Foreign National Loan

Foreign national mortgages have returned to the U.S. housing market.

Now, it's not just citizens of Canada, Mexico and the U.K. who can buy homes with U.S. financing. Anyone, from anywhere, with adequate downpayment and income can mortgage a U.S. home.

The return of foreign national loans arrives at an opportune time -- the U.S. housing market is gaining steam.

FOREIGN NATIONALS PURCHASE 6% OF HOMES, BY VALUE

According to the National Association of REALTORS®, international buyers purchased more than $68.2 million in U.S. residential real estate in the twelve months ending March 2013, comprising vacation home sales in Arizona; investment property sales in Chicago; and long-term investments throughout California and Florida.

In terms of total U.S. home sales by value, foreign buyers accounted for 6% of home sales nationwide.

This figure may rise in 2014 and 2015.

For much of history, investing in U.S. real estate has been profitable. Lately, however, as individual wealth increases in non-U.S. markets, investors abroad have sought the diversification and stability that the United States housing market tends to provide.

Real estate is the nation's largest asset class and values are up more than 10 percent annually in many U.S. markets since 2011.

Thankfully, banks are servicing foreign buyers in want of a mortgage. Different from 2008-2013 when foreign national lending was scarce, today's international buyers have options.

Foreign national mortgages are -- once again -- available via different sources.

INTERNATIONAL BUYER MORTGAGE LOAN TRAITS

U.S. banks are returning to foreign national mortgage lending. Loans are not available from every U.S. bank, but the ones that make foreign national loans available are tending to follow similar loan guidelines.

At minimum, as one example, a non-U.S. citizen should expect to make a home downpayment of 30 percent or more; while, in some cases, downpayment percentages will range as high as fifty percent.

The percentage of your downpayment will vary based on loan size, property type and a bank's overall comfort with your profile.

A home buyer with extensive international borrowing experience may be allowed to make a smaller downpayment than a buyers making his first international home purchase. Similarly, a buyer of a single-family home will typically be allowed to borrow more money than a buyer buying a condominium or co-op.

Beyond the downpayment, expect to provide the following to your lender:

• Credible income documentation for the last two years
• Passport for identification purposes
• Credit reports from your native country and/or U.S. credit bureaus
• Proof of assets for downpayment and reserves, sourced from a worldwide financial institution

Note that, because you will have a TIN, green cards, work visas and social security numbers are not required. The TIN will be used for tax payments to the U.S. government once annually.

Lenders will typically treat your purchase as a "second home" or vacation program unless the home is a designated rental property for income. Loans for investment properties carry more stringent standards and may require additional reserves or evidence of credit strength.

For non-English speaking buyers, or for buyers whose documentation is printed in a language other than English, translation services must be provided.

It's recommended to seek your local U.S. Consulate or Embassy for translation services. You will likely close on your mortgage at these locations, too.

Foreign National Loans  

Foreign Nationals are allowed to own real estate in the US. In fact, there are very few differences between a foreign and US buyer when purchasing real estate. It is important that the Foreign Buyer understands the Buying Process and knows some basic information about general US real estate practices that may vary greatly from a buyer’s home country.

US Real Estate Practices
Transparency – In the US, real estate is very transparent. A new listing for sale is required to be posted to the listing service within 24 hours so that active listings are available to all agents. This is unlike in many other countries, where buyers have to go from agent to agent to find a property. We have access to all the listings in Florida and can assist you in the sale of any one of them.

Issues for Foreign Buyers: 
Financing is Readily Available for Foreign Buyers
During the financial crisis, Foreign National financing dried up. However, over the last couple of years, banks have loosened their restrictions on Foreign National financing.

Most qualified Foreign Buyers can obtain financing for properties with a 30% down payment. Here are the terms Foreign Buyer program 

• 30% down payment 
• $2,000,000 loan limit, which translates to a property value of $2.9 million.
• 12 months’ reserves (mortgage payment, maintenance and taxes) are required to be on deposit 
• We offers 30-year and 15-year fixed rate mortgages. & Adjustable

Depending upon how long you think the holding period will be, you might want to go with an adjustable-rate mortgage that matches the holding period and has slightly lower rates.

While banks are offering loans to Foreign Buyers, they require a long-term relationship with the customer beyond just the mortgage. That is why they require as one of their terms that the buyer hold the $100,000 deposit with the bank.

While this is just one example of a Foreign National mortgage program, we have access to an array of mortgage brokers that suits the needs of a Foreign Buyer. Some of our mortgage broker contacts work with small banks that have very competitive terms and more flexibility than the big banks. 

Foreign National Loan Checklist Download: