FHA Foreign National Loans
Non-Citizens Can Buy and Finance Real Estate in the US Fairly Easily
If you are not an American citizen but want to purchase a house here, there are home loans for you. Many mortgage lenders offer foreign national mortgage programs, which work very much like standard U.S. loans -- except that the required down payment is generally larger -- about 30% -- and you may have to get your mortgage from either a large bank or a niche lender.
However, if you plan to buy a moderately-priced home, you may have another alternative. Foreign nationals can also qualify for FHA mortgages. When you indicate on your mortgage application that you hold something other than U.S. citizenship, the lender must ask for and examine additional documentation and determine your residency status.
- Lawful permanent resident aliens. If the lender determines that you enjoy lawful "permanent resident alien" status, the FHA will insure the mortgage under the same terms and conditions as it does for U.S. citizens. This means that you get to finance your home in the U.S. with as little 3.5% down, and do not even need to have a credit rating in the U.S. to be eligible. Documents that function as evidence of lawful permanent residency are issued by the Bureau of Citizenship and Immigration Services (BCIS, formerly the Immigration and Naturalization Service) within the Department of Homeland Security. You have to produce these documents when applying for your FHA mortgage.
- Non-permanent resident aliens. Those on work assignments in the U.S. can buy homes too. The FHA will insure a mortgage made to a "non-permanent resident alien" if the property will be the your primary residence, you have a valid Social Security number, you have earned a satisfactory two-year credit history, and you can produce an Employment Authorization Document issued by BCIS showing that you are eligible to work in the U.S. If your authorization is set to expire within one year, and a prior history of residency status renewal exists, the lender is allowed to assume that continuation will be granted. If this is your first year in the U.S. and there are no prior renewals, the lender will have to determine the likelihood of renewal based on information from the BCIS.
Foreign Nationals Can Have Trouble Coming Up with Credit Scores
One challenge faced by foreign nationals is the that their American credit history is likely to be minimal. Mortgage lenders can work with you if you have a thin file. Your lender can have a credit report constructed from your payment history with utility companies, landlords and any other accounts requiring regular payments. It costs more to get a credit report of this type, but it can make a mortgage and home ownership possible. If you are using non-traditional credit, it's more important for you than for U.S. citizens to be prompt with your telephone, rent and electricity payments -- your mortgage approval may depend on it.
Can Non-Residents Buy and Finance Property?
Not a lawful U.S. resident? Sorry, non-U.S. citizens without lawful residency status are not eligible to take out FHA loans. You might be able to get something from a lender in your own country, convince a property seller to finance your purchase, try an American specialty lender catering to foreign investors or make arrangements with an American co-signor or hard-money lender.
Gina Pogol has been writing about mortgage and finance since 1994. In addition to a decade in mortgage lending, she has worked as a business credit systems consultant for Experian and as an accountant for Deloitte.