, and you should not be held back from expanding your portfolio to the U.S. by lack of financing.
Getting a non-resident alien mortgage loan or foreign national is simple with the right guidance through mbanc. The documentation is light, the requirements are simple, and most importantly you will be walked through the process by patient and experienced professionals who want to educate you and help accomplish your goals.