Homeownership for Non-U.S. Citizens: Breaking Down Your Mortgage Options

Mortgage Solutions for Non-U.S. Citizens: Unlocking the American Dream

Navigating the U.S. mortgage landscape as a non-U.S. citizen can be a challenging yet rewarding journey. Thanks to programs from major agencies like Fannie Mae, Freddie Mac, and FHA, pathways to homeownership are available, even if you’re not a U.S. citizen. Understanding these agency guidelines is crucial for selecting the mortgage option that best fits your residency status, financial profile, and homeownership goals. This article breaks down these options, with an in-depth look at eligibility, benefits, and limitations across different loan programs.

A Look at Non-U.S. Citizen Mortgage Options

Non-U.S. citizens can indeed qualify for mortgage financing similarly as American citizens, hinging on several key factors:

• Residency Status: Lawful presence is required across all major programs, and documentation often varies based on residency type (e.g., permanent resident, non-permanent resident with a valid visa, or DACA).
• Employment History: A stable employment background and ongoing employment are crucial, particularly for non-permanent residents.
• Credit and Financial Profile: Demonstrating financial stability through credit history, debt-to-income ratio, and documented assets is essential.
• Continuity of Employment: Employment stability is critical for those on temporary work visas.

Let’s dive into the requirements and allowances provided by each agency, breaking down the specific terms for Fannie Mae, Freddie Mac, and FHA loans.

Fannie Mae: Flexibility with a Focus on Documentation

Fannie Mae’s approach to non-U.S. citizens provides flexibility, particularly for borrowers with lawful presence in the U.S. Here’s what prospective homebuyers need to know:

General Requirements

Fannie Mae considers a Borrower legally present in the United States if:

• They have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), AND
• They have current, verified status, which may be documented by a valid Employment Authorization Document (EAD) or other documentation showing immigration status is current (i.e., Green Card, Work Visa, etc.).

A Borrower who is legally present must meet all other applicable underwriting and eligibility requirements for the loan to be eligible for sale to Fannie Mae.

This includes the continuity of income requirements that apply to all Borrowers:

• Documentation of income continuity is not required for most employment-related income types (i.e., base, bonus, overtime, commission).
• If a Borrower relies on income for which documentation of continuity is required, the fact that a Borrower has a current, verified status does not impact the continuity of income analysis. For example, if a Borrower can provide documentation of 3-year income continuity when required, the fact that their status is renewed only every 2 years is not a factor – the Borrower is legally present and has met the continuity of income requirements.
• Lenders retain discretion as individual borrower situations differ.
• Lenders can continue to decide what type of documentation is appropriate and what can be retained as part of the loan file to show that a borrower is legally present.

Credit / Income / Asset Requirements

Credit References – Non-U.S. Citizen and Foreign Borrowers

If a non-U.S. citizen or foreign Borrower lacks sufficient credit references in the United States to satisfy Fannie Mae requirements, the lender must use credit references from foreign countries to achieve the required number of nontraditional credit references and establish a nontraditional credit profile.

Verification of Assets – Non-U.S. Citizen Borrowers

The lender must document all sources of funds used for down payments and closing costs.

Funds that a non-U.S. citizen borrower recently deposited in a U.S. depository institution are an acceptable source of funds provided all of the following requirements are met:

There is documented evidence of funds transfer from the country from which the Borrower immigrated,

It can be established that the funds belonged to the Borrower before the date of the transfer, AND

The sources of all funds used for closing can be verified just as they would for a U.S. citizen borrower.

Key Takeaway: Fannie Mae’s guidelines are beneficial for individuals with a stable income history and established residency, as they allow foreign credit histories and accept ITINs for identification.

Freddie Mac: Options for Lawful Residents, Excluding DACA

Permanent and Non-Permanent Resident Aliens

• A non-U.S. citizen who is lawfully residing in the U.S. as a Permanent or Non-Permanent Resident Alien is eligible for a mortgage on the same terms as a U.S. Citizen.
• A mortgage to a non-U.S. citizen who has no lawful residency status in the United States is not eligible for sale to Freddie Mac

Key Takeaway: Freddie Mac is suited for non-U.S. citizens with lawful residency who do not hold DACA status, making it a good choice for those with traditional employment or self-employment income.

FHA Loans: Broad Eligibility with Rigorous Documentation

The Federal Housing Administration (FHA) offers significant inclusivity for non-U.S. citizens, extending eligibility to a wide range of residency statuses, including DACA recipients. FHA loans also require detailed documentation and proof of lawful presence, making them a popular choice for many.

The Employment Authorization Document issued by United States Citizenship and Immigration Services (USCIS) is required to substantiate work status. If the Employment Authorization Document [USCIS Form I-766) or evidence of H-1B status will expire within 1 year and a prior history of residency status renewals exists, the Mortgagee may assume that continuation will be granted. If there are no prior renewals, the Mortgagee must determine the likelihood of renewal based on information from the USCIS.

A borrower residing in the U.S. under refugee or asylee status granted by the USCIS is automatically eligible to work in this country. The Employment Authorization Document is not required, but documentation substantiating the refugee or asylee status must be obtained.

While a borrower is required to have a valid Social Security Number, in no case is a Social Security Card sufficient to prove immigration or work status.

Each Borrower must be considered ‘eligible’ per FHA guidelines.

