Foreign Nationals and FHA Mortgages
Many mortgage lenders offer foreign national loans. They work a lot like standard U.S. loans, except that the required down payment is about 30 percent. However, foreign nationals buy moderately-priced homes, they may qualify for FHA mortgages. Mortgage applications require you to disclose your citizenship. If it’s other than US, the lender must obtain and examine additional documents and determine your residency status.
- Lawful permanent resident aliens. If you enjoy lawful "permanent resident alien" status, FHA will insure the mortgage the same way it does those of U.S. citizens. This means that you get to finance your home in the US and pay as little 3.5 percent down. You don’t even need 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. On a work assignment in the US? You can buy a home here. FHA insures 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 US. If your authorization is set to expire within one year, and a prior history of residency status renewal exists, the lender assumes that continuation will be granted. If this is your first year in the US and there are no prior renewals, the lender must determine the likelihood of renewal based on information from the BCIS.
Foreign nationals may have trouble getting credit scores
One challenge faced by foreign nationals is that their American credit history is likely to be minimal. Mortgage lenders can work with you if you have what’s called 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.
What about non-residents?
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.
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