Residents with green cards and work visas can qualify for a U.S. mortgage even if they are not U.S. citizens.

In fact, these home buyers can qualify for government-backed and government-sponsored mortgage loans offered by FHA, Fannie Mae and Freddie Mac at the same terms as U.S. citizens.

The most popular loan types for permanent and non-permanent resident aliens are FHA and conventional loans. Lenders require only a few extra documents for these loans – mainly verification of legal U.S. residency.

Check your home buying eligibility. Start here (Apr 19th, 2024)

Two types of U.S. residency

The following are designations for foreign-born U.S. residents.

Permanent resident alien

This is a person with a green card and a Social Security number.

Non-permanent resident alien

These are people living in the U.S. without a green card but who have a Social Security number. They are typically in the U.S. for a non-permanent employment project or position, although their U.S. employment could last a number of years. Many of these residents wish to purchase a home while they are in the U.S.

Mortgage lenders will require different documentation based on permanent or non-permanent residency.

Permanent resident alien green card mortgage

These borrowers will provide a valid green card (Form I-551) and a Social Security card to the lender. Beyond supplying these documents, getting a U.S. mortgage will be very similar to the qualification process for citizens.

Non-permanent resident alien work visa mortgage

Non-permanent resident aliens can qualify for a mortgage if they plan to live in the home they are buying. In other words, if they are using the home as their primary residence.

These borrowers also need to provide a valid Social Security number and an Employment Authorization Document (EAD), commonly known as a “work permit.” A Social Security card cannot be used as proof of eligibility to work.

Many non-permanent residents do not have an EAD, but a special visa obtained by a sponsoring employer. These borrowers are also eligible for FHA, Fannie Mae, and Freddie Mac mortgages.

Lenders accept these types of visas as proof of legal residency when applying for a mortgage:

• H-1B and other H series visas such as H-1C, H-2, H-3 and H-4
• E series
• G series
• L series
• O series
• NATO series
• Canadian and Mexican NAFTA series

Any work eligibility document must indicate the applicant’s ability to live and work in the United States for at least three years. Each lender will request documentation based on its own guidelines and the borrower’s situation.

Can a non-permanent resident alien get a Fannie Mae loan?

Fannie Mae will back mortgages for non-permanent residents who are buying a home in the United States.

This is a big deal because Fannie Mae is a big player in the market for single-family loans. Fannie, along with Freddie Mac, sets the rules that conventional lenders follow. If Fannie approves of non-resident borrowers, most private lenders will, too.

As Fannie Mae explains in this selling guide, home buyers must have a Social Security number or another tax identification (ITIN) along with documents showing their current legal immigration status is valid and will continue to be valid.

Required documents for a Fannie Mae non-permanent resident alien mortgage

Fannie Mae uses the term “legally present” to define a non-permanent resident who can apply for a conventional loan. To be considered legally present, an applicant must show:

• A Social Security number (SSN) or another Individual Tax Identification Number (ITIN)

And, the applicant must also show one of the following documents:

• Work or student visa
• Entry stamps
• I-551 stamps
• EAD (Employment Authorization Document)

When a conventional loan borrower shows these documents to prove “legal presence,” lenders can start the application process. At that point, the non-permanent resident will face the same underwriting process as a borrower who’s a U.S. citizen.

That means the borrower will have to prove they can afford the home loan and have a credit history to get approved.

What type of property can a non-permanent resident alien buy with Fannie Mae?

Fannie Mae specializes in loans for primary residences. That can be a single-family home, a condominium, a townhome, or even a manufactured home in some cases.

Non-permanent residents won’t be able to buy a second home, vacation home, or investment property with a Fannie Mae-backed loan.

Special requirements: Conventional loans (Fannie Mae and Freddie Mac)

Guidelines for non-U.S. citizens might vary widely between lenders. According to Fannie Mae and Freddie Mac, it is up to the lender to prove the borrower’s legal residency.

Like with FHA, conforming loan borrowers will need valid Social Security numbers and evidence of continued residency and income. Typically, lenders want to see continued residency and income for a minimum of three years.

Can a non-permanent resident alien get an FHA loan?

Most home buyers use conventional loans backed by Fannie Mae or Freddie Mac. Federal Housing Administration (FHA) loans may be a better fit for some non-permanent residents.

The FHA does not lend money for FHA loans; instead it provides mortgage insurance to lenders who issue FHA loans. This mortgage insurance lowers borrower eligibility requirements.

For example, a non-permanent resident with a 3.5% down payment could get approved with a credit score as low as 580. For a first-time home buyer who hasn’t had time to build a strong credit history, FHA loans can be a game changer.

The FHA’s guidelines for non-permanent residents are similar to Fannie Mae guidelines detailed above.

Special requirements: FHA loans

The popular FHA loan program will be the loan of choice for many non-citizens, including DACA recipients. FHA requires a comparatively small, 3.5% down payment, and the FHA is more lenient in its credit standards compared to conventional loans.

The EAD or visa must be valid at least one year after the proposed closing date of the loan. Or, there must be evidence the document has been renewed in the past.

If the work eligibility document expires within a year, the lender is responsible to get evidence of renewal from the employer or the U.S. Citizenship and Immigration Services (USCIS).

Beyond residency status: Qualifying for the loan itself

Visa status, DACA, SSNs and other legal documents show residency status. Proving residency status lets permanent and non-permanent residents apply for a U.S. mortgage loan. But residency status alone won’t guarantee mortgage approval.

