Buying a home in the US as a non-resident

You don’t even need to be a US citizen to buy a home in the US. Anyone who wants to buy can buy a property here.

In the year Between April 2021 and March 2022, US residential real estate sales to foreign buyers reached $59 billion, according to the National Association of Realtors’ (NAR) Global Transactions in US Residential Real Estate report. Most non-resident buyers come from Canada and Mexico, followed by China. They are mostly buying single-family homes in Florida and California.

While half (44 percent) of foreign buyers rely entirely on cash to make these purchases, nonresidents also have access to loans in the United States to finance their new homes. Although not everything is smooth. Non-citizen home buyers must meet slightly more complex mortgage application requirements that prove their financial worthiness. They will also have more complex tax laws to comply with as a homeowner.

What kind of property can a non-resident buy?

Anyone who is not a US citizen, including permanent residents, temporary residents, nonresidents, immigrants, asylum seekers, and Deferred Action for Childhood Arrivals (DACA) recipients, can buy property in this country. There are no legal restrictions against the purchase of real estate by individuals who fall into these categories.

“Buying a home in the U.S. is open to anyone, regardless of nationality,” says Jane Horner, Realtor of RE/MAX Masters in Salt Lake City, Utah.

There are also no restrictions on the type of property that can be purchased. A non-U.S. citizen can purchase a single-family home, condo, townhouse, duplex or apartment building – or land with no structures.

“There are no restrictions on buying property in the United States as a foreigner. This applies to foreign nationals who wish to purchase property as a primary residence based on their current residence in the United States, or to non-resident foreign investors who wish to purchase property for other reasons – such as investment use or a vacation home. Chase Michels of Michels Group at Compass in Hinsdale, Illinois.

According to NAR, between the spring of 2021 and the spring of 2022, 74 percent of foreign buyers purchased a detached single-family or townhouse. Additionally, 44 percent of foreign buyers purchased properties for vacation home, rental, or both.

What documents does a non-resident need to buy a house?

While they can buy for free, non-US citizen buyers are typically required to submit additional documents to complete a home purchase in the United States compared to US citizens.

The exact requirements, however, vary depending on whether the home is being purchased with cash or a mortgage and the resident status of the buyer. According to Michels, some basic requirements for non-US citizens usually include:

  • Foreign passport, US visa or driver’s license
  • Social Security Number or Individual Taxpayer Identification Number (ITIN)
  • If necessary, financial statements from the applicant’s foreign bank
  • Evidence of financial assets/income (bank statements, etc.).
  • Tax returns (preferably US, if applicable)

“A cash purchase requires proof of identity and reporting the purchase to the federal government,” says Horner. “If a mortgage lender is used, they have the ability to request as many documents as they feel is necessary to advance. [the] “Mortgage Application”.

Which begs the question: Can non-US citizens get a loan to finance a home purchase in the United States? The short answer is yes. But it’s complicated.

How can a non-resident finance a home?

Generally, mortgage lenders prefer to work with applicants who currently live in the United States and are classified as permanent or permanent residents. (Individuals with a Green Card and Social Security number are permanent residents, while those with a Social Security number but no Green Card are permanent residents.) Their advice is simple: applicants who live in this country will be considered. Less risky, especially when there is a default on the loan.

Their state of residence influences the specific type of mortgage that can be used. According to Michael Cantwell, loan officer at Guild Mortgage, there are two main types of loans for non-residential purchases. “One big category is foreign nationals, and the other is non-citizens currently living in the United States,” Cantwell said.

Applicants who fall into one of these categories may qualify for conventional loans through Fannie Mae and Freddie Mac, as well as government-backed loans from the Federal Housing Administration (FAA). However, non-permanent residents must use the home as their primary residence to obtain a mortgage permit.

“Many banks and mortgage companies will offer conventional and FHA home loans to non-U.S. citizens as long as they verify their residency status, employment history and financial record,” says Michel.

And for non-residents? Applicants who live abroad can buy property in that country with what’s known as a foreign national mortgage or foreign national mortgage, Cantwell said. These loans are typically designed by US based banks and lenders and are designed for overseas borrowers who are either buying or renovating. Foreign loans are not backed by Fannie Mae or Freddie Mac.

Additional rules and restrictions for non-residents

Tax laws also apply to assets owned by non-US citizens. For example, if a non-US citizen rents out the purchased property for income, the income must be reported and taxed in both the US and the home country, says real estate attorney Bruce Ilion. and Realtor from Re/Max Town & Country in Atlanta. In addition, non-US citizens are obligated to pay local property taxes.

And when you sell property in the United States as a US citizen, the capital gains tax will also apply.

“There are special deduction provisions that must be met when selling property in the U.S.,” Allion says. “A tax advisor with specific expertise in international taxation should be consulted.”

On the plus side, all of the Fair Housing Act, Title VII, and other anti-discrimination protections apply to real estate transactions made to non-US citizens. These rules are in effect regardless of the buyer, Michel said.

Final word on non-resident home purchases

It is possible to buy a home as a non-US citizen – whether you are a foreign national or a permanent or temporary resident. There are no restrictions on the type of property that can be purchased or how the property can be used. In addition, US laws that protect the rights of all home buyers also cover non-US and non-residents.

In terms of complexity, the most important factor is not a person’s nationality, but their place of residence. Buying a home can be more difficult if you don’t live in the US – especially if financing is needed for the purchase.

Non-residents must be prepared to deal with additional complexities, including extensive documentation requirements to prove their identity, income and assets. They are limited to certain types of loans or loans that are not backed by major loan market makers. But the road to American home ownership is definitely not closed—it just might have a few speed bumps on it.

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