Are you interested in buying a home in the United States but don’t have legal citizenship or permanent residency?
For Foreign Nationals living in the U.S., purchasing property can seem difficult.
Despite the challenges, loan options are available to those without a Social Security Number (SSN). Those who wish to purchase property in the U.S. can look into Foreign National mortgages.
In this article, we will explore Foreign National mortgages, focusing on Individual Taxpayer Identification Number (ITIN) loans.Need an ITIN loan? Start here.
What’s in this article?
These numbers are for people who are not eligible to receive a standard Social Security Number (SSN) but need to file a federal tax return.
ITINs are issued to both resident and nonresident aliens—non-U.S. citizens who live either within the U.S. borders or outside of the U.S.
These people also have a U.S. tax filing requirement, regardless of their immigration status.
The purpose of an ITIN is to aid tax reporting and compliance for those who are not eligible for a Social Security Number.
It’s very important to note that an ITIN is not sufficient authorization to work in the United States. It also does not provide any immigration benefits. It’s strictly a tax processing number.
To apply for an ITIN, individuals must complete IRS Form W-7, Application for IRS Individual Taxpayer Identification Number.
Once you fill out the W-7, you must submit it along with the required documentation to the IRS.
The documentation must prove your identity and foreign status. It typically includes a valid, unexpired passport or other documents such as a birth certificate, driver’s license, or national identification card.
Applicants can submit their W-7 form and supporting documentation in several ways:
- Mail the completed form and documentation to the IRS
- Submit the form and documentation in person at a designated IRS Taxpayer Assistance Center
- Use an IRS-authorized Certifying Acceptance Agent (CAA) or an Acceptance Agent (AA) to assist with the application process.
It usually takes the IRS between six to 10 weeks to process an ITIN application, after which the applicant will receive a letter containing their ITIN.
An ITIN loan is sometimes referred to as a Foreign National mortgage or Foreign National loan. This is a type of home mortgage loan specifically designed for homebuyers who do not have a Social Security Number but have an ITIN.
These loans cater to non-U.S. citizens, including undocumented immigrants, who wish to purchase property in the United States.
ITIN loans are considered non-conventional, meaning they are not backed by government agencies like Fannie Mae, Freddie Mac, or the FHA.
Instead, ITIN loans are offered by private lenders, banks, and credit unions that are willing to extend credit to Foreign Nationals.See if you qualify for an ITIN loan.
Benefits of ITIN loans (Foreign National mortgages)
There are several benefits to a Foreign National mortgage, especially for those who do not have a Social Security Number.
Some of the advantages include the following.
ITIN loans provide an opportunity for Foreign Nationals to buy a house in the U.S.
Paying for a mortgage allows them to build equity (e.g., a portion of the property they have paid for and is legally theirs to use as collateral) and establish roots in their community.
Foreign Nationals can establish a credit history in the U.S. by obtaining a mortgage and making timely payments. This is important because most homebuyers can’t make the entire purchase in cash. Establishing this credit history can be beneficial for future financial goals, like getting a credit card or business loan.
Depending on the individual’s tax situation, owning a house in the U.S. can provide tax benefits, such as mortgage interest deductions.
ITIN loan requirements in 2023
Lenders who offer ITIN loans will typically have specific requirements that borrowers must meet to qualify.
Exact requirements could be different among lenders. Some common requirements for ITIN loans in 2023 include the following:
- A valid ITIN: As the name suggests, borrowers must possess a valid ITIN issued by the IRS.
- Current ID: A social security card or green card is not required. However, you may need to provide a driver’s license or other government-issued ID.
- History of filing taxes with the ITIN: You must have two years of filed tax returns under your ITIN.
- Sufficient income: Borrowers must show that they have a stable and verifiable source of income to cover the mortgage payments.
- Employment history: Lenders typically require a minimum of two years of continuous employment, either with the same employer or in the same line of work.
- Down payment: ITIN loans often require a down payment ranging from 15% to 30% of the purchase price. Foreign bank statements will need to be translated to English by the lender. Down payment funds will need to be converted to USD.
- Credit history: Lenders may ask for alternative credit documentation, such as rent payments, utility bills, or foreign credit reports, to establish the borrower’s creditworthiness.
