Standard, Old-School Mortgage Definition of a Foreign National
- A foreign national is a legal resident or citizen of another nation.
- They buy a second home or a vacation home here in the U.S. for personal use.
- The foreign national lives in the US property only on a short-term basis.
- He or she could be here on business, or while on vacation or holiday.
- Foreign nationals primarily have income, employment, credit, and residency in a country other than the US.
But a Foreign National Can Also Be:
- A foreign buyer who is purchasing investment property to rent out or lease.
- A buyer purchasing commercial property such as hotels, office buildings, apartment buildings or warehouses
- A borrower with an ITIN (Individual Taxpayer Identification Number)
- Someone with a certain class of work visa, other than the B-1/B-2 visitor visa.
- International borrowers.
- US citizens who work abroad and earn income overseas.
Who We Are and How We Help
We work with several dozen national and international lenders who provide financing to foreign nationals, and who lend to borrowers with visas and ITINs. This is a complex mortgage niche, served by a smaller, specialized broker community. We have worked with foreign nationals for over 11 years, and have earned a reputation for broad product selection, low rates, and top-notch advice.
Mortgage financing has changed and with it, the easy availability of money. This is true for both US borrowers and foreign nationals. Those left in the in the foreign national market work harder to find both new sources of financing and competitive rates.
A Brief History of Foreign National Financing and “The Pendulum”.
In 1995 and 1996, foreign national loans, if they could be found at all, required 35% to 40% down with fixed rates in the 9%-10% range. However, by 2000, 80% financing became the industry standard. Interest rates fell as low as the 5%-6% range, both fixed and variable rates. 90% financing was also available.
Now, the pendulum has swung the other way. In 2006 and 2007, we noticed a tightening of underwriting guidelines. Some banks dropped out of the foreign national market entirely. 70% financing became the de facto rule for true foreign nationals. By 2008, some of the larger lenders required 40% to 50% down.
There are exceptions to every rule.
We still have access to 75% and 80% financing. Niche programs may allow for 90% financing, depending on borrower’s country of origin, location, and type of property. Please visit www.ForeignNational.co.uk and www.ForeignNational.com for more info.
However, most foreign buyers should prepare for a 25%-35% down payment and budget for 12 months of mortgage payments in reserve.
Certain visa holders may be eligible for 95% financing, and may occasionally get 97% to almost 100% financing. Buyers with visas should enter into purchases expecting to make at least a 10% down payment. If a visa buyer gets better terms due to the strength of the application, than it might be a welcome surprise.
Financing for investment properties and co-ops, and for land (lot loans) is available in certain counties. Condominium financing has become more difficult, and lenders tend to favor established condo projects where the majority of owners live primarily or as second home residents.
Fixed rate mortgages are in shorter supply, but are still available. Interest only loans are harder to come by but may be offered, usually at 65% to 70% loan to value. There are fewer stated income loans and fewer True NO DOC mortgages.
Most loans offered are variable rate mortgages. For instance, ask about 70% financing, with multi-currency rates as low as 4.50%, APR 4.642%. This mortgage requires income documentation with no credit report or credit check required. It is available to both US borrowers and foreign nationals, and can be used for investment properties and most condo projects.