The United States continues to attract record numbers of foreign-born residents. In 2013, 41 million immigrants resided within U.S. borders – a full 13 percent of the population. The U.S. attracts about 20% of the world’s immigrants, even though it’s only 5% of the world’s population.
The U.S. issues up to eighty-five thousand work visas per year, attracting highly educated and skilled workers. In addition, about 1 million people obtain green cards per year.
What does this have to do with mortgage and housing? 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 -sponsored loans offered by FHA, Fannie Mae and Freddie Mac at the same terms as can citizens.
The most popular loan types for permanent and non-permanent resident aliens are FHA and conventional. Lenders only require a few extra documents for these loans — mainly verification of legal U.S. residency.
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, 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.
Special Requirements: FHA Loans
The popular FHA loan program will be the loan of choice for many non-citizens. It requires a small 3.5% down payment and 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).
Special Requirements: Conventional Mortgages (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, borrowers will need a valid Social Security Number and evidence of continued residency and income. Typically lenders want to see continued residency and income for a minimum of three years.
U.S. Credit Score
One major obstacle for permanent and non-permanent residents is having 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, cell phone, and cable TV. This would be considered a non-traditional credit report and is acceptable with some lenders.
Borrowers need at least 12 months 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.
Proving Foreign Income and Assets
Documenting the mortgage applicant’s income over the previous two years 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 paystubs, 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.
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 are commonly known as foreign national mortgages and are widely available.
Qualifying as an Permanent or Non-permanent Resident Alien
Immigrants to the United States have equal access to mortgage credit compared to 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.