An enormous number of foreigners emigrate from their home country to the United States yearly. While some aliens immigrate to the United States for business purposes, others take this leap in their quest for better healthcare, enhanced educational experience, and abundant career opportunities.
Granted, the United States is home to people of many cultures and accommodates people from diverse backgrounds. However, getting a mortgage in the United States is no small task—especially for non-citizens.
Thankfully, even though the process of getting a mortgage as a non-US citizen might come with a few challenges, it’s still possible for you to get a loan and secure your dream home in the United States.
In this guide, we’ll be going over everything you need to know about securing a mortgage loan as a non-US citizen. We’ll look at the types of mortgages, mandatory documents for mortgage application approval, top mortgage lenders in the United States, and a glossary of mortgage terms.
Types of Non-citizens in the United States
All foreigners living in the United States are either permanent or non-permanent resident aliens.
Permanent Resident Aliens
Immigrants who fall under this category possess a green card (issued by USCIS) and a social security number. Unlike a foreigner with a nonresident status, green card holders and U.S. citizens undergo a similar mortgage application process.
Non-permanent resident aliens
Unlike green card holders, immigrants who fall under this category will need to prove that they’ll be residing in the United States over an extended period (and will live in the acquired home).
Non-permanent residents must provide their social security number while applying for a mortgage alongside their Employment Authorization Document (EAD).
When there’s no EAD to present, the borrower will need to provide one of the following visas as proof of legal residency:
- E series visas
- G series visas
- H series visas (H-1B, H-1C, H-2, H-3, and H-4)
- L series visas
- O series visas
- The Mexican and Canadian NAFTA series
- NATO series visas
Mortgage lenders confirm whether a non-permanent resident will live and work in the United States for an extended period of time. So, you will need to provide specific documents as proof of your intentions to reside in the United States for at least three years.
Types of Mortgages in the United States
The three most popular types of mortgages for non-US citizens are conventional loans, government-issued mortgages (FHA loans), and jumbo loans.
Conventional mortgages refer to home loans not provided by the U.S. government. There are conforming and non-conforming conventional loans.
We regard a conventional loan as conforming when the loan amount provided doesn’t exceed the Federal Housing Finance Agency’s set limit.
On the other hand, we refer to home loans (like jumbo loans) as non-conforming loans when they exceed the FHFA‘s limit for specific countries.
Mortgage lenders providing various conventional loan options might require borrowers to pay private mortgage insurance (PMI) when making an initial payment of less than 20% of the home’s price.
Conventional mortgages, unlike other mortgages, come with lower borrowing costs (even though they might entail a slightly higher interest rate). Borrowers may end up paying as little as 3% down on loans backed by Freddie Mac orFannie Mae.
Conventional loans also grant borrowers the privilege to request that a lender cancel the PMI when they reach a certain level of equity (minimum of 20%).
Borrowers applying for conventional loans (Freddie Mac and Fannie Mae) will have to provide their social security number alongside documents like their proof of income (for a minimum of three years) and proof of residency. You’ll also have to provide a visa and an EAD.
Government-issued loans (FHA loans)
The Federal Housing Administration (FHA) has special mortgage provisions (i.e., the FHA loans) for non-US citizens desiring to become house owners in the United States. The FHA loan is the perfect option for people with no pristine credit and massive down payment.
Borrowers need a down payment of 3.5% and a minimum FICO score of 580 to access the maximum FHA financing of 96.5%. People with a FICO score of 500 can also obtain the FHA loan but will have to provide a down payment of at least 10%.
Prepare to pay two mortgage insurance premiums when pursuing an FHA loan. You will have to pay the first upfront and the second annually for the life of the loan (if your down payment is less than 10%).
Jumbo loans are conventional loans (non-conforming) that aren’t as easy to obtain as many other mortgages.
Let’s assume that you desire to get a Jumbo loan. In that case, you’ll need to provide evidence showing that you’ve resided in the United States for over five years. You’ll also have to prove that you’re going to remain employed in the United States over the next three years.
To qualify for a Jumbo loan, you must meet the following requirements:
- You must be able to provide a 30% down payment for the two available home options (a single-family home or a condo)
- You have resided in the United States for over five years
- You can prove that you’ll remain employed even after three years of obtaining the loan
Necessary documents you’ll have to provide when applying for a Jumbo loan are:
- A stamped Form I-94 alongside a valid passport from your home country
- H-1B and H-2B visas
- EAD (to be submitted along with I-140)
Factors Every Lender Will Consider Before Granting You a Mortgage
Your credit score
One of the hurdles you’ll have to overcome to obtain a mortgage is obtaining (and presenting) a good credit score. Since new immigrants seldom have good credit scores, this disqualifies them from getting a U.S. mortgage most of the time.
Lenders often request that borrowers present a credit report with a specific number of trade lines.
A trade line is a credit account such as an auto loan, a credit card, or a personal line of credit.
As a new immigrant with no credit report, you might have to build one over 12 months. You’ll need the credit history of two to three accounts to do this.
Proof of income
Every lender will request that you provide proof of income. You’ll have to present documents showing that you’ve earned consistent income for the last two years.
Documents showing your account balances and liquid assets are also vital. The paperwork will enable the lender to ascertain whether you can provide the down payment and bear other costs.
Assets you present need not be ones you own in the United States. You can also present your foreign accounts and assets, but the documents must all be in English.
