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Mortgage Loans for International Buyers

By Arvin Sahakian · Jun 19, 2015 · Mortgage

Mortgage Loans for International Buyers

Image courtesy of Flickr, International Railway Summit

International buyers find real estate in the United States attractive, but the purchasing process is different for these buyers. Learn about the trend in international buyers, who they are and why they buy in the U.S.

According to the National Association of Realtors (NAR), foreign purchases of U.S. property grew by 35% in 2013 to $92.2 billion. This has a big impact on the real estate market in the U.S. However, if you are an international buyer, the process of obtaining a mortgage and buying a property is not exactly easy.

We will discuss a few things you need to consider if you want to become one of the many international homeowners in the United States.

What is an International Buyer?

International home buyers are any buyers who do not currently live or own property in the United States. Some of these buyers may be investors and others may be buying because they plan to move to the U.S. International buyers are interesting because many are coming from areas with vastly different economies than our own.

Why Do International Buyers Want to Buy in the U.S.?

International buyers want to purchase in the U.S. for two distinct reasons:

First Reason

They are considering a move to the U.S. This is often the case with international businesspeople who are looking for a second home, near a convenient market like New York, Los Angeles or San Francisco. Others may be planning to relocate for business altogether.

Second Reason

An international buyer wants to buy in the U.S. as an investment. With the U.S. housing market on a rebound since 2009, investors are coming out of the woodwork-this can actually bolster the market for native buyers as well because the strong demand drives real estate prices higher.

How to Find a Lender for International Buyers

The key is to make sure you are working with a lender who knows this market and the unique requirements well. Most of the larger international banks such as Citi, will have mortgage programs for international buyers.

We strongly recommend connecting with a real estate agent who specializes in working with international buyers first. The National Association of Realtors can be an excellent resource for finding a realtor specializing in this field.

Once you find your agent, you can use them as an excellent resource to connect you with various parties to complete your investment transaction.

Credit and Down Payment Requirements

The credit requirements for international buyers are tougher than U.S. buyers because the consumer credit rating systems we use are different than in other countries.

For example, the three credit bureaus that give us our credit ratings (Transunion, Experian, and Equifax) are meant for U.S. residents who have been issued a social security number. A buyer from China, does not have a SSN or a credit rating with these three credit bureaus.

International buyers should expect to have approximately 30% of the purchase price as a down payment. In addition, the buyer may have a tough time proving consistent income to make payments, which is why assets become an important part of the qualification process.

Proof of income requirements are often tough, but it is important since the buyer's credit record may not be as well established as it would be for a U.S. citizen. It is for these complications that most international investors choose to buy using cash over financing.

Document Requirements

A U.S. buyer has an easy time proving his or her identity to make a purchase. For the international buyer, there are a few extra document requirements. In addition to providing income and asset documentation, they will also need to provide a passport, and a visitor's visa. Talking with your lender and real estate agent before you get too far in the borrowing and buying process can help avoid unexpected surprises and delays.

Worth the Effort

While buying a home is a challenge for anyone, international buyers should be prepared for a few extra hurdles. Having an experienced real estate agent on your side is important. Despite the challenges, the payoff can be huge, which is why so many international buyers and investors pursue the United States as one of the most ideal places in the world to invest real estate.

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