4 Steps to Getting a Mortgage as an Immigrant to the United States
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As immigrants get jobs, start businesses and build a life in the U.S., many contemplate buying a home. Although lenders offer mortgage loans for immigrants, there are some extra steps required to qualify.
Step #1: Verify your immigration status
There are a variety of home loan programs available to immigrants in the United States. The qualifying guidelines and documentation requirements depend on what type of residency you have.
Lawful permanent resident. According to the U.S. Citizenship and Immigration Services (USCIS), lawful permanent residents are legally recognized and lawfully recorded as having permanent residency in the U.S. Also known as “permanent residents,” lawful permanent residents receive a Form I-551 — more commonly called a “green card”— that verifies their ability to live and work in the United States.
Nonpermanent residents. Nonpermanent residents can live in the United States temporarily with employment authorization granted by the USCIS through a variety of different visas. Only the following visas are acceptable for mortgage lending:
|Visa holders who are eligible for mortgages|
|WHO IT APPLIES TO|
|E Series (E-1, E-2, E-3)||Nationals of countries with a commerce treaty with the United States who are here on business to carry out “substantial trade.”|
|G Series (G-1, G-2, G-3, G-4, G-5)||Employees of foreign governments or international organizations living in the United States.|
|H Series (H-1B, H-1C, H-2, H-3, H-4)||Temporary workers with specialized knowledge, agricultural skills, or who are enrolled in programs not available in their home country; and their dependents.|
|L Series (L-1A, L-1B, L-2)||Professional employees who work for a non-U.S. company and are being transferred to an American subsidiary, and their dependents.|
|NATO Series (NATO 1-6)||Representatives, officials and experts from NATO countries visiting on official business.|
|O series (O-1A, O-1B, O-2, O-3)||Individuals with “extraordinary ability” in certain fields and their spouse or children.|
|Canadian and Mexican NAFTA series (“TN”)||NAFTA-specific employees for prearranged official business activities for foreign or U.S. employers.|
Immigrants living in the U.S. illegally. Some lenders offer tax ID loans for immigrants living in the U.S. without legal permission, typically with an individual tax identification number (ITIN) instead of a Social Security number.
Foreign nationals. A person who is in the United States but does not have U.S. citizenship or nationality.
Step #2: Learn which loan programs you qualify for based on your immigration status
Lawful permanent residents and many nonpermanent residents are eligible for most standard government- and non-government-backed mortgage programs. Immigrants living here illegally and foreign nationals typically don’t qualify for regular mortgages because they don’t meet legal residency requirements or can’t document income in the U.S. Below is a brief overview of programs available for each immigration status.
- FHA loans. The Federal Housing Administration (FHA) insures loans made by FHA-approved lenders with down payments as low as 3.5% and credit scores as low as 580. Permanent and nonpermanent resident immigrant borrowers must have a valid green card, visa, Social Security number and two years of verifiable income for an FHA loan approval.
- VA loans. Because nonpermanent resident immigrants can’t join the military, they aren’t eligible for loans guaranteed by the U.S. Department of Veterans Affairs (VA). However, green-card holding permanent resident immigrants can join and serve, and use VA home loan benefits to buy a home with no down payment and flexible qualifying standards.
- Conventional loans. Fannie Mae and Freddie Mac are government-sponsored enterprises that purchase residential mortgages and set guidelines for 3% down homebuyer programs. Permanent and nonpermanent residents with a minimum credit score of 620 are eligible for conventional loans.
- USDA loans. The U.S. Department of Agriculture (USDA) backs loans for low- to moderate-income borrowers looking for homes in rural areas. Permanent and nonpermanent residents with a valid green card, visa and verifiable income can purchase a home with a no-down-payment USDA loan if they qualify.
- Non-QM loans. Foreign nationals and immigrants without legal permission to live in the U.S. may qualify for non-qualified mortgage (QM) programs offered by alternative lenders. Non-QM loans are for borrowers that don’t meet stringent rules set by regulators to verify a borrower’s ability to repay a home loan. Borrowers with no Social Security number or verifiable income in the U.S. may qualify for these specialized programs. However, you can expect higher down payments, higher interest rates and sometimes prepayment penalties that involve a fee if you pay off a loan before a set time period.
Step #3: Special lending requirements apply to mortgage loans for immigrants
Besides meeting standard lending requirements for income, credit and down payment, mortgage loans for immigrants set extra guidelines, which may include verifying:
- A valid Social Security number. Regular lending programs require a verifiable Social Security number; ITIN numbers are not acceptable.
- An unexpired green card status. Lawful permanent residents must have an unexpired green card.
- A valid visa status. Borrowers must provide a valid visa and, in some cases, an employment authorization document that shows they have long-term employment.
- Down payment funds in U.S. dollars. Money for your down payment and closing costs must be in a U.S. account with amounts shown in U.S. dollars. Lenders look for a consistent balance for the two months before you apply.
- Income in U.S. dollars. Permanent and nonpermanent residents must show a two- to three-year history of income and prove full-time employment. Any earnings received from overseas corporations in a different currency must be converted to U.S. dollars.
- Documents translated to English. Borrowers must have tax returns or bank statements in a foreign language translated to English for loan approval.
- An alternative credit history. New immigrants without a credit score because of a lack of established U.S. credit history may be eligible for a non-traditional credit report. Lenders may accept the following in lieu of a traditional credit history or credit score:
- Rent payment history for the past 12 months verified by a landlord, bank statements or canceled checks
- Utility bill for the past 12 months (water, electric, sewer)
- Two to three non-housing-related expenses like cellphone bills, cable bills, car insurance or life insurance
- That you don’t have diplomatic immunity. Although relatively rare, diplomatic immunity prevents United States courts from forcing a payment or judgment in the event of a loan default. Mortgage companies won’t lend to an immigrant with diplomatic immunity status.
- The borrower is not on the Specially Designated Nationals list. Anyone from a country listed on the Office of Foreign Assets Control “Specially Designated Nationals” list cannot get mortgage financing in the U.S.
Step #4: Shop for the best mortgage lenders for immigrants
Permanent and nonpermanent resident immigrants that meet the basic requirements for a mortgage should use a comparison rate tool to get rate quotes from at least three to five lenders. If your green card is about to expire, or you have a temporary visa, make sure the lender you’re working with doesn’t have any added restrictions.
Check out international banks with U.S. branches for foreign national programs, especially if you keep sizable sums of money on deposit with them. Mortgage brokers and mortgage banks usually have access to a variety of non-QM loan programs as well, but watch for risky features like prepayment penalties, interest-only payments and balloon payments. Because these loans don’t fit the Consumer Financial Protection Bureau (CFPB)’s “qualified mortgage” rule, lenders may offer terms that could be difficult to repay.