Foreign National Loans Offered By Hard Money Capital Group
Getting a traditional mortgage at a bank, credit union, or mortgage company is not typically possible for a borrower who is not a US Citizen or at very least a Permanent Resident Alien. The Fannie Mae 1003 Universal Residential Loan Application clearly asks in the Declarations Section on Page 3 for a borrower to list this status. This 1003 from is the basic document used by virtually every mortgage lender in the United States, Puerto Rico, Guam, and the United States Virgin Islands. What does a Foreign National do when they want to buy a home in the United States? Is it possible?
Foreign Nationals Home Purchase In The United States
Foreign Nationals home purchases are an important part of the US economy and stating such it is the intent of all governments to attract foreign investment in their homeland from friendly nations. Therefore it has to be possible for a gentleman from Japan who visits Las Vegas on a monthly basis to buy a home there, or for bond trade from England to buy a Condo in Chicago.
Foreign National loans to buy homes are not only possible they make perfect sense. They do have different underwriting standards and require much larger down payments than traditional mortgages.
Sometimes establishing credit is easy. The foreign national may travel to the United States frequently and even bank at Wells Fargo, Bank of America, Chase, or Citi Bank. They may have credit cards from these banks and even have a traditional credit report from Experian, Equifax, and Trans Union with a FICO score. In this case they will still have to qualify for a foreign national mortgage and may need 30-35% down but the interest rate will be very similar to a regular Fannie Mae mortgage. It may be 1 % higher, but for all practical purposes will be this type of client will have very similar terms as the more traditional mortgage.
Alternative Financing Program For Foreign Nationals
Then there is a foreign national that can demonstrate foreign credit. This type of client will need at least 35-40% down. The minimum purchase price will be at least $200,000. The interest rate will be at least 2-3% higher than a traditional Bank mortgage. The term may be interest only and be fixed for a shorter period of time. The lender may need additional time to verify the down payment. However, if the foreign national buyer can demonstrate they have the down payment, the income to make the payments, and the credit to establish the willingness to repay the mortgage, this transaction is not that difficult. The typical cost of such a foreign national mortgage is anywhere from 3-5 points.
Some foreign nationals cannot demonstrate credit but can demonstrate they have substantial income. This case may also be possible. However, the Private Money Lender may require a much larger down payment. I was involved with a recent transaction Miami, Florida where the foreign national put down 50% of the purchase price and verified they had a successful import business. This was a common sense loan for the private money lender. The borrower put down half of the purchase price and had ties in the community. The borrower went to the bank in which he had several hundred thousand dollars and they told him no. The Hard Money Lender said yes. The borrower’s rate was double digits, and he paid 5% in fees, but in a year he should be able to demonstrate credit. The lender is confident the foreign national borrower will be able to refinance. However, if he can’t refi, the Private Money Lender is glad to take the interest.
Another foreign national common situation is where the borrower has a problem demonstrating credit, and many of the other requirements talked about above. I just was involved in another such transaction where the lender funded the purchase. The Hard Money Lender required a 40% down payment and US Citizen Co Borrower with acceptable credit.
The moral of all of these stories is that if the Foreign National borrower has a substantial down payment and demonstrate they have the intent to make the monthly mortgage payments, the foreign national should be able to get a mortgage to purchase a property.