A foreign national loan finances a U.S. second home or investment property for a borrower who lives and works outside the United States — with no U.S. credit score required. Typical programs lend up to about 70% of value when a foreign credit report is available, and about 50% when it isn't, on loan amounts up to $5 million.
For San Luis Obispo County, that means a buyer in London, Toronto, or Mexico City can purchase a Pismo Beach vacation home or a rental near Cal Poly without building a U.S. credit file first.
What the lender looks at
- Foreign credit report — if one is available, it raises the maximum LTV from 50% to 70%
- Income — foreign personal tax returns for self-employed borrowers; pay stubs and a W-2 equivalent for wage earners. CPA letters are generally not accepted
- Assets — foreign assets, including foreign retirement funds, can be considered for the down payment and reserves
- Debt-to-income — generally capped around 43%, with all foreign debts converted to U.S. dollars
Reserves and moving money
Plan on six months of payments in reserves for the property you're buying, plus six months for every other property you own in any country. Funds for the down payment and closing costs have to be moved to a U.S. account or wired directly to title before closing. Foreign assets used only as reserves typically don't need to be moved.
The steps people miss
- A taxpayer ID. At least one borrower generally needs a Social Security Number or ITIN before closing. A pre-approval letter can help your CPA or attorney move that along.
- Entry documents. A passport, visa, or ESTA waiver allowing U.S. entry is required for every borrower.
- Certified translations. Income, asset, and housing-payment documents must be translated by a U.S.-based certified translation company.
- Occupancy. A second home generally must be in a resort or vacation area, and the general rule is no other U.S. properties owned. A home in a metropolitan area is usually treated as an investment property.
Cash-out and special property types
Many foreign national programs allow cash-out refinances with no title seasoning, and can be combined with non-warrantable condos, condotels, co-ops, jumbo, and super jumbo properties. Gift funds are allowed on many programs.
When this is not the right program
If you will live in the home full time on a work visa, a work visa program is the better fit. If you are a U.S. citizen with limited credit, a no-credit portfolio program may work instead.
See the full foreign national loan page or the Creative Lending Series guide.
Programs, rates, and terms are subject to change and may vary based on risk analysis, collateral, and other factors. This is not a commitment to lend.