Can a foreigner buy a house in the United States?

Perhaps you plan to move to the USA or simply want to go on vacation frequently, in that case, you will want to know if Can a foreigner buy a house in the United States?. Stay with us, we will explain it to you in detail.

We have good news for you, Anyone can buy a house in the USA, regardless of their citizenship. But there are some things you should keep in mind.

Keep reading: How to buy a house in the United States? Step by Step

Can a foreigner buy a house in the United States?

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Of course yes, a foreigner can buy a house in the United States. The easiest way to do this is through a cash purchase.

If you need financing (a mortgage), you will have to meet certain requirements.

Most lenders require foreigners to comply with the following:

  • A minimum credit score of 720 (Ideally 780+).
  • Being able to make an advance of 20%.
  • Have a valid SSN or ITIN.
  • Have a source of income in the United States and that income continues for at least 3 years.
  • Have been in the United States for at least 2 years.
  • Work experience in the US of at least 2 years.

Taking out a mortgage will be easier for a Green Card holder or someone working in the US on a visa than for someone living abroad with no ties to the US.

Foreigners in the US can even qualify for government-backed mortgages. This is a type of subsidized mortgage to protect lenders from default. The best known government-backed loan is the Federal Housing Administration (FHA), which is available to both permanent and temporary residents.

The options available to you also depend on how long you have been in the country and your ability to pay. as a foreigner, your credit report may not have enough data to establish a reliable credit history. This means that assessing your creditworthiness will be more difficult for lenders if you have been in the country for less than 2 years. Borrowing you money may be considered riskier. You may need to raise your credit score before applying for a mortgage.

Companies like NOVA Credit have special programs to help immigrants build their credit. Their services can be useful if you want to get approved for a loan or credit card. However, if you meet the requirements listed above, you may be able to find a lender who will give you a mortgage.

Keep reading: How much credit do I need to buy a house?

Green Card Holders

Green Card holders have some advantages when applying for mortgages in the US. They receive almost the same privileges as US citizens when they need a mortgage.

Fannie Mae and Freddie Mac are government-sponsored companies that offer affordable conventional loans to US citizens. Green Card holders can take advantage of FHA loans and loans from Fannie Mae or Freddie Macjust like US citizens.

This means that as a Green Card holder, you have a great chance of buying a house with as little as a 3% down payment. But still, be prepared to meet the regular mortgage paperwork. It will always be better if you have been in the US for at least two years and if you also have two years of work history and are paying taxes. All lenders will ask for your tax returns for the last two to three years, your credit history for the last two years, and your bank statement for at least two months. Other requirements may vary depending on the lender.

Non-temporary resident aliens may also qualify for mortgages. If you are in the US with a work visa valid as an E-1, E-2, H-2A, H-2B, H-1B, H-3, L-1, or G-1 through G-4, you also have the option to borrow from the Federal Housing Administration. In this case, you may have to file a employment authorization document and a social security number (SSN).

If your contract with your employer expires in less than a year, the lender may request a letter from your employer showing their intention to renew your contract. Lenders will normally look for evidence that you will be able to live and work in the country for at least three years.. The lender’s priority is to make sure you stay and pay off the loan. Remember that as a Green Card holder, you need to have at least two years of tax returns and credit history. Your lender may also ask for a bank statement that is at least two months old.

If you come from a country like Canada or the UK, which have similar credit systems to the US. lenders may also take into account the credit history of your home country.

Keep reading: How to raise credit score fast

Refugees

Refugees and aliens who are granted asylum may also qualify for mortgages. If you have been granted asylum or are a refugee in the US, you can apply for home loans on the same terms as a US citizen. You need to have a valid I-94 form, arrival and departure record stamped “Employment Authorized” to prove your eligibility to work as an asylee or refugee. This form is a work document valid for up to 90 days from your date of entry into the U.S. After the expiration of the 90-day validity of the form, you must present the employment authorization document issued by the Service United States Citizenship and Immigration.

Those who live outside the United States

People living outside the US may have trouble getting conventional financing. If you do not have a valid green card or work visa, you are not eligible for a conventional mortgage or US government-backed loan. Lenders will not have enough elements to evaluate your credit history. It will be more difficult to obtain a credit report if you do not live in the US Given your situation, private lenders will ask you for a down payment of 30% to 50% of the price of the property.

What about investment properties?

Although it is quite difficult to get a mortgage for an investment property as a foreigner, it is not impossible either.

Keep in mind that foreigners living in the United States can obtain mortgages to purchase investment property. But nevertheless, lenders can be much more demanding in terms of requirements. For example, a high credit score, proof of continued income in the United States, and a down payment to qualify.

If you are planning to buy property in the US that you will use for rental or just as an investment, you can also take advantage of domestic foreign mortgage programs offered by lenders such as 1st Capital Group, HSBC, and Quontic Bank.

This type of loan is only valid if you have no plans to become a permanent resident of the US and the property will be held as an investment. These loans usually have higher interest rates, usually 2-4% above a normal mortgage.

The purchase of a commercial real estate property with a minimum required investment of $500,000 in a rural area or investment of $1 million in an urban area may count for those applying for an EB-5 visa. The EB-5 visa is an investor program that grants a Green Card to an individual who meets any of the above investment requirements and who hires at least 10 full-time US workers.

Keep reading: Credit score outside the USA: Is it valid?

If you are thinking of cooperatives as an investment or property option, it is better that you discard them. It is very difficult for a foreigner to be approved by a cooperative board. The credit union approval process involves lengthy and detailed financial disclosures, which can be difficult to comply with if your assets are overseas or if you don’t have substantial employment or tax history in the United States. Also, cooperatives often have restrictions on subletting, which can make it difficult to rent the apartment if you need to return to your home country. Condos typically have a much easier review process for buyers. In general, cooperatives are 20-25% cheaper in price than a condominium.

When you decide to sell your property

When you finally decide to leave the US and sell your home, if you are a foreigner or non-resident alien, you could be in for a surprise. Please note that foreigners are subject to a 15% withholding tax.

Under the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980, when a foreign person sells a property, 15% of the proceeds from the sale are withheld at source. There are some exceptions.

If you are subject to withholding tax, you will receive a stamped copy of the Form 8288-A from the IRS. You must file a tax return with Form 8288-A stamped to be credited with the taxes withheld from the sale. Some states like New York also charge non-residents a tax capital gains of 8.82%

Now that you know that Can a foreigner buy a house in the United States?What you should do is seek professional advice. Consult your situation with a real estate agent who knows the area where you want to buy, he will be able to guide you. Good luck!

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