Asian Chinese family moving into new house and received the house key from real estate agent after getting a foreign national loan

Navigating the U.S. real estate market can seem daunting, especially when it comes to understanding the intricacies of mortgage loans. In this blog, we’ll delve into what a foreign national loan is, its unique requirements, and how it can be your key to owning property in the U.S.

Whether you’re looking to invest in a vacation home or an income-generating rental property, this guide will equip you with the knowledge you need to make informed decisions.

What is a Foreign National Mortgage Loan?

A foreign national mortgage loan is a specialized type of loan designed for foreign nationals who wish to purchase property in the U.S. This type of loan is typically used for investment properties and is not intended for individuals who live or work in the U.S. full-time.

This loan program is designed to accommodate the unique circumstances of these borrowers, such as different forms of identification, income earned in foreign currencies, and the potential lack of a U.S. credit history.

What is a Foreign National?

A foreign national is a person who lives and works outside the United States and does not hold U.S. citizenship or permanent residency. They may be in the U.S. on a temporary basis for work, study, or travel, or they may reside entirely outside the U.S. but have financial interests within the country.

Do Foreign National Mortgage Loans Have Different Requirements?

Yes, foreign national loans do have different requirements compared to standard mortgage loans. These requirements are designed to mitigate the additional risks associated with lending to individuals who reside outside the U.S.

According to common guidelines, a foreign national must:

  • Live and work outside the U.S.
  • Not reside in the U.S.
  • Qualify under the ICF/DSCR program based on how the property cash flows.

Additional requirements include:

  • Maximum Loan-to-Value (LTV) ratio of 70%
  • 12 months of reserves required
  • 30-year fixed mortgage only
  • Loan amounts up to $1,500,000 with a minimum of $75,000 offered
  • Seller concessions are up to 3% only
  • Automatic Clearing House (ACH) is required from an FDIC Bank for monthly mortgage payment

Do Foreign National Loans Require a Higher Down Payment?

A larger down payment, generally 30%+, is required for a foreign national loan. The exact percentage will vary depending on the borrower’s specific financial circumstances. It’s best to contact a mortgage professional at JVM Lending to determine the exact down payment requirement for your situation.

Frequently Asked Questions

1. Can a Foreign National Buy Property in the U.S.?

Yes, a foreign national can buy property in the U.S. There are no laws that prohibit foreign nationals from purchasing real estate in the U.S. However, the process can be more complex due to the additional documentation required and potential financing challenges. This is where this loan program can be beneficial.

2. What Types of Properties Can Be Purchased with a Foreign National Loan?

Foreign national loans are typically used for purchasing non-owner-occupied residences. This includes investment properties and vacation homes. They cannot be used for properties that the borrower intends to use as their primary residence.

3. What is the Interest Rate for a Foreign National Loan?

Interest rates for foreign national loans can vary widely based on a number of factors, including the borrower’s creditworthiness, the loan-to-value ratio, and the type of property being purchased. Generally, these interest rates will be 2% – 4% above standard rates for traditional mortgage financing.

It’s important to work with a lender like JVM Lending which specializes in these loans to get the most accurate and competitive interest rate information.

It’s important to note that the interest rates for foreign national loans are typically a few percentage points higher than those for conventional loan products. This is because the loans are not backed by Fannie Mae or Freddie Mac (like most conventional loans are) and are therefore considered riskier than conventional loans. While this may seem like a disadvantage, it’s a necessary trade-off for the opportunity to take advantage of the many opportunities that investing in U.S. real estate offers.

View mortgage rates for December 2, 2023

How to Apply for a Foreign National Loan with JVM Lending

Applying for a foreign national loan with JVM Lending is a straightforward process designed to help you secure your U.S. property investment. Here’s how to get started:

  1. Initial Consultation: Reach out to JVM Lending to schedule an initial consultation. This is your opportunity to discuss your property investment goals and understand the foreign national loan process.
  2. Documentation: Gather all necessary documentation. This typically includes proof of income, bank statements, and identification. You may need to provide additional documentation such as proof of legal status in your home country and proof of income from foreign sources.
  3. Application: Complete the loan application provided by JVM Lending. Be sure to fill out all sections accurately and thoroughly to avoid any delays in the approval process.
  4. Loan Processing: Once your application is submitted, JVM Lending will process your loan. This involves verifying your information, evaluating your financial situation, and determining the terms of your loan.
  5. Approval: If everything is in order, JVM Lending will approve your foreign national loan. You’ll then be ready to finalize your property purchase in the U.S.

Remember, our team at JVM Lending is here to support you throughout the process. Don’t hesitate to ask questions or seek clarification at any point. Your dream of owning U.S. property is within reach!

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