Can a non-U.S. citizen buy a house in America?
That’s about 3% of all existing homes sold during that time.
So, yes. A foreign national (meaning anyone who’s not a US citizen) can buy a house here.
That includes residents, non-residents, refugees, asylees, and DACA recipients.
But the rules are a little different if you want to purchase the house with an American mortgage.
Most importantly, you’ll need a green card, work visa, or other document proving your residency or employment to get a home loan in the U.S.
If the above applies to you, you can start your home loan application right now.Get a U.S. home loan as a foreign national (Jan 18th, 2020)
In this article:
- Residency rules
- Green card holders
- Nonpermanent residents (no green card)
- Refugees and asylees
- DACA recipients
- Building U.S. credit as a foreign national
- Advice for non-citizen home buyers
Foreign national mortgages: residency is key
Pretty much all mainstream mortgage lenders prefer making home loans for U.S. residents.
So buying a house is easiest for someone with a green card or a valid visa that permits them to live in America.
That’s because lending to residents is usually less risky for mortgage companies.
Imagine someone living in another country defaults a U.S. mortgage.
Yes, the mortgage agreement itself will fall within the jurisdiction of an American state’s courts. But the expense of hiring international lawyers to enforce U.S. judgments and collect any money owed would be extreme.
So if you want to buy a U.S. home as a foreign national, it’s important to have documents verifying that you live or work here legally.
How residency status affects your home loan
Besides U.S. citizens, there are three main categories of people who can live in the States legally.
These categories are critical for foreign nationals who want a home loan. Broadly, they affect your eligibility and documentation required to purchase a house.
The three categories of non-U.S. citizens are:
Lawful permanent resident (LPR)
A lawful permanent resident is someone who holds a “green card.” Green card holders don’t enjoy all the same benefits as citizens (you can’t vote in U.S. elections, for instance). But they can apply for home loans.
>> Lawful permanent residents can use their green card as proof of residence to get financing and buy a home in the U.S.Green card holder? Start your home loan application here (Jan 18th, 2020)
Nonpermanent resident alien
Nonpermanent resident aliens are noncitizens who have legal authority to live and work in the US, usually on a temporary basis. But “temporary” is a flexible term and some remain resident for many years with this status.
>> Nonpermanent resident aliens can apply for a home loan using a work permit or other visa in their passport, and a valid social security number.Non-resident? Start your home loan application here (Jan 18th, 2020)
Refugees and asylees
According to the Department of Homeland Security, refugees and asylees are, “unable or unwilling to return to [their] country of nationality because of persecution or a well-founded fear of persecution.”
>> Refugees and asylees can apply for a green card after one year of residency. But they can also apply for a mortgage with a Form I-94A, or other official residence or employment documentation.Refugee living or working in the U.S.? Start your home loan here (Jan 18th, 2020)
Getting a mortgage as a permanent resident alien (green card holder)
Assuming you’ve built some U.S. credit, getting a mortgage as a foreign national with a green card should be straightforward.
Well, as straightforward as it is for a U.S. citizen, at least.
First, you’ll have to show your green card to your loan officer.
After that, your goal is the same as a U.S. citizen’s would be: to prove you’re a responsible borrower, and shop for the lowest mortgage rate.
Each lender is free to set its own criteria for deciding what interest rate to charge you.
As a rule, you’ll get the best mortgage rate with a high credit score, big down payment, and few existing debts. That applies equally to U.S. citizens and foreign nationals alike.
Documentation required to get a mortgage with a green card
Your green card isn’t the only document you’ll need to buy a home in the U.S. Lenders enforce strict documentation guidelines for foreign home buyers as well as U.S. citizens.
You’ll have to provide paperwork supporting all the information you list on your home loan application.
In particular, be prepared to prove your:
- Identity — Your passport and green card, but also proof of your U.S. address
- Employment — Your latest two or more pay stubs
- Self-employment — At least the last two years’ tax returns and possibly your or your business’s accounts for the same period, certified by an accountant
- Assets — Recent statements that show your savings, investments and retirement accounts. If you own real estate, you’ll need documents that prove that. You may be asked to show the source of recent deposits
- Liabilities — Bank statements covering the last two months, which should reveal your outgoings on debts
- Personal circumstances — Court documents that detail any divorces — plus any alimony and child maintenance obligations you have
If your lender has reason to doubt anything on your application — or simply needs clarification — it can request as many documents as it wishes before advancing you your mortgage.
If you’re newly arrived in America, some of those documents may be in the language of your last place of residence.
Unless that’s English or Spanish, your lender may ask you for certified translations — and currency conversions into U.S. dollars.
