Can a foreigner buy a house in the USA? International buyers account for about 10% of all home sales in the United States. Not only can foreigners buy houses in the US, but it’s a great investment.
Of course, many foreign citizens aren’t buying houses as investments—they’re buying them as residences. You could be looking to purchase a house for a child attending college or to continue living in the United States rent-free.
International buyers may face some challenges when buying a house in the United States. But that doesn’t make it not feasible.
How Can a Foreigner Buy a House in the USA?
There’s good news if you’re a foreigner looking to buy a house in the United States. There are many countries where a foreigner can purchase a house just like a citizen. The United States is one of them—another in Costa Rica.
But that doesn’t mean it will be easy to buy US real estate. To get a home loan, you must go through the same process as any other borrower. And the home loan process can be fairly extensive.
You will need a US credit score to get a mortgage to buy US real estate. This score is acquired through the three reporting agencies: Experian, Equifax, and TransUnion.
You will also need to show that you have the income to make monthly mortgage payments. And you will need to put down a down payment, depending on the type of loan you get.
Foreign investors may even need a special type of foreign national loan. But first, let’s talk about the types of foreign investors.
Types of Foreign Buyers
There are generally three types of foreign buyers: permanent residents with a green card, non-permanent residents with a visa, and foreign nationals. When discussing the complexities of buying real property in the US, we largely refer to foreign nationals.
Permanent residents with green cards can buy property like any other American citizen. There are no restrictions on the type of property they can purchase, and they can use loans like FHA and USDA loans.
Non-permanent residents with a visa will have similar options, although they may find it harder to prove their income and creditworthiness because they may not be legally allowed to work in the US.
Foreign nationals have more restrictions, especially when it comes to lending. While they can purchase a house in cash, a mortgage lender will put their file under additional scrutiny. Their property will be an investment property, meaning they will need to put down more money as a down payment.
But that all covers lending. It’s much easier for foreign investors to buy a house in cash.
Buying a House in Cash? Not a Problem
The process is pretty straightforward if you’re buying a house in cash. Start by talking to a real estate agent about the type of property you want. Once you’ve found the perfect property, the agent will draw up the offer for the home seller to review.
After your offer is accepted, an escrow company will collect your cash. They will run a title check and ensure the home transfers to you successfully. A real estate attorney can help you further protect yourself during the transaction.
Non-US citizens can purchase a house in cash just as easily as a US citizen. Quite a lot of foreign ownership occurs through cash deals for this reason.
What Are the Challenges of Buying a House as a Foreigner?
So, while a green card or visa holder can purchase a house just as a US citizen can, a foreign national investor will encounter some challenges. Some are related to the mortgage loan, while others are practical elements of the real estate purchase.
- Proximity. If you aren’t currently living in the United States, purchasing a house as a foreigner can be challenging. You may need to purchase a property sight unseen. Working with a local agent is essential.
- Lending. You will need to find a lender willing to work with you. You may have to put down a larger down payment than someone who is a US citizen, which can make getting approved for a loan more difficult.
- Income. Another challenge is showing you have the income to make the monthly mortgage payments. This may mean providing tax returns or other financial documents, which can be difficult if you’re not a US citizen.
- Residency. If you are an international buyer, you must have lived in the United States for at least two years to get a mortgage there. If you haven’t, you will likely need to pursue a non-conforming investment or rental property loan.
Despite the challenges, buying a house in the United States as a foreign national is more than possible. You must work closely with a real estate agent, attorney, and lender.
Can You Get an FHA Loan as a Foreign Buyer?
Yes, you can—as a green card or visa holder.
The Federal Housing Administration (FHA) is a government organization insures home buyers’ loans. If you default on your loan, the FHA will repay the lender. FHA loans are intended to help low to moderate-income home buyers purchase their first residential property.
The FHA doesn’t lend money directly to home buyers. Instead, they work with lenders who offer FHA-insured loans. This type of loan is available to all home buyers, including foreigners.
To get an FHA-insured loan as a foreigner, you must meet the same requirements as any other home buyer. This includes having a good credit score and proving that you have the income to make the monthly payments. You’ll also need to put down a 3.5% down payment.
