How To Buy a Home as an Immigrant

by | Dec 17, 2019

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For many, owning a home is their version of “The American Dream.” Being able to own property is something that many want in their lifetime so that they have something to pass onto their children. A home is a financial asset and an investment that can help many in the future, but is it possible to extend these perks to those who are not US citizens?  The answer is yes, those who do not hold US citizenship are able to purchase a home.

Can an immigrant buy a house in the US?

Buying a home entirely in cash would help to alleviate any problems or hurdles to become a homeowner, but for many that’s just not possible. Financing a home by getting a mortgage is the most realistic route in order to achieve this. Thankfully, non US Citizens are able to get mortgages and have a chance to get their “American Dream.”

Permanent Residents and Non-Permanent Residents

Permanent residents are immigrants who are legally authorized to live and work in the United States. Permanent residents are given a card as proof of their status called a United States Permanent Resident Card, most commonly known as the green card, and a social security number. Green cards are valid for 10 years for permanent residents.

Non-permanent residents are also authorized to live and work in the United States. They are given a social security number and a valid work visa, but they are not granted a green card. Even though non-permanent residents are not issued a green card, non-permanent residents are still able to get a mortgage.

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Getting a Mortgage as a Permanent Resident

Permanent Residents are able to get a mortgage just like any other US Citizen, even government backed loans such as a FHA Loan (Federal Housing Administration). The most popular mortgage options for permanent residents are the FHA Loan and conventional home loans such as the 30 or 15-Year fixed rate mortgages. For a conventional loan, the process to get a mortgage is very similar.

In order a get a conventional loan, borrowers will be required to provide their green card and their social security number. The rest is the same standard mortgage process that all borrowers go through. If applicable, the borrower might have to provide proof of income, proof of residency, employment history, and a credit history. This is just to show the lender that you are able to afford paying for the loan and aren’t that much of a risk. Most US Citizens have w2 forms and credit history, but if the borrower hasn’t been living in the country for that long, there might not be sufficient information.

For FHA Loans, permanent residents must provide proof of residency in the US and a social security number in addition to meeting all of the FHA Loan eligibility requirements.

Getting a Mortgage as a Non-Permanent Resident

Non-Permanent Residents are issued a social security number, but do not have a green card. They are legally allowed to live in the US to work with a valid work visa. As a non-permanent resident, the borrower must provide their work visa. In addition to their work authorization, proof of income, employment history, proof of employment, and a credit history are usually required to show the lender that they will be able to make the monthly payments.

For FHA Loans, non-permanent residents can get approved if the property is intended to be the borrowers’ permanent residence. They must also provide a social security number and a BCIS (the Bureau pf Citizenship and Immigration Services) Employment Authorization Document.

The borrower is also expected to live and work in the US for a minimum of 3 years. If one’s work visa is approaching expiration, renewal is expected.  Borrowers need at least a years’ worth of credit history in order to get a credit score, so it is best to at least wait a year before applying for a mortgage. If the borrower does not have any lines of credit to make a credit report, the lender can ask for a non-traditional credit report from other accounts such as a cell phone bill, TV bill, water or electric bills, etc. An account history for at least 2-3 accounts is needed in order to generate a credit report and credit score.

Are Undocumented Immigrants Able to Get a Mortgage?

Most undocumented immigrants pay for their homes in full and in cash since this eliminates many of the hurdles that they may face, but it is possible for undocumented immigrants to get a mortgage. There is a type of mortgage that many do not know about called the ITIN Mortgage.

Individual Tax Identification Number (ITIN) Mortgages

ITIN Mortgages were created to help those who are not eligible to receive a social security number. ITIN stands for Individual Tax Identification Number and is a tax processing number. Undocumented immigrants with individual tax ID numbers pay taxes like everyone else and use their taxpayer ID number as proof. If they were to ever face a deportation hearing, having a record of taxes can benefit them since they are abiding by the law. While ITIN mortgages were originally made for foreign nationals who had assets in the United States, undocumented immigrants who reside in the US have become homeowners through the help of an ITIN mortgage.

ITIN mortgages are a completely different type of loan and is a different situation than permanent residents and non-permanent residents experience. Permanent and non-permanent residents are able to apply for conventional loans and government backed loans. Those who only have taxpayer ID numbers can only apply for an ITIN mortgage.

It is important to note that having an ITIN does not qualify as a substitution for a work visa. Having an ITIN gives the tax payer the opportunity to get a tax refund and provide proof of income.

ITIN Mortgage Requirements

Most ITIN mortgages have a term of 30 years and usually come with a much higher interest rate, almost double or higher than the interest rate that comes with a conventional 30-Year mortgage. Thankfully, interest rates with most ITIN mortgages have a fixed interest rate so the monthly payment will remain the same until it is paid off. Borrowers are required to put down at least 20% as a down payment to lessen the risk involved in the situation.

Additional qualifications that the borrower must meet include:

  1. Can provide pay stubs accounting for the last 30 days
  2. Have an employment history of at least 2 years in the same line of work
  3. Provide 2 years’ worth of tax returns with the same taxpayer ID number
  4. Must have filed taxes under the same number for at least 2 years
  5. Must have a credit score greater than 620

Like permanent and non-permanent residents who may not have credit cards or loans, non-traditional credit reports could be obtained from different household bills if the lenders allows this. The borrower must also use this property as their primary residence and can be used to purchase single family homes, condos, or planned unit developments (PUD).

ITIN Mortgages are More Expensive

ITIN mortgages are not very popular and are not as widely available as conventional loans. Some lenders will only issue ITIN mortgages in certain states and some lenders have different eligibility requirements than others such as a higher down payment, sometimes going as high as 30%. Basically, ITIN mortgages require a good amount of savings and can be fairly expensive. Credit unions can be a good alternative since they tend to offer competitive rates due to being a non-profit organization, and may even have special lending programs for non-citizens.

ITIN mortgages usually have higher interest rates and require a larger down payment because of the risk factor associated with the situation, but some lenders feel that there is actually less risk involved with ITIN mortgages. There have been instances where even when the borrower was deported, the mortgage payments were still made.

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Overall Thoughts

The topic of immigrants will always be sticky, no matter what. There are many with certain views and opinions on this topic, but the United States has always been there to create opportunities to those who want them. There is a reason why many come to this country and regardless of whether they are a permanent resident, a non-permanent resident, or an undocumented immigrant: immigrants are able to become homeowners here. As long as they are paying their taxes, contributing to their communities and government, and can provide proof that they can afford the home, they should be able to fulfill their goals of owning land.

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