A Guide To Foreign National Loans

Defy Mortgage
Jun 29, 2023 • 2 min read
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Empowering Foreign Borrowers To Invest In United States Real Estate

Introduction 

Purchasing a home is a big step and usually a great investment for individuals who are not native to the United States. People from all over the world buy homes in the United States. In fact, international buyers purchase an average of over 100,000 properties for over $50 billion on an annual basis. 

U.S. newcomers with visas have a higher median salary than an average U.S. worker. The non-resident investor in U.S. real estate is generally high-net-worth clients with good credit in their home country making them anecdotally a lower credit risk. This has led to the development and growth of creative mortgage programs for Foreign Nationals with no or thin U.S. Credit history.

In this blog post, we will delve into the different mortgage options available to international buyers – also referred to as foreign nationals. Our aim is to provide insights into the broader landscape of international transactions in U.S. real estate and shed light on how foreign nationals can secure home loans without having a U.S. credit history. Without further ado, let’s get to it.

Who May Benefit From A Foreign National Program?

International buyers and foreign nationals can obtain a mortgage through foreign national lending programs without a Social Security number, green card, or visa. Furthermore, in order to show proof of credit, borrowers are not required to have a FICO score. Instead, borrowers can prove their creditworthiness through several methods or by submitting a credit report from their home country.

Homeabroad reports that in 2022, “60% of all non-resident foreign buyers made an all-cash purchase,” according to a NAR report on International transactions in U.S. residential real estate. Likewise, 66% of U.S. newcomers on non-immigrant visas financed their home through a U.S. mortgage, most waiting for 2+ years to establish a U.S. credit history. Given this data, it’s evident that many foreign national buyers who have little or no credit history in the U.S. are not aware of the financing options available to them – options such as a foreign national loan. 

Foreign National Loans Are Non-QM 

Foreign National loans fall within the non-QM or non-qualified category. This means that these mortgages do not fall within the typical guidelines of a qualified mortgage, but that doesn’t mean they aren’t great alternatives for many people.. You can find more information on non-QM loans in a past blog post.

Defy’s Foreign National Loan Highlights

  • No U.S. credit score need
  • No Social Security number required
  • Variety of loan terms including 30-year-fixed and adjustable rates
  • Most Visas included
  • Primary, second, and investment properties
  • Loan amounts up to $5M
  • Up to 75% Loan to Value (LTV)
  • Purchase or refinance with cash-out
  • Debt-service (DSCR) loans available for investment properties
  • An experienced team working with international borrowers

Step-By-Step Process From The Perspective Of A Foreign National Borrower

Here is an overview of the U.S. mortgage process from the perspective of a foreign national borrower:
1. Estimate your budget/Monthly Payment: How much home can you afford? Keep in mind the following components of your monthly payment: Defy will review your principal and interest, property taxes, homeowners insurance premiums, and homeowner’s association dues/assessments (if applicable) along with your other debts and income.  

2. Obtain mortgage pre-approval: This will allow you to shop with confidence and show sellers you are serious and qualified. For pre-approval, you generally need a few main documents or pieces of information:

  • A copy of your passport or valid U.S. Visa unless your country participates in the Visa Waiver Program to verify your identity
  • Depending on your U.S. credit history, an International Credit Report may be required
  • Two years’ history of residency (rent/own, address, and dates) along with 2 years of employment history
  • Income statements that demonstrate an ability to make payments on a new home
  • Asset statements such as stocks, savings accounts, etc can help with down payment costs  

3. Shop for your home and make an offer: Find a good agent experienced in international real estate transactions, such as a CIPS (Certified International Property Specialist) with a designation in the U.S.

4. Finalize your application and lock the interest rate: After you have provided the property information to our Mortgage Consultant, you have the option to lock the interest rate. In the U.S., mortgage rates fluctuate daily. Locking your mortgage rate will ensure that your interest rate stays the same until the loan’s closing. Your Mortgage Consultant will help you with the rate lock process.

5. Mortgage Process and Underwrite:  After accepting your Loan Estimate, your loan will move to the processor who will prepare your information and application for review by the underwriter. The loan processor will order the appraisal and will ensure that we have all documentation for submission to the underwriter. Your mortgage underwriter will determine the final qualification based on the lender’s underwriting guidelines. 

6. Prepare for the closing: You’ll bring your photo ID, a copy of your Closing Disclosure, and any other final paperwork to the settlement table, as well as all necessary funds to close your home loan. 

Our Mortgage Consultants at Defy Mortgage are very experienced in dealing with foreign transactions, and each member is familiar with the regulations regarding international finances. Our skilled team is well-versed in non-QM loans and will provide personalized solutions to each customer’s needs. 

No matter your circumstances, Defy Mortgage is here to help you. Visit our website to learn more about our non-traditional loan options. For more tips on Foreign National loans, check out our recent Tip Tuesday on our Instagram page.  We look forward to assisting you.

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