To get approved for the loan, permanent and non-permanent residents will still have to qualify for the loan itself, just like any other borrower.

In a nutshell, achieving “approve/eligible” status on a mortgage loan depends on the borrower’s personal finances and the state of the home (or subject property) itself.

Here are the important hurdles between a mortgage application and a loan closing.

U.S. credit score

Most of the time, a credit score of 620 is high enough for a conventional loan while 580 is the minimum for an FHA loan with 3.5% down. (With 10% down, FHA borrowers can get approved with scores as low as 500.)

But it can be difficult for permanent and non-permanent residents to show enough U.S. credit history to qualify.

All applicants need a valid Social Security number and enough history of using credit in the U.S. to generate a credit report and credit score. In addition, most lenders require a minimum number of trade lines in the credit report. A trade line is simply a credit account such as a credit card, auto loan, or personal line of credit.

In some cases, the lender can request a credit report and credit score using account history from other accounts such as water, electric, cellphone, and cable TV. This would be considered a non-traditional credit report and is acceptable with some lenders.

Borrowers need at least 12-month history in at least two or three accounts to generate a credit score. For this reason, new immigrants typically wait at least a year before applying for a home loan.

Check your home buying eligibility. Start here (Apr 19th, 2024)

Debt-to-income ratio (DTI)

Debt-to-income ratios (DTI) show whether a borrower can afford the new loan’s monthly payments. DTI compares current gross income to current debts (including the new house payment).

Borrowers who spend more than 36% of their monthly income on debt payments, including student loan payments, car payments, credit card payments, and other loan payments, will have a harder time getting approved for that conventional loan amount. (FHA loans can allow DTIs up to 45%, and even higher, for some borrowers.)

Income

To calculate DTI, lenders need to document the income borrowers earn. They do this by looking at pay stubs for most borrowers. Self-employed borrowers can submit IRS tax returns instead.

Lenders usually need to know a borrower’s income over the past two years. Borrowers who can’t prove they have enough income to support the new mortgage can add a co-borrower if necessary.

Assets

Lenders also need to know whether borrowers can afford their down payment amount. The minimum down payment for a conventional loan is 3%, but not every borrower can qualify for a down payment that low. All FHA borrowers with credit scores of 580 or higher can buy with 3.5% down.

Underwriters will check bank statements to see whether down payment — and closing cost — funds are available. Lenders will want to know the source of any money deposited in the borrower’s bank within the past 60 days.

Some lenders have reserve requirements, meaning they want borrowers to have enough cash to make payments even after making the down payment and paying closing costs.

Proving foreign income and assets

Documenting the mortgage applicant’s income over the previous two-year period is an important part of the lender’s approval. Likewise, a lender needs to prove the borrower has enough liquid assets to pay the down payment and closing costs.

Loan applicants who have foreign income and assets can still qualify.

Often, the lender will use a third party of its own choosing to get pay stubs, bank statements and other documents translated into English.

Additionally, staff at the bank or loan company will use websites to convert foreign assets and income into U.S. dollars (USD) at current conversion rates. From there, the lender uses income and asset amounts in USD to determine approval.

Subject property types

In most cases the property must be used as a primary residence. The subject property must also meet livability standards for safety.

The property’s cost matters, too. If the loan size exceeds the appraised value of the home, the lender won’t approve the mortgage. Lenders measure this as loan-to-value ratio (LTV) or combined loan-to-value ratio (CLTV).

Sometimes, making a bigger down payment can get a loan’s LTV back into compliance.

Foreign nationals without long-term residency

Borrowers without a long-term visa or green card can still get a loan, but it will likely be offered by individual banks and lenders that provide loans geared toward foreign visitors looking to buy a vacation home or rental. These loans charge higher interest rates than other loans.

These loans are commonly known as foreign national mortgages and are widely available.

FAQs about permanent and non-permanent resident mortgages

Does FNMA allow H1B visa?

Yes, Fannie Mae guidelines allow lenders to accept applications from H-1B visa holders along with other H series visas.

Does Fannie Mae allow non-permanent resident aliens?

Yes, non-permanent residents of the United States can apply for Fannie Mae conforming loans. Getting approved for the loan will require meeting the lender’s underwriting guidelines.

Does Freddie Mac allow F1 visa?

Yes. Students who have an F1 visa allowing legal residency can apply for Freddie Mac’s conventional loans if the student still has three years left on the visa. Getting lender approved will depend on the borrower’s documented income and credit score.

Can you get an FHA loan with an L1 visa?

Most L1 visa holders can apply for an FHA mortgage. However, L1 visas for some workers expire quickly, meaning the visa might not last long enough to satisfy the FHA lender. In most cases, lenders want to see at least three years remaining on the visa or proof that the visa is likely to be renewed.

Can you get a mortgage with diplomatic immunity?

No. People with diplomatic immunity are not subject to U.S. law. Lenders won’t approve a loan file without the protection of law.

Qualifying as a permanent or non-permanent resident alien

Compared to citizens, legal residents of the United States will face more hurdles to home buying. But, once they’ve documented they meet residency requirements, immigrants can access mortgage loans just like citizens.

They can enjoy living and owning a home in the U.S. like their friends and co-workers who are natural-born or naturalized citizens.

If you wish to find out if you are eligible to buy a home in the U.S. we can connect you with a lender who can tell you.

Check your home buying eligibility. Start here (Apr 19th, 2024)