There are times when potential homeowners might have the means to obtain a loan, but they simply don’t have the necessary documents and credentials. Citizens from another country looking to buy a home in the United States may be ineligible to obtain a traditional mortgage loan to buy a house or property. When a non-resident wants to obtain financing to purchase a home, they can use a Foreign National Mortgage loan.
What is Required for a Foreign National Loan?
Foreign National loans are available to eligible people who are either aliens, temporary residents, or have another temporary resident or other classification of either permanent or temporary status. Down payments are typically higher for those looking for a foreign national loan, and they usually have to put down 30% of the total purchase price. The amount is also called a 70% Loan to Value loan.
Why Might Someone Need a Foreign National Loan?
Often foreign nationals are unable to secure a loan because they do not have any credit history or they don’t have enough to be eligible for a traditional loan. A Foreign National loan is a way for them to borrow money using different types of documentation.
What Are the Advantages of a Foreign National Loan?
Foreign National loans come with some advantages. The first is that it gives those in the US who are not US citizens the opportunity to own property, whether it is a primary or secondary residence. Foreign National loans do not require the standard W2s, pay stubs, or tax returns to secure a loan. They also come with a higher debt-to-income ratio than other traditional loans, but they do provide high loan amounts. A Foreign National loan may also apply to investment property.
What are the Disadvantages of a Foreign National Loan?
The biggest drawback of a Foreign National loan is that it typically comes with a higher interest rate than other mortgage loans. They are not offered by many lenders because they usually involve too much risk. Also, they require a large down payment to secure the loan.
Is a Foreign National Loan a Good Idea for Your Client?
Although Foreign National loans are a great alternative to traditional loans that are not available for non-US citizens, they do have some drawbacks. If you want to buy a home, a second home, or invest in property, they give you a way to do so. If you have the means and are able to pay the mortgage down on time or even ahead of time, then they are a great tool to own property in the United States.
At HomeSpring Mortgage, we are creative problem-solvers when it comes to securing mortgage loans in non-traditional ways. Where other lenders see roadblocks, we see solutions. Our Foreign National loans allow people to buy the home of their dreams by providing them the financing they need when they need it. Having a tough time securing a loan for your client? Contact us and let’s work together!