For your consideration: Our observations regarding What's holding back the housing market?

For your consideration: Our observations regarding What's holding back the housing market?

FHA Foreign National Loans

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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 nonresident 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 these non-QM loans mean you may have to get your mortgage from either a large bank or a niche lender.

However, if you are a legal resident borrower and plan to buy a moderately-priced home, you may have other alternatives. 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" 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 U.S. Citizenship and Immigration Services (USCIS) 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 residents" if:
  • the Property will be the Borrower’s Principal Residence;
  • the Borrower has a valid SSN, except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD;
  • the Borrower is eligible to work in the United States provided the Borrower provides either:
    an Employment Authorization Document (USCIS Form I-766) showing that work authorization status is current;
    a USCIS Form I-94 evidencing H-1B status, and evidence of employment by the authorized H-1B employer for a minimum of one year;
    evidence of being granted refugee or asylee status by the USCIS; or
  • evidence of citizenship of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau; and
  • the Borrower satisfies the same requirements, terms, and conditions as those for U.S. citizens.

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 USCIS.

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.

Related: International buyers returning to U.S. housing market

Can Non-Residents Buy and Finance Property in the U.S.?

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, make arrangements with an American co-signer or hard-money lender.

This article was updated by Keith Gumbinger.

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