This is open for a permanent resident or a green card holder, just as it would be to anyone else. But a foreign owner who does not live in the US cannot qualify for this loan because they are purchasing an investment property rather than a residential property.
How Can a Foreign Buyer Prove Their Income?
You’ll need to prove your income if you’re a foreign buyer looking for a mortgage. The best way to do this is with tax returns. You can provide bank statements or pay stubs if you don’t have tax returns.
You may also need proof of any other income, such as investments or rental properties. Be prepared to provide documentation for any and all sources of income.
It’s important to note that you may have to provide additional documentation if you’re self-employed. Lenders will want proof of your income, such as contracts or invoices. If you’re having trouble providing this documentation, you may need to get a cosigner.
If you can’t, a cosigner agrees to make the payments on your loan. This person will need to have good credit and a steady income. Remember that the cosigner will make the payments if you default on your loan.
Investment Loans and Foreign National Loans for Foreign Buyers
As a foreign buyer, getting a non-conforming income loan for investment may be easier than a conventional mortgage. These loans are available to home buyers looking to purchase a property as an investment rather than a primary residence.
There are a few things to remember with these types of loans. First, you’ll likely need a larger down payment. Second, the interest rates will be higher. Finally, because of these restrictions, you may be unable to borrow as much as possible.
Despite these challenges, investment loans can be a good option for foreign buyers. They can help you purchase a property you can rent and generate rental income from. You won’t need to show income to purchase the house; you’ll need to have the down payment available and a solid credit score.
How Long Will It Take to Buy a House as a Foreigner?
Buying a house as a foreigner can take a few months to a year. The time it takes depends on factors like your credit score, income, and the type of loan you’re applying for.
If you’re buying a house in cash, the process will be faster because there’s no need to go through the loan approval process.
If you’re purchasing a house with an FHA or conventional loan, it will take one or two months to make an offer. If you’re purchasing a house with a non-conforming or investor loan, it may take a bit longer—and that all depends on the company you work with.
The process of buying a house as a foreigner can be daunting. But your real estate agent may have a list of lenders to help you with your investment.
Tips for Buying a House as a Foreigner in the United States
There are a few things to remember if you’re a foreigner looking to buy a house in the United States.
- Talk to a real estate agent first. Your real estate agent will understand the intricacies of the local market.
- Involve a real estate attorney. Most house sales in the US don’t require a real estate attorney, but a real estate attorney will know more about international purchasing.
- Have all your documentation in order. As a foreigner, you must provide more documentation than a US citizen.
- Prepare your down payment. You will likely be treated as an investor if you aren’t a green card holder/visa holder. This often comes with a 30% to 40% down payment.
Nearly 40% of purchases by foreign buyers are in cash for a reason. Although there are no restrictions on foreigners purchasing a property outright, there are some restrictions on mortgage lending.
But just because you can’t buy a house in cash doesn’t mean you can’t buy real estate in America. It may just be a little more challenging.
Conclusion: The Next Steps
Buying a house as a green card or visa holder isn’t different from buying a house as any other American resident. You can go through the same loan programs, such as FHA loans or conventional loans, although as a visa holder, you should be mindful that you will still need to leave the country should your visa expire.
As an international resident who isn’t living within the United States, however, you will find it harder to purchase a house in the US. You must purchase the house in cash or work closely with a mortgage lender (potentially even an international one) for a loan. You may be considered a resident if you have been in the US for a few years. If not, you need an investor’s loan.
Either way, you can get started by:
- Working on your US credit score.
- Pulling together your income documentation.
- Checking with a lender for mortgage prequalification or preapproval.
A foreigner can buy a house in the USA without a visa. However, they must meet the same requirements as any other home buyer, including having a good credit score and proving they have the income to make the monthly payments.
Buying a property doesn’t automatically impart either residency or a visa. Even if you own property, you will need a visa to live in the United States. You will still need to follow all these restrictions.
No, buying a house in the USA cannot get a green card. You can only get a green card through family, employment, or investment. (But, if you build a business around real estate investment, that could be different.)