4 Steps to Getting a Mortgage as an Immigrant to the United States
Owning a home may be a classic part of the American dream, but getting a mortgage as an immigrant in the U.S. can involve extra challenges. The good news is that lenders offer mortgages to immigrants, but there may be some extra steps to qualify.
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1. Verify your residency and immigration status
There are a variety of home loans available to immigrants, but the type of mortgage you can qualify for may vary depending on your residency and documentation status.
Green card holders or lawful permanent residents
Non-U.S. citizens who can legally live and work in the country on a permanent basis are known as lawful permanent residents or “green card” holders. This refers to the card proving permanent resident status. There are several different paths to obtain a green card, but a common one involves a family member or employer sponsoring your application.
Nonpermanent residents can live and work in the U.S. for a set period of time as determined by their specific visa type. Only the following visas are acceptable for mortgage lending:
Visa holders who are eligible for mortgages
|Nonpermanent resident visa type||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,” for example.|
|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-1B1, H-2A, H-2B, H-3, H-4)||Temporary workers with specialized knowledge or 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 office or 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.|
DACA recipients and undocumented immigrants
Undocumented immigrants are non-U.S. citizens who do not have a valid visa or other immigration documents allowing them to lawfully live and work in the country. Deferred Action for Childhood Arrivals, or DACA, allows people who were brought to the country unlawfully as children to receive a two-year renewable deferment from deportation, granting them the right to work in the U.S.
Refugees or asylum seekers
Immigrants who come to the U.S. seeking protection from prosecution in their homeland because of their race, religion, nationality, political opinions or membership in a particular social group can apply for refugee or asylum status. Once approved, they can live and work in the U.S. and, in time, ask to become a lawful permanent resident or U.S. citizen.
A person visiting the country for a brief period of time for work or vacation who does not have U.S. citizenship or nationality is considered a foreign national.
2. Explore home loan options for immigrants
There’s a variety of types of mortgages available for immigrants. Below is a summary of common mortgage programs and the immigration status required for each:
Insured by the Federal Housing Administration (FHA), this government-backed mortgage option offers borrowers the option to pay a low down payment of 3.5% if their credit score is 580 or higher, or 10% if their score falls between 500 and 579. FHA loans also require mortgage insurance, which costs 1.75% of the loan amount up front and then an additional 0.45% to 1.05% annually.
Eligible immigration statuses: U.S. citizenship is not required to obtain an FHA loan, but an immigrant must have lawful permanent residence status, have nonpermanent residency status or be a DACA recipient.
Documentation requirements: Permanent residents will need to show their green card and indicate their status on the Uniform Residential Loan Application. Nonpermanent residents will be asked to prove their eligibility to work in the U.S. and must have a valid Social Security number.
VA loans are backed by the U.S. Department of Veterans Affairs (VA), come with no down payment or mortgage insurance requirements and cap lender fees at 1% of your total loan amount. To be eligible for a VA home loan, you need to be an active-duty service member, veteran or eligible surviving spouse.
Eligible immigration statuses: Non-U.S. citizens can serve in the military, but only if they are lawful permanent residents, meaning a green card is a prerequisite for VA loan eligibility.
Documentation requirements: While green-card-holding military members may need to provide proof of their residency status, lenders will primarily be concerned with their certificate of eligibility (COE), which is a document prepared by the VA that shows they qualify for the VA home loan benefit.
A USDA loan is a government-backed mortgage designed to help foster homeownership in rural areas. Backed by the U.S. Department of Agriculture (USDA), these loans don’t require a down payment, but there are strict income and location requirements borrowers need to meet in order to qualify.
Eligible immigration statuses: Permanent residents, refugees, asylum seekers and other noncitizens may qualify for USDA loans.
Documentation requirements: All applicants will need to provide proof of their residency status as U.S. noncitizen nationals or qualified aliens.
A conventional mortgage is any home loan that isn’t backed by a government agency. Conventional loans tend to require higher minimum credit scores than government-backed loans and are often stricter when it comes to acceptable debt-to-income ratios, down payment amounts and loan limits.
Eligible immigration statuses: Immigrants with lawful permanent residence status or nonpermanent residency status can qualify for conventional loans.
Documentation requirements: Borrowers need to provide a valid Social Security number or Individual Taxpayer Identification Number as well as proof of their current residency status through an employment authorization document (EAD), green card or work visa.
Non-qualified mortgages are home loans that fail to meet the Consumer Financial Protection Bureau’s “ability to repay” rule, or requirement that lenders review a borrower’s finances and set loan terms that they’re likely to repay. These loans are typically offered to buyers who can’t qualify for traditional loans, usually because of bad credit, and they come with higher interest rates, higher down payment minimums, upfront fees and other costs qualified mortgages don’t have. And they often include unusual features such as the ability to make interest-only payments or balloon payments.
Eligible immigration statuses: Even foreign nationals can qualify for non-QM loans, as many of these lenders do not require proof of U.S. income, U.S. credit or a Social Security number.
Documentation requirements: You typically won’t need to provide any proof of U.S. residency status or a Social Security number, and instead you’ll just need to meet the lenders’ income, savings or other standard requirements.
3. Gather documents
Like any homebuyer, you should be prepared to show your income, assets, down payment source and credit history. In addition, you’ll typically need to provide documentation of your residency status to mortgage lenders. Here’s a list of common personal information to have at the ready:
→ Social Security number: Most government and conventional home loans require a valid Social Security number to qualify. In some cases, an Individual Taxpayer Identification Number will be allowed, but generally Social Security numbers are preferred.
→ Residency: Lenders want to see valid, unexpired proof of your current residency status within the U.S. This means lawful permanent residents will need to provide their green cards and nonpermanent residents will need to show their visa or employment authorization document.
→ Down payment in U.S. dollars: Money for your down payment and closing costs must be in U.S. dollars in a U.S. bank account. If those funds originally came from a foreign account, you’ll need to provide evidence of their exchange to U.S. dollars. Lenders prefer to see a consistent balance for at least two months prior to the application.
→ Income in U.S. dollars: Be prepared to show lenders at least the past two years’ income history, usually through W-2s or federal tax returns, and prove current employment. Any payments or earnings received from a foreign corporation or a foreign government in a different currency must be translated to dollars.
→ Credit history: Lenders will check your U.S. credit score and credit report from one or more of the three national credit bureaus: Experian, Equifax and TransUnion. If your credit is too new because of a lack of sufficient U.S. credit history, your mortgage lender may use credit references from a foreign country, provided they meet the same standards for domestic reports and are able to be translated into English. Lenders may also accept a nontraditional credit history, such as the past 12 months’ rent or utility payments.
4. Compare mortgage lenders
Once you’ve identified what kind of mortgage you’re looking for, shop around and compare multiple offers from different lenders. In a recent LendingTree study, borrowers who shopped around and received three or more offers saved $63,151 on average over the loan’s lifetime.