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08 . 20 | Real Estate Law

How to Buy a Home in the U.S. as a Non-U.S. Citizen

Buying a home in the U.S. as a non-U.S. citizen can be tricky, at least on the surface. If you’re wondering whether a citizen of another country can buy property in the U.S., the short answer is yes, though it’s easiest if you’re buying the property in cash. If you’re seeking financing from a financial institution in the U.S. to purchase real estate., as a non-citizen getting a mortgage is the most challenging part. However, if you are prepared to purchase property in the U.S., but you’re not a U.S. citizen, here is essential information to know.

Buying a House as a Non-U.S. Citizen

Anyone may buy and own property in the United States, regardless of citizenship. There are no laws or restrictions that prevent an individual of any foreign citizenship from owning or buying a home in the U.S.
In fact, many foreign nationals purchase vacation homes in the United States, and there are many wealthy foreign investors who purchase investment property such as multi-unit apartments or condos, single-family homes, and even business properties such as shopping malls. So whether you’re a new resident searching for a two-story home for you and your household, or an investor with interest in vacation property, there are several resources and options available to you.

Getting a Mortgage as a Non-U.S. Citizen

Buying a house in the U.S. as a non-U.S. citizen is simple if you plan to pay in cash (or have all the money saved to buy the home in one lump sum). If you’re not in the financial position to be able to purchase a home with cash, you’ll need to obtain a mortgage loan to purchase property. This is where the process can become more complex.

Your ability to get a mortgage as a non-U.S. citizen depends on your residency status. If you are planning to buy a home and have no intention of moving to the U.S., the only loan you may qualify for is a foreign national loan. Foreign national loans tend to have a higher down payment, higher interest rates, and you will need to have an Individual Taxpayer Identification Number (INTN).

If you are a permanent resident with a green card, a non-permanent resident with a valid work visa, or a refugee granted asylum, you can qualify for a mortgage. A lender will need to be able to verify the legal residency of the applicant, so foreign nationals whose primary residence is not in the U.S. may have a harder time getting a mortgage.

You may be wondering if you can buy a home with an FHA loan if you are not a U.S. citizen. In most cases, you can apply for an FHA loan as long as you provide proof of your permanent residency. However, in order to qualify for an FHA loan, the home you are looking to buy will need to be your permanent residence, not a second home or vacation residence.

Additionally, most U.S.-based mortgage lenders look at a borrower’s U.S. credit history to determine their eligibility for a mortgage loan. As a non-U.S. citizen, you may not have a U.S. credit report or your credit report may not have enough information for lenders to establish your creditworthiness. Therefore, it can make it difficult for lenders to analyze the risk of loaning you money to purchase a home. That means your lender will have to use another method for evaluating your risk as a borrower.

Due to the complexity of analyzing risk, many lenders simply opt to not lend money to foreign citizens. It may take you longer to find a lender who is willing to work with you, and it may take longer to get approval for your mortgage loan. You might also pay a higher interest rate. If you are concerned about securing a mortgage loan due to your credit, consider taking the time to improve your credit score before buying a home as a non-U.S. citizen.

Implications for Selling a U.S.-based Home as a Non-US Citizen

Eventually, you might decide to sell your U.S.-based property. Before you purchase new property in the U.S., it’s good to be aware of the rules and requirements should you decide to sell your property in the future. The IRS requires that buyers of property from non-U.S. citizens withhold 15% of the gross sale price to ensure foreign nationals do not evade U.S. income tax on their sold property. If the buyer does not withhold this amount, they may be responsible for additional taxes. The rules surrounding this are somewhat complex but are outlined in the IRS FIRPTA publication, and more information can be found in the International Tax Gap Series.

Working with an agent you trust, who won’t push you beyond what you’re comfortable offering or rush you into making a bad decision, is key. Work with a trustworthy real estate agent, so you know they have your best interest in mind.

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