This Foreign National Cheat Sheet will help you to easily explain the requirements for obtaining financing for a second or investment home for people living and working outside the US.
The Foreign National Cheat Sheet
Visa & Valid Passport
Foreign National borrowers must show a valid copy of their passport and current Visa (Tourist Visa’s are ideal, student visa’s do not qualify, for a complete list see here).
You should also check that your customer is not listed in OFAC – Office of Foreign Assets Control – Sanctions Programs and Information
The down payment can range from 25% to 50% depending on the property type, interest rate, and documents that the client can provide (i.e. If the client cannot provide tax returns they will need a larger down payment or a higher rate).
Rates vary from the mid 5’s to the low 8’s and are subject to change every day.
Our compensation is not based on the rate and borrowers will receive best options available at the time of application.
The borrower needs to show three months of bank statements and all deposits must explain where they came from.
The only sources that lenders allow for deposits are wages and earnings if self-employed. Unsourced funds and cash deposits will not be taken into consideration and will work “against” the borrower.
If the borrower has money in cash, he/she will need to deposit that cash in their bank and let it season two full months.
This seasoning (waiting period) is crucial for Foreign National loans and is the #1 reason these loans fail to close on time. U.S. anti-money laundering laws require this.
The borrower must have 12 months of seasoned reserves (Principal, Interest, Taxes, Insurance). Reserves must be in a bank for at least 30 days.
Funds in a U.S. Bank
The funds for the down payment and closing costs must be in a banking institution for 60 days (seasoned). 30 of these days must be in a U.S. bank account prior to closing.
The “seasoned” reserve funds can be in a foreign bank for at least 30 days prior to closing.
Minimum Loan Amount $150,000
Unlike regular loans, like FHA or Conventional, Foreign National loans do have a minimum loan amount requirement. Remember that it is the loan amount, not the sales price.
If you have a specific scenario and property that you would like us to price it and give you the requirements for your client, please feel free to contact us.