FHA does not specify eligible Visa types, only characteristics of what the lender should determine, such as Employment Authorization Documentation, expiration dates, and the likelihood that the Visa will be renewed or has not expired.

A Borrower with lawful Permanent Resident Alien status may be eligible for FHA-insured financing provided the Borrower satisfies the same requirements, terms, and conditions as those for U.S. Citizens. The mortgage file must include evidence of permanent residency and indicate that the Borrower is a lawful Permanent Resident Alien on the URLA. The U.S. Citizenship and Immigration Services (USCIS) within the Department of Homeland Security provides evidence of lawful permanent residency status.

For Non-Permanent Resident Aliens, eligibility for an FHA loan depends on the Borrower meeting the following guidelines as described in the FHA Manual 4000.1.

• The Property will be the Borrower’s Principal Residence;
• The Borrower has a valid SSN, except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD;
• The Borrower is eligible to work in the United States, provided the Borrower provides either:
  1. An EAD [Employment Authorization Document USCIS Form I-766] showing that work authorization status is current;
  2. A USCIS Form I-94 evidencing H-1B status and evidence of employment by the authorized H-1B employer for a minimum of 1 year;
  3. Evidence of being granted refugee or asylee status by the USCIS OR
  4. Evidence of citizenship of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau; AND
  5. The Borrower satisfies the same requirements, terms, and conditions as those for U.S. Citizens.

Refugee or Asylee Status Documentation:

• EAD [Employment Authorization Document USCIS Form I-766] or USCIS Form I-94 indicating refugee or asylum status, OR
• USCIS Form I-797 notice indicating approval of a USCIS Form I-589, Application for Asylum or Withholding of Removal, substantiating the refugee or asylee status.

Documentation of a borrower’s annual income, employment, employment status, and ability to be lawfully employed will be required as a condition of loan approval.

Key Takeaway: FHA loans are an excellent option for non-U.S. citizens with varied residency statuses, including DACA, due to the broader acceptance criteria.

Important Considerations Across Agencies

While specific requirements differ across these agencies, there are shared factors to consider as a non-U.S. citizen applying for a mortgage:

• Proof of Funds and Source Verification Non-U.S. citizens may need to show the source of their funds, especially if using foreign assets for a down payment or closing costs. Typically, the money must be transferred to a U.S. bank before approval.
• Building a Credit Profile Without U.S. History For applicants without an established U.S. credit history, non-traditional credit options or foreign credit references can sometimes fulfill agency requirements. However, these exceptions depend on the agency’s guidelines and lender policies.
• Employment Continuity Whether through permanent employment, temporary work, or self-employment, continuity of income is critical across all agencies. Income verification helps demonstrate the ability to repay the loan and meets agency guidelines for mortgage eligibility.
• Single Loan Limits and Application Restrictions In some cases, non-U.S. citizens may face limitations on the number of active loans, particularly with FHA programs. It’s essential to check whether a specific agency’s rules align with your homeownership goals if you’re considering multiple properties.

Maximizing Your Mortgage Success as a Non-U.S. Citizen

The following tips can help streamline the application process:

• Gather All Documentation Early: Whether it’s proof of residency, EADs, or tax returns, having all required documents can speed up the approval process.
• Choose the Right Lender: Certain lenders have more experience working with non-U.S. citizens and may have policies that align with agency guidelines more closely.
• Understand Residency Requirements: Know your status and eligibility to ensure a smoother application with your selected agency.
• Research Non-Traditional Credit: If lacking U.S. credit, ask your lender if they accept foreign credit or other references for non-traditional credit building.

About Us

At Innovative Mortgage Brokers, we understand that navigating the mortgage process as a non-U.S. citizen can seem overwhelming with additional requirements and unique eligibility criteria. Our team is committed to simplifying this journey, leveraging our expertise to guide you through each step, from gathering documentation to selecting the best loan option tailored to your specific residency status and financial profile. With access to a wide range of programs from conventional like Fannie Mae and Freddie Mac, to FHA, USDA, and VA, we’re able to offer you competitive options whether you’re a permanent resident, temporary resident, or a veteran with lawful U.S. residency.

Our experience working with diverse clients has equipped us with the knowledge to address any challenges that may arise, such as sourcing foreign credit histories or ensuring employment continuity requirements are met. We work closely with you to build a comprehensive application package that maximizes your chances of approval. At Innovative Mortgage Brokers, our goal is to make homeownership accessible and achievable for all, providing personalized support to help you find the ideal mortgage solution and making your dream of owning a home in the U.S. a reality.

Conclusion: Unlocking Homeownership Opportunities for Non-U.S. Citizens

Navigating the mortgage landscape as a non-U.S. citizen presents unique challenges, but with the right knowledge, planning, and support, homeownership is well within reach. Fannie Mae, Freddie Mac, and FHA provide options designed to accommodate a range of residency statuses, financial backgrounds, and credit profiles, allowing permanent and non-permanent residents alike to access mortgages with favorable terms. From foreign credit assessments to flexible residency documentation, these agencies make it possible for non-U.S. citizens to realize their dreams of homeownership.

At Innovative Mortgage Brokers, we are dedicated to helping you understand these pathways and making the process as straightforward as possible. Whether you’re a first-time buyer or looking to secure an investment property, we are here to guide you every step of the way. With expert insight and a commitment to exceptional service, we make home financing accessible for clients from diverse backgrounds, ensuring you’re empowered and supported in your journey to homeownership in the U.S.