Securing Financing for International Buyers


Depending on an international buyer's visa classification, lenders may have more stringent underwriting guidelines.  Mortgage lenders are more cautious about financing second homes and investment properties for foreign nationals for a very practical reason.  If a non U.S. citizen were to leave the country and default on a mortgage loan, the lender would have little or no recourse.  To hedge their risk, lenders often require that international buyers make substantially larger down payments and submit to certain requirements in order to meet underwriting guidelines.


With the additional requirements from lenders, international buyers need to be patient with the financing process.  It's not unreasonable to expect that it may take considerably longer than it would for U.S. residents to get a loan.  One of the challenges many non-permanent residents (foreigners with working visas) face is a lack of an established credit history in the U.S.  Even when mortgage lenders allow for alternative credit documentation, "non-perms" sometimes must settle for less han optimal financing terms, then refinance later for better rates and terms once they establish a positive credit history here in the states.

Visas for foreign nationals do not allow them to work or reside in the U.S.  This Category includes Canadians, Europeans (or any other Non U.S. resident) who want to buy second homes for investment or vacation purposes.  Before the home financing crisis, international buyers had more mortgage options available.  Some lenders still offer loan programs for foreign nationals, but they carry stringent documentation requirements.  Without a credit history to consider, mortgage lenders focus on documented income and other assets.  To underwrite a loan for foreign nationals, lenders typically require a substantial down payment of 35% or more, in addition to closing costs.  Foreign nationals can expect to pay higher interest rates and possibly upfront charges for these loans.  Requirements will vary from lender to lender, but here are some tips offered to international buyers to help them prepare for financing a property in the U.S.  Following these steps can help foreign nationals secure a mortgage.

Financing Tips for International Buyers:

1.  Establish credit in the U.S., if possible.

2.  Open up an account with a U.S. based bank at least 2 months before you seek financing

3.  Start an account in your home country with a large international bank with branches in the U.S. close to where you want to purchase a home.

4.  Get 3 reference letters declaring you are in good standing from 3 financial institutions in your home country if you can't accomplish #1 or 3.

5.  Obtain verification of your gainful employment and line of work.  A simple letter from a CPA or some other third party in your resident country will suffice.

6.  Apply to extend your visa or passport if it's due to expire in 6 months or less.