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Lenders consider the residency status of immigrants before giving them a home loan.
Non-US citizens must provide a green card or work visa (with a three-year minimum validity period) as proof of residency.
Mortgage loans are also available for immigrants with no long-term work visa or green card. You can obtain these loans from banks (and other lenders) if you seek to purchase vacation homes and rent specific properties.
Mandatory Documents to Provide to Get a Mortgage
Delays aren’t uncommon when pursuing a mortgage loan, especially when all necessary documents aren’t in place. So, be sure to prepare all paperwork ahead of time.
The documents that a mortgage company would request from a borrower depend on several factors. For example, self-employed non-US citizens might have to provide documents that differ from those that an organization’s employee would present.
In all cases, though, lenders will request documents showing your income reports and debt records.
Below is a list of mandatory documents you should prepare if you seek to obtain a mortgage loan:
Every lender will want to get a complete picture of your financial situation.
Mortgage companies often request that borrowers sign Form 4506-T. By giving your consent, a lender can proceed to obtain your tax returns from the IRS.
Lenders will check to see whether your annual income and pay stubs remain consistent (and don’t fluctuate hugely yearly).
Proof of income
No one will grant a loan to someone incapable of repaying. So, one of the essential documents every lender will request is your proof of income.
Tax returns give lenders an idea of your overall financial health. However, in addition to that, you may have to provide pay stubs from previous months (or other proof of income).
Bank statements and proof of assets
Every lender will assess your risk profile before approving your loan application. For this reason, a mortgage company would request that you provide your bank statements and proof of assets.
These documents help lenders gauge your financial capacity and determine whether you’ll repay your loan, even if emergencies arise.
Checking your bank statement will also verify that your down payments didn’t appear overnight but have been in your bank account for a period of time.
Your credit history is an essential factor that will determine whether a lender will approve your loan application. To obtain this information, lenders will review your credit report (with your permission).
Mortgage lenders take note of negative and positive information in borrowers’ credit reports. Be ready to explain the reason for any negative item on your credit report.
Rental history report
First-time homebuyers may have to provide a rental history report. With this document, lenders will assess how swift and consistent you are with paying your rent.
This document is vital, especially for non-US citizens with no substantial credit history. Your rental history report will help lenders determine whether you’ll be able to repay your mortgage loan on time.
Your friends and family may support you with funds for your new home. However, you’ll have to provide a written document from the donor (called a “Gift Letter”) to prove that the money isn’t a loan but a gift.
The document should clearly state the relationship between you and the donor and the amount of the gift.
Lenders will have to confirm your identity. So, you’ll have to provide a valid Photo ID such as a driver’s license.
Top Mortgage Lenders of 2021
This list comprises a list of mortgage lenders, from traditional banks to mortgage lenders for low-income earners.
Quicken Loans is a leading mortgage company. One report (see page 62-63) shows that the company originated over 500,000 loans in 2019 alone, making it the most prominent loan originator (based on volume).
Quicken Loans mortgage application procedures are less challenging compared to those of many other lenders. There is less paperwork, so the overall process is often quick and straightforward.
Quicken Loans offers VA, FHA, USDA, and other loan options.
Reali doesn’t specialize in mortgages only. In addition to that, the company also buys and sells properties.
Anyone can find and purchase a home with the Reali app, even without visiting the property physically (since potential homebuyers can do a virtual tour at their convenience).
Reali helps buyers acquire homes by facilitating both the home loan and purchase process.
Located in Saint Louis, Missouri, Busey Bank is a top-ranked bank offering traditional banking services alongside mortgage services.
Busey Bank might not be the biggest name on the list of the top mortgage lenders. Nonetheless, this is a bank to keep in mind.
Since its establishment in 1868, Busey Bank has served numerous loan borrowers with its wide range of loan options.
Chase is a top-ranked bank (and mortgage lender) with over 4000 branches nationwide.
Want to obtain a home loan from a bank? You should check out Chase.
You’ll get access to loan bankers who will offer you professional recommendations on the best loan option to pick.
Not to be mistaken for Freddie Mac, PennyMac is a mortgage lender with loan options suitable for non-US citizens.
PennyMac is a direct lender offering FHA loans with a low down payment. The company’s online operations make the process of acquiring a home loan swift and effortless.
Citi’s HomeRun Mortgage is a perfect solution for low-income households. Even without having savings that cover 20% of your down payment, the company can still offer you a mortgage.
Citi’s HomeRun Mortgage allows borrowers to obtain home loans with a down payment of only 3% and without any mortgage insurance.
The company also accepts down payments provided as gifts and from other outside sources.
Guaranteed Rate is ideal for anyone looking to obtain an interest-only mortgage.
An interest-only loan will be an ideal option for you if you meet these requirements:
- You intend to sell the property before the end of the interest-only period
- You are a real estate investor
- You are confident you will get a significant pay increase before an increase in your mortgage payment occurs
Guaranteed Rate’s interest-only mortgages come with a payment period of five to ten years.
Social Financing (SoFi), which began as a student loan refinancing company, is a recognized mortgage lender offering long-term fixed-rate mortgages.
The journey to obtaining a mortgage via SoFi begins with a short, two-minute pre-qualification stage. Next, you’ll proceed to choose your loan amount and then submit all required documents.
LoanDepot simplifies the process of refinancing.
The company offers borrowers the advantage of waiving refinance fees after their first refinance and reimbursing appraisal fees for their future refinances.