Buying your own home is almost always a part of the American dream, and buying one can be very beneficial in the long run. However, it can also be rather complicated, especially if you are not a permanent U.S. resident or citizen.
Although getting a mortgage in the US can seem overwhelming, it doesn’t have to be difficult to understand how mortgages work and which ones are available to non-resident buyers. Together with this, there are other easy Loan facilities to access in America.
Read on for some key steps on getting a mortgage in the US as a non-resident and find out how you can own your dream home.
Understanding the American mortgage system
The American mortgage system is unique in many ways and can be confusing for foreigners who are not familiar with it.
The first thing to understand about the American mortgage system is that it is based on a system of private lending.
This means that the government does not directly provide loans to borrowers. Instead, borrowers take out loans from private lenders, such as banks, credit unions, and mortgage companies.
The second thing to understand about the American mortgage system is that it is a secondary market. This means that loans are not directly between borrowers and lenders. Instead, loans are bought and sold on the secondary market by investors. Investors can be banks, hedge funds, insurance companies, or private individuals.
The third thing to understand about mortgages is typically 30-year loans. This means that the total amount you borrowed will be spread over 30 years, and you'll make monthly payments until the loan is paid off.
Finally, in the United States, most mortgages are fixed-rate loans. This means that your interest rate will stay the same for the life of the loan.
The benefits of getting a mortgage in the US
- Mortgage rates are lower than anywhere else.
- It's easy to qualify for mortgages in America
- The average interest rate on an American mortgage is about 6%.
- Getting a mortgage can help you build your credit score, so it may be worth the time and expense if you plan on buying another house or renting an apartment sometime in the future.
- You might not need much money saved up for the down payment, especially if you have a stable income.
- You don't have to speak English fluently because there are translators at most banks that will help with paperwork.
The challenges of getting a mortgage in the US
There are many challenges when it comes to getting a mortgage in the US. They include:
- For one, the process can be lengthy and complex, with many different steps and paperwork involved.
- Another challenge that can come up when getting a mortgage in the US is credit score.
- Lenders are required to verify your income and assets before approving your loan. This means that you'll need to provide tax returns, pay stubs, and bank statements when you apply for a mortgage.
- Finally, down payment requirements for a home loan are now higher than they were in the past. To get a good interest rate, you'll generally need to put down 20% of the purchase price of the home.
How to get a mortgage in the US as a non-resident
It can be difficult to get a mortgage in the United States as a non-resident. You will need to take a few extra steps to qualify for a loan.
1. Find the right lender
Find a lender who is willing to work with non-residents. A few lenders specialize in international loans, so that is a good place to start your search.
Once you have found a willing lender, you will need to provide them with a few documents. These may include your passport, income proof, and funds. You may also need to provide a letter of explanation as to why you are seeking a loan in the United States.
2. Check your credit score
Your credit score will be the most important factor when you're applying for a loan. Lenders use a credit score to determine your interest rate and whether or not they'll be willing to offer you financing.
When you apply for a loan, you'll need at least two trade references from people who have known you for at least two years and proof that you can afford the monthly payments. You'll also need information about your income, such as pay stubs, tax returns, and bank statements.
As a non-resident, this may seem like an impossible task. But there are ways around it. If you've been employed in the U.S., ask your employer for an IRS Form W2 (which includes all of your earnings) or Form 1099 (which includes income).
Another option is to find an American citizen who has bought property before and take them on as a co-signer—someone who agrees to help you out financially if things don't work out with the lender.
3. Get pre-approved for a loan
Getting pre-approved for a loan can be another step in getting your mortgage. Pre-approval means that you are qualified and have been approved for up to an amount of money.
For example, if you're looking at houses that are over $300,000, it's important that you have pre-approval so that the lender knows they're willing to lend you the money.
A common option for international buyers is the FHA loan, which allows homebuyers to finance 100% of the purchase price.
4. Find an agent
Next, find an agent who can help guide you through the process of purchasing a property and submitting your application for pre-approval.
5. Find the perfect property & sign
Finally, after receiving your pre-approval letter from your lender and finding a property that meets all of your criteria, it's time to sign on the dotted line!
Requirements to apply for the Mortgage
You will still need certain additional paperwork even though you have already satisfied the basic loan requirements, which include having a certain income, credit history, and down payment.
Providing evidence of this could include things like:
- A valid social security number
- Permanent residents must obtain a green card.
- If your authorization is temporary, such as work authorization, you must submit a valid visa and, sometimes, work authorization paperwork proving your long-term employment.
- The down payment and closing charges must be paid in US dollars. Lenders are looking for a steady balance in the two months preceding the application.
- Permanent and non-permanent residents must show proof of a full-time job and a two- to three-year income history. Earnings from international corporations in other currencies must be converted to US dollars.
- If you have tax returns or bank statements in a language other than English, you must get them translated into English.
- New immigrants who do not have a credit score because they have no established credit history in the United States may be eligible for a non-traditional credit report. Instead of your typical credit history or credit score, lenders may accept: Rent payment history over the previous 12 months, as verified by the landlord, bank statements, or canceled checks, Utility bill for the previous 12 months (water, electricity, sewage), Two to three non-housing costs include a cell phone, cable, auto, or life insurance.
FAQS
Can I buy a house if I'm not a U.S. citizen?
Yes. Non-citizens can acquire property in the US because there is no citizenship requirement. If they meet specific requirements, foreigners can get a mortgage.
How long do I need to live in the US to get a mortgage?
Foreign nationals can buy a property in the United States; however, lenders normally need borrowers to have a social security number, an established credit score, and to have lived in the United States for at least two years to acquire a mortgage.
Can I buy a house in USA with tourist visa?
Yes, it is lawful for you to do so. Permanent residency or U.S. citizenship are not legally required for real estate ownership in the United States.
Conclusion
It can be difficult to get a mortgage in the United States as a non-resident, but it is possible. The most important thing is to have a good credit score and a steady income.
You will also need to provide a down payment and show that you have the ability to repay the loan. If you have all of these things, you should be able to get a mortgage in the United States.