Are you a foreign national in the process of getting a mortgage in the United States but don’t have an SSN? Or a foreign national with no credit history or FICO looking for a mortgage?
If so, you may be wondering if you need to provide your Social Security number (SSN) to complete the process or if there is an alternative. Or how to get a loan with a credit score.
In this blog post, we will discuss in two main sections whether or not foreign nationals need to provide an SSN when obtaining a mortgage, how to use ITIN to get a mortgage, and how to get a mortgage without FICO and offer some tips for successfully completing the process.
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Getting a Mortgage Without FICO
If you don’t have an excellent credit score, applying for a home loan can be overwhelming. The process may seem even more challenging if you don’t have a credit score.
Although specific loan programs and lenders accept people with no credit score, the options might be limited. Still, you will need to up your chances of securing a mortgage without FICO. Below we’ve gone through everything there is to know about FICO to start off on the right foot. We’ll also review some factors to consider while applying for a mortgage with no credit history later.
What is a FICO Score?
FICO score is a type of credit score.
The name Fair Isaac Corporation for the FICO score was introduced in 1989. “Credit score” and “FICO score” are synonymous; however, there are other scores from different brands. Most FICO scores generally fall between 300-850 points, with a higher number indicating better credit. In addition, FICO offers industry-specific credit card and car loan scores that range from 250 to 900, respectively.
Is FICO Essential in Obtaining a Mortgage?
Yes, but getting a mortgage without FICO or credit history is completely accessible. So, let’s gain some perspective on what FICO is and why it is important.
FICO Scores are utilized in over 90% of lending decisions in the United States, so it’s crucial to understand what kinds of FICO Scores exist and where you can check your credit score for free. The three-digit number known as your credit score is essential to determining which financial services, such as credit cards and personal loans, you’ll be accepted for.
In the first section of this blog, we will discuss getting a mortgage with no credit history (FICO). So let’s get into it!
How to Get a Mortgage Loan Without FICO?
Although the steps to apply for a mortgage are the same whether you have an ITIN number or FICO score, here are some key ways to increase your odds of being approved without a FICO score.
1. Have a cosigner
A cosigner is a person who helps and agrees to be responsible for your loan along with you for its prompt repayment. Even though you are the only person making your mortgage repayments, your cosigner is still responsible for the loan. A cosigner can be any individual you know, like your parent, cousin, sibling, spouse, or a close friend willing to cosign for you. It’s important to keep in mind that your loan and repayment history will be reported to their credit.
You can still get a cosigner if you have a good credit score. Getting a cosigner adds creditworthiness and more chances for your mortgage approval.
2. Go big on the downpayment.
If you fail to make a loan payment, the lender will have an easier time getting their money back if you’ve already paid a significant portion of the loan or there is considerable equity in your home. In other words, if you have a larger downpayment saved up for your mortgage, the lender will feel more confident in giving you the loan.
If you cannot secure a mortgage loan for your home with your existing credit history, giving a larger downpayment to the lender can improve your chances of getting a mortgage. Furthermore, some lenders and mortgage loan providers may want a larger down payment if your credit score is lower.
3. Have a manual underwriting process
The process of underwriting is simply when the lender examines the risk of repayment from the borrower’s side. The lender usually looks at things like income, any existing debt, employment status, and other borrower expenses to ensure that the borrower can promptly repay the loan monthly.
Why should you go through manual underwriting and not automated?
Many lenders use automated underwriting systems to evaluate mortgage loan applicants. These systems, which were created to discover warning signs such as a bad or non-existent credit score, may result in the denial of the application.
If you request a manual underwriting process for your mortgage, in which a human underwriter goes through your application all by themselves. You could avoid automated denial if you chose the manual underwriting process. Underwriters have the leeway to evaluate your application based on the criteria supplied.
4. Consider credit unions or online lenders.
Having an existing relationship with a local bank or a credit union can be beneficial for you to get a mortgage as it can up your chances of getting your mortgage approved.
Usually, credit unions offer a more personal touch and relaxed requirements when it comes to lending. An institution such as a credit union will likely consider you creditworthy if you have other products, such as an auto loan or credit card, with the same company and healthy payment history on those accounts.
You might have more success applying with online lenders, like through an aggregator platform. Shopping from multiple lenders simultaneously makes it easier to find one whose requirements are more flexible. You can take HomeAbroad’s help in finding the right lender for you.
HomeAbroad provides foreign national mortgage programs with no US credit history, and you can contact us for a quick quote and preapproval.
Pre-qualify for an ITIN Loan in 1 Minute.
Get a US Home Loan without an SSN.
Now that you have learned about getting a mortgage without FICO, let us learn about securing a mortgage through an ITIN number without SSN.
