How to Buy a Home in the U.S. as a Non-U.S. Citizen

It is not impossible to purchase a home in the United States if you are not a citizen, but it requires a little more planning and preparation. In point of fact, the procedure is not all that dissimilar to that of a citizen. Making a cash offer is the easiest way for non-US citizens to purchase a home; however, mortgages are a common practice among immigrants and visa holders.

The difference is that before a bank approves your loan, you will need a higher credit score and a few more documents. That is encouraging news for foreigners who want to live the American Dream and own a home. There is no reason why you can't become a homeowner in the United States if you take a few more steps and do a little more work before making an offer on a home.

Getting a mortgage as a non-US citizen

Similar to the majority of US citizens, taking out a mortgage loan is the most common way for a non-US citizen to buy a home. In order to determine your level of financial risk and stability, your bank will need to verify your income and credit history. If you are not a permanent resident, it might be hard for them to find your records, so you might have to try different lenders to find one that will give you money. You are qualified for the majority of loan programs as long as you are able to provide the necessary documentation.

One of the most popular loan programs for borrowers who lack the funds to put a large down payment is the Federal Housing Administration (FHA) loan. This program is open to non-US citizens; however, you will need to demonstrate that the home you are purchasing will be your primary residence and not a vacation or investment property.

If you are not a resident on a green card or visa, the process is a little more difficult. Because it will be more difficult to locate a credit report, some banks won't be able to determine your financial eligibility. The best option for foreigners purchasing a home outside of the United States is to pay cash for it. Foreign National Loans are another option, but they come with high down payments and high interest rates. Additionally, in the United States, you will require an Individual Tax Identification Number. Non-US citizens can get mortgages just like citizens can by showing proof of their finances and credit history.

Your residency status:

Determines what kind of home loan you will get and how much you will pay for it. Assuming you live and work in the US, you'll have tax documents to show your bank that you are monetarily reliable. However, it is more difficult to verify your records if you are a foreign national living abroad.

Your lender will have more information from which to base their decision the longer you have lived in the United States. As a result, obtaining an affordable mortgage is easiest for those who hold a green card or a work visa. Your credit report is all your lender has to go on if you are a foreign national whose primary place of employment and residence is outside the United States which may result in lenders charging you higher interest rates or ask for a larger down payment.

The conventional loan of a green card holder will be backed by Fannie Mae and Freddie Mac, the same as they would for a US citizen. These enormous government-supported foundations purchase mortgages from more smaller banks to alleviate some monetary gamble. Green card holders are not subject to any special requirements.

Holders of work visas Fannie Mae and Freddie Mac will also buy your mortgage from your lender if you hold a work visa; however, you may be required to demonstrate that your employer will renew your contract. It is easiest to demonstrate to your lender that you will be employed in the United States for at least three years. FHA loans are also available to people with work visas. These loans let you buy a mortgage with as little as 3% down.

Foreign nationals

Individuals who live and work outside the US will have the hardest time fitting the bill for a traditional home loan. Other than your basic credit history, your lender won't have enough information to verify your income. For a non-conventional loan, you may be able to locate a private lender; however, you will need to make a larger down payment and have a high credit score.

Documents for non-resident homebuyers

Your home loan moneylender needs documents that assist them with deciding your record of loan repayment, business history, and confirmation of pay. This is fairly simple for a US citizen due to access to American credit reporting agencies and tax records. Finding your credit history with these credit bureaus can be costly and time-consuming if you are not a citizen of the United States. However, this ought to be easier if you have a relationship with or account with an international bank.

If you don’t have an international bank account, though, here are the records, criteria, and documents you’ll need to qualify for a loan:

• A credit score of 720 or higher
• A valid Individual Tax Identification Number or Social Security Number
• American pay stubs and an American bank account where your salary goes
• Proof that you’ve been a US citizen for at least 2 years
• Proof that you have worked in the US for 2, consecutive years

Implications for Selling a Home in the United States as a Non-US Citizen

At some point, you might decide to sell your home in the United States. It is beneficial to be aware of the rules and requirements in case you decide to sell your property in the future before purchasing new property in the United States. To ensure that foreign nationals do not evade U.S. income tax on their sold property, the IRS requires buyers of property from non-U.S. citizens to withhold 15% of the gross sale price. The buyer may be liable for additional taxes if they fail to withhold this amount. The IRS FIRPTA publication outlines the somewhat complicated rules surrounding this, and the International Tax Gap Series provides additional information.

The most important thing is to work with a trusted agent who won't pressure you beyond what you're comfortable offering or rush you into making a bad decision. Work with a dependable real estate agent to ensure that they are thinking of your best interests. At Sohum we have helped many non-citizens from India, South Asia and other countries.