Loan types available to permanent resident aliens
You may be getting the impression that buying real estate with a green card is a lot like buying a house as a U.S. citizen. And you’d be right.
You’re even eligible for the same mortgages.
So you could get a home loan starting at zero to three percent down payment, depending on where you buy and which loan you qualify for.Verify your U.S. home loan eligibility. Start here (Jan 18th, 2020)
Getting a mortgage as a non-permanent resident alien (without a green card)
If you skipped the last section on the grounds that you’re a foreign national who doesn’t have a green card, you need to go back and read it. Because almost everything it says applies to you, too.
The only thing that doesn’t apply is the bit about showing your green card.
Instead, you’ll have to show your visa (often a work visa) that gives you the right to live here.
And there is one additional hurdle you’ll need to clear.
Special rule for U.S. home buyers with a work visa
Lenders must verify that a foreign national’s right to reside in the U.S. is going to last for at least the next three years.
The exact length of residency can be hard to pin down. So lenders will often take the fact that you have a valid visa as sufficient verification.
However, if you have less than a year on your current visa, the lender may ask your employer to confirm that it intends to keep you on the job.
Then, it’s up to the lender to determine whether or not it believes you’ll be in the U.S. at least another three years.
FHA loans for work visa holders
If you’re a non-permanent resident alien applying for an FHA loan (a mortgage backed by the Federal Housing Administration), a special rule applies.
Your current visa doesn’t prove you’ll be able to stay for another three years or more. So the lender has to make further inquiries. It may check with your employer and U.S. Citizenship and Immigration Services.
The good news is that there’s an exception to this exception. As long as you’ve had your visa or work permit renewed at least once, lenders aren’t obliged to make those inquiries.
Non-resident buyers may have it easier with a big down payment
There’s another exception to all this.
Foreign nationals who don’t reside in the U.S. may get a mortgage more easily if they have a bigger down payment. Think, 25-50%.
However, they tend to have to borrow from lenders in a small but flourishing specialist sector.
For example, Britons buying vacation and investment homes in Florida are well-served even if they live in the UK.
But these specialist lenders often require a down payment (“deposit,” in British English) of roughly one third to one half of the purchase price. Though you may find lenders willing to go as low as 25%.
That’s a far cry from the low- and no-down payment mortgages available to many green card holders and U.S. citizens.
And you’re unlikely to be offered a mortgage rate that’s as low as a similarly qualified American borrower could get.Find competitive U.S. mortgage rates. Start here (Jan 18th, 2020)
Mortgages for refugees or asylees in the U.S.
There’s nothing to stop an asylee from getting a mortgage in the same way someone with a green card or a residency visa does.
But you’ll have to show the lender a different type of documentation.
Specifically, you’ll need to provide one of the following:
- Your employment authorization document
- Your Form I-94A , which must carry a current and valid employment authorization stamp
- Another official document issued by U.S. Citizenship and Immigration Services that confirms your employment and residency rights
Just to be clear, any one of those should be enough. And you do not need two or all three.Asylees, start your home loan application here (Jan 18th, 2020)
Refugees and asylees — the difference
That last section referred to asylees rather than refugees. That’s because Homeland Security says a refugee becomes an “asylee” the moment he or she is on U.S. soil.
If you think of yourself as a refugee but are living in the U.S. legally, the previous section applies to you, too.
But if you’re living elsewhere, you’ll likely encounter some real issues if you try to apply for a mortgage from abroad.
Home loans for DACA recipients
Back in March 2019, Fannie Mae issued new guidelines for non-citizen borrower eligibility.
That includes those who are in the DACA program.
Of course, Fannie’s guidelines only apply to lenders who make “conforming” home loans. But it’s highly likely that many lenders will adopt these rules — or something very similar — as their own policy.
Fannie Mae lending guidelines for DACA recipients
In brief, Fannie Mae’s new lending rules are good news for “dreamers.”
It confirmed that those who have current leave to live here remain eligible to apply for a mortgage.
The most common documentation DACA recipients would use to apply for a home loan includes:
- Employment authorization document with C33 category and either
- An individual tax identification number (ITIN) or
- A social security number (SSN)
Of course, you’ll also have to meet the employment, credit, income and other criteria that U.S. citizens face when buying a home.
But the guidelines also gave individual lenders a great deal of discretion. Each lender can “decide what type of documentation is appropriate.”
So if you find that mortgage lender is blocking your application, hunt around for another that’s more sympathetic.DACA recipients, start here to find a home loan (Jan 18th, 2020)
Politics, DACA, and home loans
If you’re a dreamer, you’ll be acutely aware of the political squabbles that have surrounded the DACA program in recent years.
