Even if you aren’t US citizen, you may still be able to secure a mortgage. Lenders call it the foreign national mortgage. In short, it’s a mortgage for those that live in the United States for work but aren’t a citizen. You don’t need a social security number or even a tax ID. As long as you meet the guidelines of the program, you should be well on your way to securing a mortgage.
Specific Guidelines for Foreign National Mortgages
Like most loan programs, each lender sets its own guidelines. In general, though, you’ll find that lenders look for the following qualifications.
As a foreign national, you probably don’t have standard credit and that’s okay. Lenders allow you to use non-traditional credit lines to prove your financial worthiness. Non-traditional or alternative credit consists of bills you pay on a regular basis but that don’t get reported to the credit bureaus. A few examples include:
- Tuition payments
- Insurance payments
- Cell phone payments
- Utility payments
Lenders like to see a 2-year history of consistent payments from any of these creditors. The creditors can be US-based or from your own country.
You can’t pay your mortgage unless you work, right? Lenders want to see that you have stable employment. They prefer a two-year employment history with the same employer. This shows consistency and reliability. Even if your income was from outside of the US, it will still count. If your documents are in another language/currency, they will need to be translated for the lender.
Along the same lines as stable employment, lenders want stable income. They want to know that you make enough money to cover your obligations. These obligations include the potential mortgage, any existing debt (credit cards or personal loans) as well as money for the daily cost of living. Lenders like to see your debts take up less than 50% of your gross monthly income to stay affordable.
Lenders also care about your disposable income. This is the money you have left over each month. They figure that if you have adequate disposable income, you won’t feel like you have to sacrifice. Borrowers that have to sacrifice often end up defaulting on their mortgage. Lenders obviously want to avoid this risk.
Large Down Payment
As you can imagine, foreign national mortgages are risky for lenders. They make up for this risk by requiring a larger than average down payment. You may find lenders that ask for a 20% – 25% down payment. On a $200,000 loan, this means a $40,000 – $50,000 down payment.
The down payment helps lenders feel secure in your ability to keep up with your mortgage payments. Without your own money invested, it’s easier to walk away from the home when things get tough. With a higher down payment, lenders feel as if they decrease the risk of default.
The bottom line is that you need to lower your risk as much as possible. Let lenders know that you want a mortgage and that you are willing to stay current on it. You display your willingness with good credit, a large down payment and stable income. Private lenders offering subprime loans are often your best bet for foreign national mortgages.