Getting a Mortgage Without a Social Security Number
People who do not have a social security number can still become homeowners. They only need to furnish their ITIN (Individual Taxpayer Identification Number) to apply for a house. This identifier demonstrates that, while you lack an SSN, you are fulfilling your tax obligations as the nation requires. Contrary to common belief, you may purchase a property in the United States even if you do not have a social security number or legal status. All you have to do is obtain an ITIN number to receive financing. First, let’s get into knowing what SSN is.
What is SSN? Why is it Important?
Getting a mortgage loan with SSN is the standard way to qualify for a mortgage, but many foreigners do not know a social security number and still want to get a mortgage loan. Well, there are other options as well which do not require an SSN.
But before we delve into that, first, let’s know why having a social security number seems necessary for traditional banks to give out mortgages to foreigners.
An SSN is a plus while securing a loan because it’s a sign to the lender you are less of a risk from lending POV to them.
Without an SSN, no traditional lender is likely to approve your loan. They will, at the very least, they would want you to have a cosigner with an SSN and excellent credit history if you don’t.
Although there is a way to get a mortgage as a foreigner without an SSN in the US through ITIN, let’s dive into it.
What is Individual Taxpayer Identification Number (ITIN)
Not having a social security number can still lead you up to getting a mortgage as a foreigner through ITIN. ITIN, known as Individual Taxpayer Identification Number, is used by the IRS to verify tax deductions and credits.
It is only available to nonresident and resident aliens, their spouses, and dependents who cannot obtain a Social Security Number (SSN). It’s a nine-digit number that begins with the letter “9” and follows the format of an SSN (NNN-NN-NNNN). The Internal Revenue Service issues an ITIN.
Even though individuals with an ITIN are legally allowed to work in America, the main objective of an ITIN is not granting people the right to take employment in the United States or use it interchanged for other benefits (both ITIN and SSN have unique purposes).
However, the ITIN can be used to get a mortgage loan as it is widely accepted by various financial institutions around the United States.
The Process to Get a Mortgage Loan Through ITIN.
Here are the following step to secure a mortgage through ITIN
Step 1: Apply for the ITIN Number
The first and obvious step to getting a mortgage loan through an ITIN number is to ensure you have one. If you don’t have an ITIN number already, you need to go to the official website of the IRS and fill out an application form for your ITIN number.
Step 2: Mortgage budget plan out
It’s vital to consider the monthly payment when buying a home in the United States, rather than the property’s purchase price, as this will be needed to pay each month.
Some things that you need to keep in mind before buying a house on a mortgage should be real estate taxes, interest rates, insurance dues, and other extra expenses related to the house.
Step 3: Apply for the ITIN loans ASAP.
Pre-approval of ITIN loans will give you confidence and an idea of how much your ITIN mortgage lender will offer before you start looking for houses. This way, real estate agents can see whether or not a buyer knows exactly what they want from the beginning, which increases your credibility.
This method allows sellers to focus their marketing on buyers who are the most interested in their property. This also gives potential customers more confidence in the seller’s endorsement when negotiating.
Step 4: Gather your documents
As a foreign national, you will need to prove your nationality and verification through various documents, such as your income statements, proof of identity verification, and proof of any asset that you hold, like stocks or savings.
Apart from these documents, you will be required to bring some more documents for complete verification to get an ITIN mortgage. In addition to the documents listed above, other required documents include:
- A copy of your passport
- Your valid US visa
- The complete ICR (International Credit Report) form that the ITIN mortgage lenders provide
- At least two years of employment history along with your contact information
- Two years of history of residency
Step 5: Finalize your home and make an offer
After your ITIN mortgage loan is pre-approved, it’s time to start looking for a house. The first and most important step is finding a qualified real estate agent with a CIPS designation. They will be experienced in handling your situation and know how to get you the best offers. These offers could potentially save you a lot of money. Furthermore, they will help narrow down your home options by showing you properties that fit your needs perfectly.
After you’ve decided on a house, it’s time to submit an offer and prepare a purchase agreement. You will be required to deposit a percentage of the sale price of your property at the offer letter phase to demonstrate your intent to buy.
Step 6: Complete the ITIN loan application
The process of getting a mortgage from ITIN can start right after making an offer to the seller of the property. You will need to prioritize two things while getting a mortgage: the amount of down payment you will make and how long it will be.
The process of obtaining your mortgage approval is now complete, and you’re ready to move on. The next step is to finish any unfinished paperwork, although the bulk of it was already covered during the loan application procedure. At last, the loan officer will give you an estimate on loan, which means that you will have an estimate on the closing amount within three days after applying.
Step 7: Interest rates, loan processing, and underwriting on ITIN loans
When you lock your mortgage rate, you guarantee that your interest rate will not change until you refinance or sell your home. When taking the loan figure, consider locking your interest rate. In the United States, the interest rates tend to change on mortgages frequently because of the bond market.
The process of approval and appraisal begins on your mortgage after you receive and sign your loan estimate.