Indeed, at the time of writing this, a case is pending in the U.S. Supreme Court. And that could see the program ended.
Clearly, this or any other legal changes to DACA could cause Fannie and all others in the mortgage industry to change their policies.
Indeed, Fannie explicitly says, “As with all Fannie Mae policies, subsequent changes to the law and its application may cause us to reevaluate our policy on this matter prospectively.”
DACA program participants are not eligible for FHA loans. In June 2019, the Department of Housing and Urban Development clarified its policy: “… because DACA does not confer lawful status, DACA recipients remain ineligible for FHA loans.”
Foreign home buyers and U.S. credit
If you’re a foreign national, you need to prove your residence or employment status to buy a home in the U.S. But that’s not where it ends.
You also need to prove you’re a credit-worthy borrower who a mortgage company can trust to pay back their loan.
Often, that means having a U.S. credit score.
>> Related: What credit score do you need for a mortgage?
The vast majority of U.S. citizens and residents build up credit histories without even realizing they’re doing so. Every time you borrow money from a mainstream lender, your application and subsequent payments end up on your credit report automatically.
If your credit report shows that you’ve consistently paid all your debts on time, you’ll have a higher credit score.
And that gives mortgage companies the confidence they need to fund your multi-thousand-dollar home purchase.
Many foreign nationals have a “thin file”
Over time, Americans build up a credit report and credit score based solely on how responsibly they’ve managed their debts.
But the few who never borrow have a problem. At least, they do if they ever apply for a mortgage, credit card or other loan.
That’s because they can’t prove that they have a record of borrowing responsibly. In the finance industry, this is called having a “thin file” — because the borrower’s report contains so little information.
Pretty much all foreign nationals arrive in America with thin (or no) credit history.
And that can be a circular problem: Banks don’t want to lend to you because you don’t have a credit report. But you can’t get a credit report until someone lends to you.
Building U.S. credit as a foreign national
There are ways to build credit after moving to the U.S. But they require patience.
You’ll likely need to make credit card payments or finance another large item responsibly to build credit over time. And you’ll need to find a source to borrow from that accepts applicants without any prior credit.
So, with luck, you might find a store card issuer that will give you an account. Or maybe a specialist “bad-credit” auto lender that will approve your application.
But expect to pay a high interest rate the first time around. Maybe your best bet is to make a very large down payment on a car, or other item, so you’re borrowing (and paying that high interest on) only a small sum.
Importantly, your monthly payments will still count.
And, provided you pay on time every time, you should build a reasonable credit score over the course of a year or so.
Then, you can gradually increase your borrowing from other lenders. And, eventually, you should acquire a great score and blemish-free report.
>> Related: Guide to improving your credit score
Consider a bigger down payment
Even getting to the first step for a mortgage (getting an application approved) is likely to take at least a couple of years.
And it may require considerably longer to build up the sort of high credit score that will earn you the best deals on a home loan.
However, you may get a better deal, regardless of your score, if you can make a hefty down payment on the home you’re buying.
Look for a lender that will consider foreign credit histories
For some foreign nationals, there may be a possible short cut to getting a low-rate mortgage. That’s because a few lenders have started to offer to check newcomers’ credit histories in their home countries. And to use those as a basis for their lending decisions.
This is still new and rare. But, for example, global bank HSBC says on its website:
“International borrowers with qualifying documentation do not need U.S. credit history to apply for an HSBC mortgage. We may order an international credit report for your application.”
But what’s “qualifying documentation?” Well, presumably the bank is referring to your green card. Or the visa you have that gives you the right to live here.
General advice for foreign national homebuyers
It’s a good time for foreign nationals to invest in U.S. real estate. That’s because:
- Median home prices are affordable ($270,000 in the third quarter of 2019)
- Mortgage rates are exceptionally low (good borrowers could get one well below 4% on the day this was written)
- You can buy a home with as little as 3% down, depending on the loan you choose
But many working in real estate are unfamiliar with the rules and guidelines described above. And some have never helped a foreign national to buy a home.
You may benefit by finding a real estate agent and lender who are experienced in assisting people in your situation. And having an expert on your side can make a big difference to your experience and success.
Buy U.S. property as a foreign national
You do not need to be a U.S. citizen to buy a home in the States.
If you’re a permanent resident, temporary resident, refugee, asylee, or DACA recipient, you’re likely allowed to buy a home. And you can finance the purchase, too.
You’ll just have to show a green card or work visa. Or another document that proves you’re legally allowed to live and work in the U.S.
Your mortgage rate and eligibility will vary by lender, so make sure you shop around for your home loan before buying.
Ready to get started?Verify your new rate (Jan 18th, 2020)