Citizenship is not necessary to purchase property nor is it necessary to qualify for a home loan. However, getting a loan if you aren’t a “traditional borrower” can prove to be difficult. Here are a few difficulties you may face when trying to find a mortgage loan as an non-citizen, and what to do.
Documenting Financial Information
A legal immigrant that has been in the United States for three or more years will find that buying a home is much the same as for someone who was born here. This is because they will have all the right documents. These documents include a social security number and proof of earnings. Having the right documentation makes the lending process easy.
However, recent arrivals to the United States will find the process to be a bit trickier. Even if you are well-established in your home country, getting financial documents from abroad can be difficult. Most of the documents will need to be translated and many that are required by American bankers, such as W-2s, do not exist in other countries. Finally, when it comes time to validate this information, the language barrier, and institutional differences can slow up the process.
What To Do:
- Currently, there are programs underway to establish a cooperation between some of the larger foreign banks and the United States to help immigrants document their assets abroad. Check with your international bank to see if such a program exists.
- Some international banks offer US mortgages. Securing a relationship with such a bank would allow you to get an international loan on a US property.
No Credit Score
If you do not have any kind of credit history, you won’t have a credit score, either. A strong credit history allows bankers to feel comfortable loaning you money, so those without a history must rely on other methods.
Some lenders may be willing to look at international credit reports. If you are a native resident of Canada, the United Kingdom, or Ireland, this may be an alternative, though it is very expensive.
For non-citizens without credit in the United States or the inability to get an international report, lenders can look at less traditional methods of verifying your credit rating. For instance, your banker may look at rent payments and utility bills, as well as letters from doctor’s offices and landlords. Your lender can also look to letters from someone in your native country verifying that you are a good credit risk. Since this is a more labor intensive process than just looking at a credit score, loans that use these methods often have higher interest rates.
What To Do:
- Get letters from anyone that knows you to be a good credit risk both inside and outside the United States. This can include doctors, dentists, landlords, employers, neighbors, or church leaders.
- Gather together cash receipts and proof of payment for all utility companies or other company in which you make monthly cash payments.
Many Contributions To The Family Income
If you are from a multi-generational home, lenders will have to spend large amounts of time determining who lives in the home, who contributes to the income, and how long each person will remain as an income producer at that residence.
What To Do:
- Get the documentation together for all the income from each income-producing person in the home.
- Get letters from each wage earner stating how long they plan to be part of the current household.
Non-Permanent Status
It is possible that you are here on a temporary visa because you have a skill that is currently in demand. If you do not have a green card, getting a loan can be a little more challenging.
Most lenders want to feel confident that the borrower will be in the United States for a significant amount of time. One way to prove this is to get a statement from you employer stating how long you are expected to remain in the country.
Fannie Mae and Freddie Mac offer programs specifically for non-permanent resident aliens who are here on an H1B or H2B temporary work visa. These loans require a larger down payment and have some other restrictions.
What To Do:
- Get a letter from your employer stating how long the company intends to keep you in the United States.
- Speak to someone about the non-permanent resident alien loans by Fannie Mae and Freddie Mac.
Non-Citizens
Although most loans require that you provide a Social Security number and state your citizenship status to obtain them, not all loans do. Loans that are not required to meet banking-agency regulations, such as Fannie Mae, Freddie Mac, or FHA, can have their own requirements.
For these types of loans, as a non-U.S. citizen, you will need an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. Interest rates for ITIN mortgages are typically 2 to 3 percent higher than a conventional loan.
What to Do:
- Get an ITIN by filling out form W-7: Application for IRS Individual Taxpayer Identification Number.
- Have available your original or certified copies of your proof of identity.
Other Considerations
- As a non-citizen, getting a loan may not be easy. However, finding a lender that is used to dealing with non-citizen clients can be the key to success. If you already deal with an international bank that operates in the US, start there. If not, then look at a community bank located in an area with a large immigrant population. Finally, see if the local credit union has lending programs for green card and visa holders.
- Be sure that your lender is aware of the Fannie Mae, Freddie Mac, and the FHA loan products that work with those with nontraditional credit and income.
- Finally, you may also want to consider buying into a condominium or co-op situation rather than into a single family home. Since buying a condominium or co-op means you own only a share in the building, lenders may be more flexible with their terms.
