If you are a citizen from another nation, you can still have the opportunity to get a mortgage to buy a house in the United States. The products you are eligible for are called foreign national mortgages.
The property can become a second or vacation home while staying in America. It could also be an investment property. During the housing crash nearly nine years ago, some banks got out of the foreign national market entirely. Those who stayed in to the market required borrowers to put down 40 to 50 percent of the purchase price.
But things have changed again, and many of the major banks are offering foreign national mortgages, says Rebecca Abella, senior vice president of residential lending and production manager at Total Bank in Miami.
“These loans never really went away for some banks and some areas,” she says. “In Miami, you have to lend to foreign nationals, or you’d be out of business.”
According to a recent survey by National Association of REALTORS®, five countries accounted for 51 percent of purchases by foreigners: Canada, China, Mexico, India, and the United Kingdom.
Although foreigners purchased property across the country, the four states that accounted for 50 percent of international sales included Florida, California, Texas, and Arizona. Approximately 209 thousand houses were bought by foreign buyers over the time period of March 2014-March 2015 — approximately 4 percent of total Existing Home Sales. The total foreign sales dollar volume is estimated at $104 billion.
Foreign National Home Buying Habits
These foreign clients aren’t buying anything too cheap either. On average, they paid on average nearly $500,000 for a house, compared to the overall U.S. average house price of about $256,000.
“We get foreign buyers from all ages from those in their early 30s to those up in their 70s, and some are buying for their children or purchasing a place for their families for vacation,” Abella said.
She adds that her bank lends to people in most countries except several ones in the Middle East, plus now Total Bank is restricted from giving mortgages to those in Russia, Venezuela and Argentina. Many of those in Venezuela and Argentina are paying cash, anyways, for properties, she says.
“We get a lot of Europeans, too, and many Brazilians,” she says. “Sometimes, people are coming from countries where their monies are worth a little more by investing in the United States’ properties.”
Foreign National Mortgage Qualification
To get a foreign national mortgage, lenders have to verify their income in their country either through a letter from an accountant or CPA, plus information from their place of employment. They must show proof of their income from the past two years.
“We verify their assets through bank statements from the last two years of bank statements, plus obtain two reference letters from two banking installations in their country,” Abella says. “We also check a few days before the closing to verify their income and employment.”
Also, the bank researches their clients’ businesses in their country. They check to see if there are any negative or derogatory things regarding them and their companies.
At Total Bank, foreign nationals must put down 30 percent if they are buying a single family home with a loan of $750,000 or less. If they are buying a condo with a loan $750,000 or less, they must put down 35 percent. For any loans from $750,000 up to $1 million, they must put down 35 percent for a condo or a single family. If the loan is over $1 million, the borrower must bring 40 percent to the table.
Each lender creates its own set of qualification rules and down payment requirements.
“This is just a way to protect the bank,” she says. “But many of our mortgage customers are our bank customers. They bank with us for all their needs, so we get to know them.”
Communication with Lenders
Most of the lenders at Abella’s bank speak Spanish, plus a variety of them speak other languages, too.
“If there is a language that we don’t speak, we have professional translators that have to be certified. The documents all have to be translated into English,” she says.
She adds that most of those inquiring about foreign national mortgages are usually buying homes anywhere from $300,000 to $4 million and higher.
“They come here to Miami for sunshine, the weather, the nightlife and the beaches,” she says.