A loan processor verifies that any necessary documentation is included in your loan file’s submission to the underwriter. An underwriter evaluates your income, assets, job status, and other information throughout the underwriting process to determine whether or not to accept or reject your mortgage application.
Step 8: Appraisal of the property and closing
An appraisal serves to safeguard both the buyer and the lender by ensuring that the property is worth what was agreed upon. Your lender will examine a home appraisal report from a real estate appraiser during the underwriting process.
After the underwriting process is finally done, you will receive a copy of the closing disclosure three days before the signing is done on the mortgage loan documents while closing. You may also be required to provide other documents such as a copy of the closing disclosure, your photo ID, etc.
ITIN Loan Requirements
Here are some basic requirements laid down for you to get an ITIN mortgage loan
- You must have at least a 15% down payment, depending on your credit score. Gift funds may also be accepted.
- You will need a minimum of two-year work history (whether W2 or self-employed) and one year of evidence of income.
- Provide the pay stubs for the past 30 days for W2 employees
- Self-employed foreign nationals can qualify using bank statements instead of tax returns. As a bank statement loan.
- Some lenders are more lenient and will allow your debt-to-income ratio to be as high as 55%.
- You will need a minimum credit score of 600. But, you can still qualify without a credit score. (No US Credit Mortgage Available)
Challenges Faced by ITIN Homebuyers
Not being able to provide documents.
Many applicants fail to provide wage documents since most employers do not submit that information. If the worker is paid in cash, it becomes nearly impossible to obtain that documentation.
ITIN loan rates can be higher.
As an ITIN holder, If you somehow fail to provide your wage documents as a US non-citizen, you will need to save up and provide extra money to the lender as a down payment or an income payment history to the lender to get the mortgage. Usually, ITIN loan rates can be higher than the conventional ones seen in fixed or adjustable loan rates.
Building a credit history to get the mortgage
Foreign nationals can reside in the US without having an SSN but must have an ITIN number to work in the United States legally. The process of getting a mortgage for US citizens is indeed much smoother because of their strong credit history compared to a foreign national holding an ITIN number.
Factors That Can Help You Get an ITIN Mortgage Loan
The lenders may sometimes reject your application for a mortgage loan if you do not have an SSN. As a result, we propose that you undertake the following additional measures to assist you in acquiring a mortgage using an ITIN.
Credit Cards
One of the best things you can do is apply for a few credit cards. Make a few monthly purchases and then pay off the balance in full. This will establish a credit history that lenders may look at.
It will reassure lenders about your capacity to pay back your obligations since many foreign nationals do not have credit in the United States when they come. Getting a few credit cards can help reassure the lender about your loan repayments.
Bank Accounts
Most lenders like to see that you have enough money saved up since you will be paying the downpayment for your ITIN loan. Having money saved up is important. You try to start at least one or two bank accounts and start saving up. If you’re audited, keep your down payment money in that account for at least two to three months before applying for an ITIN loan.
Employment history
They will assess your employment history. Always maintain a steady job to increase the chance of success. Having long-term, continuous employment in the same field makes you look more favorable to get a mortgage loan easily.
Alternative Credit Sources
You could also submit statements from your power company, cell phone provider, insurance provider, and so on to show that you are paying on time. You might also request a letter or a statement showing all of your on-time payments from them.
Conclusion
The process of getting a mortgage loan through ITIN is not difficult, but there are certain requirements that you must meet to be approved. Following the guidelines outlined in this blog post can increase your chances of being approved for an ITIN mortgage loan. Similarly, getting a mortgage loan without having a credit history or FICO is totally doable, just keeping a few pointers in mind, as we have mentioned in the blog for you.
FAQs
Can I get a mortgage without an SSN?
Yes! people without a social security number can still become homeowners and homebuyers in the United States. You just need to have an Individual Taxpayer Identification Number (ITIN) to buy a house and apply for a mortgage.
Can I get a mortgage with just an ITIN number?
Yes, an ITIN mortgage loan is available to individuals who hold an ITIN card. For identification reasons, the ITIN is used instead of Social Security. To qualify for an ITIN mortgage loan, the buyer must also fulfill all criteria.
How much is a downpayment on the house with an ITIN number?
However, you may still be eligible for a mortgage if you have an Individual Taxpayer Identification Number (ITIN). To qualify, you’ll need to come up with at least 15% of the property’s purchase price as a downpayment.
What is an ITIN mortgage?
If you don’t have an SSN or Social Security Number, ITIN mortgage loans are a type of mortgage that may be available to you. With this type of loan, the US and non-US citizens can buy a home without a social security number.
Can I get a mortgage loan without FICO?
Yes! you can apply for a mortgage loan without having a credit history or FICO. Additionally, a few factors will need to be considered to get a mortgage without FICO, getting a cosigner, having a bigger downpayment, going through an underwriting process, etc.
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