Foreign National Limited Documentation

The DSCR Loan Program

The limited documentation DSCR Loan is a popular choice for Foreign National buyers as it eliminates the need to 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 DSCR Loan only looks at the market rent for the property you are buying. Your debt and income are not considered. Instead, the key factor is having a Debt Service Coverage Ratio ("DSCR") of at least 1:1. This is determined by an appraisal of the subject property which will calculate the value of the property AND the market rent it will generate. If the market rent at least equals your mortgage payment (PITIA) then you have a 1:1 DSCR and a 25% down payment is all that is required. If the market rent is up to 75% less than your mortgage payment then you may have to put 30%-35% down.

Below we will take a look at the required documentation necessary to satisfy the criteria of the DSCR Loan 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.

Required Documentation

Proof Of Foreign Status

Documentation showing your primary residence address in your country of origin. (i.e. lease, mortgage statement, utility bills)
A copy of your visa (OR I-797/I-94) and passport with photographs. If your resident country participates in the Visa Waiver Program then a visa will not be necessary.
Canadian citizens traveling to the U.S. do not need a non immigrant visa.
If the Buyer is from a NAFTA country (i.e. Canada, Mexico) a driver's license from the NAFTA country is all that is necessary.

Proof Of Credit History

Proof Of Foreign Status

None Required.

Proof Of Income

Down Payment & Closing Assets

None Required.

Down Payment & Closing Assets

Foreign assets CAN be used for the down payment, 1st mortgage payment and closing costs/escrows. The foreign assets must be held in a foreign institutional account (i.e. Bank) so that the assets can be sourced to the Buyer for at least the past 60 days. The foreign account statement terms must be translated by a Certified Translator.
The foreign assets needed for the down payment, 1st mortgage payment and closing costs/escrows must be transferred and arrive in an FDIC insured U.S. Bank at least 10 days prior to closing.
Borrowers with Bitcoin assets may utilize the assets for funds to close, but these assets are not eligible for reserves. To utilize for funds to close, the assets must be liquidated and deposited into another account with evidence of liquidation & deposit provided prior to closing. Bitcoin is the only eligible form of Cryptocurrency; all others are ineligible.
Gift funds are not allowed.

Reserves

Holding Title In an LLC

In addition to the down payment and closing costs the Buyer will have to show they have enough funds in their account(s) to cover 12 months of mortgage payments including principal, interest, property taxes, homeowners insurance, and association/condo fees (if applicable).
Only 6 months reserves can be required if the Buyer puts more money down. (Usually, an additional 5% of the purchase price.)
Assets held in a foreign account can be used for reserves. The two most recent 30-day account statements are required, and funds are to be converted to U.S. dollars using the current exchange rate. Any translation must be signed and dated by a certified translator.

Holding Title In an LLC

Vesting in the name of an LLC is allowed provided it is a solely business-purpose loan to be used for the purchase or refinance of an investment property. The following requirements apply:

Purpose of the LLC is for the ownership and management of real estate.
The borrower(s) must be majority owners or managing members of the LLC. For LLC’s with multiple owners, each borrower own no less than 25% of the vesting business. All of this information must be supported in the operating agreement and/or the articles of incorporation.
The loan must be disclosed to all borrowers.

The following LLC documentation must be provided:

Articles of Incorporation
Operating Agreement
Tax Identification Number
Certificate of Good Standing

A personal guaranty is required if the property will be vested in an LLC. The personal guarantor is subject to the following requirements:

The guarantor must be an individual person and not a business entity.
The guarantor must be a managing member or majority owner of the business entity. Each borrower can own no less than 25% of the vesting business.
The guarantor is subject to the same credit requirements and fraud checks as individual borrowers.