The crumbling of the sub-prime market has had far reaching effects on the economy. We have all seen how housing prices have declined, down payment requirements have increased, and mortgage underwriting has grown more stringent. Nowhere is this more evident than in the millions of non-residents and foreign nationals seeking to purchase a home in Texas, or anywhere in the United States.
Up until late last year, there were a number of banks that catered to this community of non-citizens who simply didn’t have the right visa to meet the qualifications for traditional mortgage financing. Today, mortgage loans for non-citizens are far more difficult to find. Few banks offer them and there is no single source a borrower can seek in order to find a lender that does offer such a program. This group of disadvantaged buyers includes investors, seasonal workers, and full-time workers that are often in a better position to borrow than many citizens who are first time home buyers if they could only secure financing.
To be fair, many non-citizens are able to purchase real estate using traditional FHA, FNMA and FHLMC conforming mortgage loans. Though the requirements vary from lender to lender, eligible borrowers typically include Permanent Resident Aliens (i.e. green card holders) and certain Non-Permanent Resident Aliens with approved visa classifications, such as diplomats, government and international organization workers, professional employees whose company’s main office is outside the U.S., and workers operating under a trade treaty. In most cases, spouses and dependents of these visa classes will also meet these qualifications. Nevertheless, there is still a large segment of the non-permanent resident population that falls through the cracks.
There is some relief for non-permanent resident aliens. A few programs are available that offer home mortgage loans to these borrowers under certain conditions. Most often, the borrower must hold a valid IRS Individual Taxpayer Identification Number (ITIN), or an ITIN Letter, along with a valid government-issued photo ID which might include their passport, visa, or matricula card. In addition, the borrower must have filed federal income tax returns for at least two years and be able to demonstrate consistent earnings and acceptable creditworthiness. Credit may be in the form of non-traditional credit or even a credit report from their native country where credit was established.
The rates, terms, and down payment requirements are significantly different from traditional government guaranteed programs like FHA and VA home mortgage programs. First, a non-permanent resident should expect to contribute a much larger down payment, often 30% or more. Second, fixed rates are very difficult to secure, so the borrower should expect a 3/1 or 5/1 adjustable rate mortgage with a higher initial rate. Often, by the time of the first rate adjustment, these borrowers are in a much better position to secure traditional mortgage financing at more competitive rates. Potential borrowers should check with a local mortgage lender that offers these products for additional requirements, rates, and terms.
Ultimately, immigrant residents of Texas and across the United States can find home mortgage loans if they look in the right places and demonstrate the stability, creditworthiness, income, and equity that any lender is looking for in a borrower.
Mike Lesmeister is a licensed Texas Mortgage Broker and Partner at Home Loan Specialists, Inc. (http://www.hlstx.com), a Houston-based mortgage boutique. Mike assists homeowners and homebuyers (including non-residents) in Spring, Tomball, The Woodlands, and Houston acquire and refinance residential properties through creative financing strategies, transparent pricing, high ethical standards, and superior client service.