Foreign National vs. ITIN

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The Foreign National Buyer is not a U.S. Citizen.  However, they can buy a 2nd home or investment property here in the U.S. and use these homes for vacations, for their children who are attending college in the U.S. or purely as investment properties.  The Foreign National Buyer can use full documentation loans by obtaining letters of credit from banks or lenders in their home country with whom they have an established credit history.  In some cases an international credit report can be used instead of letters of credit.  

The easiest and most common route taken by the Foreign National Buyer is to use the very limited documentation DSCR loan program.  In this program, all that is required is that the market rent for the subject property be enough to carry the full mortgage payment including property taxes, homeowners insurance and association/condo fees.  This will be determined by an appraisal of the property which will show both the property's value and market rent.  A property that has a market rent which exactly covers the aforementioned expenses is called a 1:1 Debt Service Coverage Ratio.  We will cover this and other programs in more detail in the Foreign National Program section below.

The ITIN Buyer has come to live and work in the United States and is a tax paying, productive member of society that has created their own business or is a full time employee.  They are filing taxes using their ITIN because they are not currently eligible for a Social Security Number.   Now, they want to fulfill the American dream of buying a house.

              How Does An ITIN Buyer Qualify?

There are many ways for an ITIN Buyer to qualify for a mortgage.  We will dive into the alternatives in more detail below.  Although the documentation will be different than with a U.S. citizen, the ITIN Buyer can have the same programs available to them that a U.S. citizen would.  These programs include:

• Standard Full Documentation Loans;
• Bank Statement Qualified Loans;
• 1-4 Unit Properties;
• Primary Residence;
• 30 Year and 40 Year Fixed Rates;
• No Prepayment Penalties.

Permanent Resident and Non-Permanent Resident Alien Buyers are a separate category of Buyers.  These Buyers may have the same or similar options available to them as ITIN and Foreign National Buyers PLUS other options that are not available to Foreign National or ITIN Buyers.  The documentation that a Permanent Resident and Non-Permanent Resident Alien will be required to produce will be different from what is required of Foreign National or ITIN Buyers because their status in the U.S. is different.

              THE PERMANENT RESIDENT ALIEN

The Permanent Resident Alien Buyer will have a Green Card from USCIS and a valid Social Security Number.  This category of Buyer will basically follow the same path as a U.S. citizen (including access to USDA and VA loans) to qualify for a mortgage and purchase a home in the United States.

         THE NON-PERMANENT RESIDENT ALIEN

The Non-Permanent Resident Alien Buyer will have an Employment Authorization Document ("EAD") from USCIS and a valid Social Security Number.  If this Buyer does not have an EAD then they may have an employer sponsored visa such as an H1-B (special skills) or an E-1 - E-3, EB-5, G-1 - G-5, H series (temporary worker), L-1, O-1, or R-1 Series visa, a Mexican, Canadian NAFTA Series visa or NATO Series visa.  Other visa types may be eligible.  The EAD or visa must show you have the ability to live and work in the United States for at least 3 years.  The EAD or visa must be valid for at least 6 months from the date of closing. Otherwise, you will need evidence of renewal from the employer or USCIS.

Once the visa or EAD hurdle is crossed, the Non-Permanent Resident Alien Buyer will have to show proof of employment, credit, income and assets much like any U.S. citizen would when applying for a mortgage.  In order to have acceptable credit The Non-Permanent Resident Alien  Buyer will have to have the following:

• a 12 to 24 month history of using credit in the U.S. with at least 2 to 3 tradelines depending on the lender and program you are using.  A tradeline is typically a credit card, personal loan, or car loan.  But some lenders will allow you to use other accounts such as cable, utility, or cellphone accounts.
• A credit score of at least 620 for most conventional mortgage loans or 580 for an FHA loan.  FHA will allow for lower scores but a higher down payment will be required.

The Non-Permanent Resident Alien Buyer can have access to Conventional mortgage loans backed by Fannie Mae or Freddie Mac or FHA loans backed by the Federal Housing Administration.  These types of loans will be used to purchase a home that will be the The Non-Permanent Resident Alien Buyer's primary residence.  In addition to Conventional and FHA mortgage loans the The Non-Permanent Resident Alien Buyer may have access to the following:

• Full Documentation Loans that do not fit within the guidelines of Conventional or FHA mortgage loans;
• Bank Statement Qualified Loans;
• Profit & Loss Statement Loans;
• Asset Depletion Loans;
• 1-4 Unit Properties;
• 2nd Home and Investment Properties.
• 30 Year and 40 Year Fixed Rates

                             THE DACA BUYER

The Deferred Action For Childhood Arrival ("DACA") program has created another category of Buyer.  The DACA Buyer may have a valid Social Security Number and be authorized to work in the U.S. but may or may not be eligible for certain mortgage programs.  For example, in 2019 the DACA Buyer was declared to be ineligible to participate in the mortgage program backed by the Federal Housing Administration - commonly referred to as FHA loans.  These loans are very popular with U.S. citizens who are seeking to gain access to the housing market but may not qualify for other popular mortgage programs.  This exclusion was an unexpected setback for DACA Buyers. However, in January of 2021 under a new administration, DACA Buyers were again declared to be eligible for the FHA  program.

If you are a participant in the DACA program and are seeking to purchase a home, please give us a call so we can understand your particular circumstances and find a way for you to achieve your goal of owning a home.

We have an extensive network of industry professionals, including lenders, attorneys, inspectors, and contractors, to help you every step of the way. We work with the best in the business to ensure that you get the best possible service.