Foreign National Loans

Financing a home purchase when you are a foreign national

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For many a foreign national, the United States has always been a great place to invest in, especially Florida. Cities like Miami and Orlando have been major destinations for tourists and investors alike.

Purchasing a home

There are no restrictions for foreign nationals (non-US citizens) when it comes to buying a house or condo in Florida. Any person with a valid Visa can own property and rent it if they want to.

Cash purchases are very common and close quickly, and cash sales have very low closing costs.

Where things can get complicated is when the financing the property.

Financing a home for a foreign national

Many options exist for foreign nationals when it comes to securing financing for a property in Florida, and lenders are constantly offering new mortgage programs for nonresident foreigners.

Rates for these foreign national loans are higher than what a person living in the US would pay since the buyer represents a greater risk for the lender and this translates into higher rates.

All foreign national mortgages share several common elements:
  • Down payments start at 25%
  • Rates vary a lot, they depend on market conditions
  • Most lenders need 6 to 12 months reserves
  • Buyer must have all funds in a US bank for at least 60 days

Reserves are the monthly mortgage payment, PITI (Principal, Interest, Taxes, and Insurance), so if the payment is $1000 a month, lenders want to see from $6,000 to $12,000 in the bank. This shows that the buyer has enough money saved to make the payments.

Funds for 60 days in a US bank is often called “seasoned”. The catch here is that the account should not have any deposits in that 60-day period. Every single deposit made to that account will have to prove where it came from if done within those 60 days.

From my personal experience as a mortgage broker, proving where the transferred funds came from can be a nightmare. Avoid this at all costs.

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Valid visa types

Not all visas qualify for a foreign national loan, and each lender decides what is valid for them.

Here is a list of accepted visas:
Type Description Allowed Program
A1, A2, A3 Employees of Foreign Governments Yes Non-Permanent
B1, B2 Visitors for business or pleasure Yes Foreign National
C1, C2, C3 Aliens in transit No
D1, D2 Alien crew members of ships and aircraft No
E1, E2, E3 Treaty Traders and investors Yes Non- Permanent
F1, F2, F3 Student in academic program No
G1, G2, G3, G4, G5 Employees of International Organizations Yes Non-Permanent
H1 Alien in specialty occupation Yes Non-Permanent
H1-B Chilean or Singaporean National in specialty occupation Yes Non-Permanent
H2, H3 Temporary worker performing services unavailable in the US Yes Foreign National
H4 Spouse of H1 – H3 No
I Members of the Foreign Press Yes Foreign National
J1, J2 Exchange visitors Yes Foreign National
K1, K2, K3, K4 Fiancé or spouse of US Citizen No
L1 Intercompany transfer from International company Yes Non-Permanent
L2 Spouse of L1 visa holder No
M1, M2, M3 Vocational students No
N8, N9 Parent or child of permanent resident No
O1 Alien with extraordinary ability Yes Non-Permanent
O2 Alien accompanying or assisting O1 visa holder Yes Foreign National
O3 Spouse or Child of O1 or O2 visa holder No
P1, P2 Internationally recognized athlete or entertainer Yes Foreign National
P3 Artist or entertainer in a culturally unique program No
P4 Child or spouse of P1, P2 or P3 visa No
Q1, Q2, Q3 Cultural exchange visitors No
R1 Alien in a Religious organization Yes Non-Permanent
R2 Spouse or child of R1 No
S5, S6, S7 Aliens supplying critical information on criminal activity No
T1 – T5 Victims of trafficking No
U1 – U5 Victims of criminal activity No
V1- V3 Spouse, child or parent of lawful permanent resident No
TN NAFTA Professional Yes Non-Permanent
TC No
TD Spouse or Child of TN visa holder No

The buyer should not be on the OFAC list!

Office of Foreign Assets Control (OFAC), if the buyer is on this list, the sales will not go through at all. Do not be on this list.

Required documentation

Foreign national lenders require very little documentation for the most part. A basic rule of thumb is that the less documentation required, the higher the interest rate.

Do not use a “Full Doc” lender, this is only a good idea if the buyer is from countries like Canada or the UK.

Some common elements that all lenders will want to see are:

  • Copy of the passport
  • Copy of the Visa
  • If self-employed, a letter from a CPA stating the buyer’s annual income in USD.
  • For the self-employed, three credit reference letters.
  • If the buyer is an employee, letter from employer stating yearly income in USD.
  • Last two bank statements that have the funds for the purchase, including closing costs and reserves.

All documents must be in English, if not they will have to be translated and depending on the lender they translator might have to be certified. You can save time by having the letters written in English from the get go.

Verifiable CPA letters on letterhead paper. The best verification is with an internet search that shows the CPA’s name, address, etc.

Closing costs

Closing costs are all the fees that the state of Florida and the county where the property is located collect at closing. These fees also include title company, attorney fees, broker fees, application fees, and any other fee related to the closing.

A good rule of thumb is that any purchase will have about 4% to 6% of the sales price in related closing costs. The buyer must be ready for these costs.

Some common closing costs include:

  • Appraisals
  • Home Inspections
  • Title Insurance
  • Processing fees

Conclusion

Financing a property in the US might seem daunting at first, but if the buyer has a good Realtor and Mortgage Broker, the transaction should be a smooth one with a positive outcome.

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