The Foreign National Asset Program

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A Full Documentation loan will look at all of your monthly debt and all of your monthly income in order to determine that your debt to income ratio ("dti") is not higher than 50.  A debt to income ratio is determined by taking the total of your current monthly debt PLUS your proposed mortgage payment and dividing it by your monthly income. The proposed mortgage payment number will include Principal, Interest, Property Taxes, Homeowner's Insurance and any Condominium/Association fees.  ("PITIA")

The Foreign National Asset Program looks only at your assets to determine your income.  Using that income, your debt to income ratio should not be higher than 50%.  All assets used in this calculation must be held in a US FDIC insured institution.  The Foreign National Asset Program may be used to determine qualifying income both alone and in conjunction with other income documentation options such as fully documenting employment or investment property income.  All assets must be have been in the buyer's possession/name for at least 6 months:  The following assets are considered Qualified Assets and can be utilized to calculate income:

• 100% of checking, savings, and money market accounts
• 80% of the remaining value of stocks & bonds
• 70% of retirement assets
• Personal funds in the borrowers name only (business funds and joint accounts with individuals not on the loan are not eligible).
• Revocable Trust accounts will be reviewed on a case by case basis. In these instances, the borrower must be the sole beneficiary and sole trustee. 

The income calculation is as follows:

• Monthly Income = Net Qualified Assets / 60 Months  (** Net Qualified Assets = Total of Assets times the required “Qualified Asset Percentage” minus the required down payment, closing costs, and reserves.)

After deducting the down payment, closing costs, and the reserves required to qualify, you must have the lesser of

• (a) 1.5 times the mortgage loan amount, or
• (b) $1mm in Qualified Assets.
• Whether (a) or (b) is used, you must have at least $450k in liquid assets.

OR

You can forego the debt to income calculation.  If you choose this option then you must have sufficient post-closing liquid assets > the sum of the items noted below:

• 100% of the loan amount.
• 60 months of all revolving installment, alimony/child support, and *mortgage related expenses.
• Subject property reserves requirements  

*If the mortgage related expenses are connected to another investment property then the PITIA for that property can be excluded from this part of the calculation provided the investment property has positive cash flow.   If the investment property has negative cash flow, any net negative rental amount must be multiplied by the 60-month term with the resulting amount added to the required assets. Leases + 3 month’s most recent rent receipts are required to document the rental income received for an investment property. 

Short-term rentals are permitted. Proof of receipt for the most recent 12 months is required. Use documented 12 months average of payments to derive the monthly rental amount average. If no rent is received, use zero for that month. 12 months banks statements or a ledger from a national short term rent institution (Airbnb, VRBO, Homeway) may be used to verify short term rental income.

A monthly residual income calculation must be completed. The formula for this calculation is:

• Total Assets (as detailed in Eligible Asset Types above) / 60 months = Total Monthly Income
• Total Monthly Income – Total Monthly Debt Obligations (Expenses) = Monthly Residual Income
• Monthly Residual Income must meet or exceed $1,500
• Note: Required reserves are not deducted from Total Assets when calculating residual income.     

Below we will take a look at the required documentation necessary to satisfy the criteria of the Foreign National Asset Program.  First let's start with some characteristics that are common to Foreign National Programs:

                                                                                             ELIGIBLE PROPERTY TYPES

• 1-4 Unit Properties
• 5-8 Unit Properties
• Condominiums (Both warrantable and non-warrantable)
• Townhouses/Planned Unit Developments

                                                                                              MINIMUM DOWN PAYMENT

Your minimum down payment will depend on your credit score as follows:

• 700 or above  = 20% down
• 680 - 699        = 25% down
• 620 - 679        = 30% down
• Foreign Credit = 30% down

                                                                                                    ELIGIBLE PARTIES

• All parties (borrowers, banks and property sellers) involved on the transaction must be screened through exclusionary lists, and must be cleared through OFAC's SDN list.
• Borrowers from OFAC sanctioned countries including Russia and Belarus are ineligible. Access the link below for a list of sanctioned countries: http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx 
• Individuals with diplomatic immunity are not eligible. 

                                                                                               CLOSING REQUIREMENTS

• Any loan made to a Foreign National must have an ACH agreement signed at the closing table. The ACH account must be set to draw from a US bank account. The Borrower shall provide proof that a US bank account is opened in their name (or in the name of the LLC which owns the property, if applicable) and that the account is funded with the first month’s payment.  

                                                                                                           DOCUMENTS

• All documentation provided that has or will be translated to English must have a Certified Translator Stamp
• Documents signed outside of the United States must be notarized by a U.S. embassy or consular official. The certificate of acknowledgment must meet the standard notarial requirements and must include the embassy or consular seal. Foreign National borrowers may use Assets to determine qualifying income provided funds are held in a US FDIC insured Institution    Asset Depletion may be used to determine qualifying income both alone and in conjunction with other income documentation options.