There is typically no requirement for an ITIN home loan applicant to have a U.S. bank account.
ITIN mortgage loans can apply to a variety of properties, including secondary residences, family vacation homes, homes for family members studying in the U.S., and investment properties.
There are no government restrictions on the type of property that can be purchased with an ITIN home loan. However, applicants will need to prove a sustainable amount of income, credit history, and income verification to qualify for the loan.
In addition to a valid ITIN, borrowers applying for an ITIN loan will need to provide identification. Acceptable forms of identification may include:
- ITIN card
- Valid, unexpired passport
- Driver’s license
- Foreign National identification card or a U.S. government-issued I.D
A social security card or green card is not required for an ITIN loan.
Interest rates for ITIN loans are typically higher than those for conventional loans. This is because lenders consider ITIN loans a higher risk. This is due to the lack of traditional credit history and the borrower’s immigration status.
However, interest rates can vary widely among lenders. It’s highly recommended for borrowers to shop around and compare offers.
Factors that can influence the interest rate on an ITIN loan include:
- The size of the down payment: A larger down payment can result in a lower interest rate, reducing the lender’s risk.
- The borrower’s credit history: A strong alternative credit history can help secure a more favorable interest rate.
- The loan term: Shorter loan terms typically have lower interest rates than longer terms.
Many ITIN loan applicants wonder whether U.S. immigration agencies, such as Immigration and Customs Enforcement (ICE), review ITIN loan applications for deportation purposes.
The loan application process does not involve sharing information with immigration authorities.
ITIN loans are designed to accommodate individuals without a Social Security Number.
Lenders are required to verify the borrower’s identity. They are not obligated to report any information to immigration agencies.
This requirement means that applying for an ITIN loan should not expose borrowers to deportation risks.
Borrowers should gather proof of income, employment history, and alternative credit history. They should also have their ITIN and a valid form of identification readily available.
Once the documentation is prepared, borrowers should find lenders who offer ITIN loans. Compare their terms, interest rates, and fees. Get multiple quotes to find the best loan option.Compare ITIN loan offers here.
Choose a lender. Complete a loan application and provide the required documentation.
The lender will then review the application and determine whether this borrower qualifies for the loan. If approved, the lender will issue a loan commitment letter outlining the terms of the loan.
Finally, the borrower will attend a closing meeting to sign the loan documents and make the down payment and any required closing costs. The house is then theirs.
While ITIN loans share many similarities with conventional mortgages, there are some key differences that borrowers should be aware of:
- ITIN loans are designed for individuals without a Social Security Number, whereas conventional mortgages require a valid SSN.
- ITIN loans are offered by private lenders and are not backed by government agencies like Fannie Mae, Freddie Mac, or the FHA.
- Interest rates on ITIN loans are generally higher than those for conventional mortgages, reflecting the higher risk associated with these loans.
- ITIN loans may require a larger down payment, typically ranging from 15% to 30% of the purchase price.
- Borrowers applying for ITIN loans will need to provide alternative credit documentation, as they may not have a traditional U.S. credit history.
There are several misconceptions surrounding Foreign National mortgages and ITIN loans.
ITIN loans are not limited to undocumented immigrants. They’re designed to cater to individuals without a Social Security Number.
Legal residents and nonresidents who have an ITIN and wish to purchase property in the U.S. can also apply for these loans.
For example, someone who works in the U.S. but has a permanent resident in another country might use an ITIN loan.
ITIN loans are legal and are offered by reputable banks, credit unions, and private lenders in the United States.
Many ITIN loan programs work for borrowers with various types of U.S. visas, including temporary workers, students, and investors.
ITIN loans can be obtained in all 50 states. While most ITIN loan programs have specific guidelines, many lenders are willing to work with borrowers on a case-by-case basis to find a loan solution that meets their needs.
ITIN loans are an excellent option for individuals without a Social Security Number who wish to buy a home in the United States.
While the process of obtaining an ITIN loan may be more complex than a conventional mortgage, they can provide borrowers with the opportunity to become homeowners and build a solid credit history.Get started on your ITIN loan qualification.
Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.