Home Loans To Non-Resident Aliens

Your residency status affects your ability to obtain a home loan. A home buyer will fall into one of the following categories: citizen, resident alien, or non-resident alien. In the case of a citizen or resident alien (green card holder), obtaining a home loan in the U.S. is a simple process. You are eligible to apply for home loans either through conventional financing or FHA provided you meet their underwriting requirements (income, assets, credit, etc.).
However, if you are a non-resident alien, finding a home loan can be much more difficult.
A non-resident alien is in the U.S. either illegally (without a visa) or legally (with a visa i.e. student, work, etc.). Visas are temporary and have a defined life span with renewable or non-renewable features based on the type of visa you have. In the past, it was not unusual to find a limited number of lenders who could provide home loan programs to buyers who had no visa or one with a limited life span and renewable features. This was a home loan often referred to as sub-prime and is no longer available.

We are left with home loans that must follow conventional (FNMA) or FHA guidelines which means that a lender must establish:
  1. Borrower must have an acceptable work visa. This is usually an L1 or H1 visa renewable.
  2. Borrower must have a two year work history verifiable income.

  3. Borrower must have verifiable assets from acceptable sources.

  4. Borrower must be able to establish credit history either with a typical credit report and credit scores or through direct credit references (in most cases, lenders will not approve a home loan unless the credit history contains three credit scores from a typical credit report). Applicants meeting this criteria are eligible for standard FNMA conventional or FHA type financing with minimum down payment scenarios.

The reason L1 or H1 visas are accepted visas for a home loan is because they cover a three year life span and are renewable. Loan underwriting requires that a borrower establish stability of employment. For FNMA and FHA this means that your employment can be expected to continue for three years or more and that you have a reasonable opportunity to renew your visa.

If you are fortunate enough to have the right visa, the next problem to overcome is credit history. Loan approvals are usually obtained by using an AUS (automated approval system) for both FHA and conventional home loans. This system requires that credit scores be present to analyze the loan application. Unfortunately, I'm not aware of any other countries that have three major credit reporting agencies like the U.S. (Transunion, Experian, and Equifax). I believe Canada, England, and Australia have one bureau only. Item 4 above, refers to the use of direct credit references in place of credit scores. This alternative credit approving method has faded away. In today's lending environment, most lenders will only accept loan applications that have been processed by their AUS and received an approve/eligible response. Without credit scores, an AUS approval is not possible.

To conclude, if you are a non-resident alien, you will need an acceptable visa to apply for a home loan. You will also need acceptable credit scores. I assume there are acceptions to these rule but they won't be found with the most popular types of home financing, FNMA conventional and FHA. Naturally as the credit crisis changes so will loan approval guidelines. I'll try to bring you those changes as they occur. For current mortgage, guidelines visit MortgageGuidelines.

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Post Category: Home Buying, Mortgage & Finance, International Real Estate

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