International Students Buying a House in the USA – Complete Guide

The USA is one of the most flexible nations in allowing foreigners and international students to buy property in the country. However, you should know some important things for international students seeking to purchase a home in the country for the first-time buyer. This blog post will explore the process of buying a house in the USA as an international student, including the types of mortgages available to you and what you need to do to be approved. Keep reading for more information!

Can an International Student Buy a House in the USA?

Yes, as an international student, you are eligible to buy a residential property in the US. There are no restrictions regarding the laws on purchasing a house as a foreigner in the United States. So, stick to this guide if you are interested in buying a house in the USA as a foreign student.

The main question is whether you can afford a house as an F1 student. To determine if it’s a smart idea for you to acquire property in the United States, you must first evaluate your position and budget correctly.

It is also possible for you to get a mortgage loan on your F1 Visa; all you have to do is make sure that you have sufficient income and budget to carry the expenses of buying a house so that the lender is approving on giving you a loan. The advantage is that, in addition to owning the property you buy, you are also permitted to rent and earn additional money. This is permissible even as an F1 visa student. You aren’t “working” for this money; therefore, it does not violate your Visa’s 20-hour workweek conditions. You just need to remember to file your federal and state income tax on any money you may earn on the property.

Why Should an International Student Buy a House In The USA?

Each year, more and more international students come to study at renowned American universities and colleges. A more fitting choice for you as an international student in the USA would be to purchase a house-that way, they will not have to stress about monthly rent payments, and you’ll own a place of your own!

If you choose the right property, then your monthly mortgage payments will be lesser than the rent you pay every month. Moreover, you’ll have an appreciating asset.

Even if you have to return to your country, you can rent out your house or sell it and book your profit right away. So, from an investment point of view, it is profitable to buy a house in the USA as an international student.

The Process of Buying a House as an International Student in the US

Step 1: Make a budget plan.

The first important step to buying a house is determining how much you can spend. What is your overall budget? As a student, you must be sure that you are completely capable of purchasing a home and will be able to cover any additional expenditures related to the purchase. Expenses such as a down payment, closing costs, interior expenses, taxes, and ensuring that any general expenditures in your daily routine do not push you over budget.

The region in which you’re purchasing your house and the location where it is located has a significant role. The cost of any residential property varies based on the prestige or sophistication of the area.

The location where you plan to buy a house plays an essential role in determining the cost of the residential property you buy. It is contingent on the location, how Poche and basic it is, and any added services and amenities available.

Step 2: Find a suitable lender.

Consider having a lender throughout your home-buying process. Because your mortgage loan is essential and your lender is important, you should look for a provider you trust to clear all of your uncertainties and, later, affect the interest rate you will pay on your loan.

Before finalizing your lenders, have a conversation with several of them and compare the numbers. Be sure to research beforehand, so you know what you’re getting into.

HomeAbroad can help you here by connecting you with the best lender possible for your case. HomeAbroad is a platform dedicated to foreigners and immigrants to help them buy a house in the USA.

Step 3: Get pre-approved for your mortgage.

After you have found the lender of your choice, getting pre-approved by them is the next step in buying a house. You need to get pre-approval before you start looking for a house.

A pre-approval is merely proof of a document showing your credibility about how much you can afford on the house and how much the lender expects to lend you.

A pre-approval is essential for any student looking to buy a house because it shows the agent how committed you are to the purchase. It also gives you an idea of what budget you’re working with regarding expenses.

Step 4: Hire a real estate agent.

After getting pre-approved, the next crucial step is to look for a real estate agent to help you find a house of your choice. Being a foreign student, purchasing a home in a whole different country can be an exhausting and daunting task to do by yourself. But getting in touch with a professional real estate agent with a CIPS (Certified International Property Specialist) certificate can take the load off of you.

Moreover, HomeAbroad makes this task easy for you and can simply and quickly connect you with the top CIPS-designated professional real estate agent in America.

Step 5: Start searching for a home.

The most important thing to do while looking for a house is narrow down a price range according to your budget and the kind of neighborhood you want. You can consult your real estate agent if you face any doubts or difficulties trying to look for a house. You can let your agent know about all your preferences, and they will lay down some options for you to choose from.

Don’t forget to clear all your queries with the house’s seller. For example, you may ask questions about the neighborhood, nearest market or mall, convenient transportation from your place, parking space, and security of the area in general. You can make a list of questions to ask the seller and the relator to choose the right place.

Step 6: Put an offer on the house.

Set aside time to drive by the property; if you like what you see, your agent will help you submit an offer. Your real estate agent can also help you prepare an offer letter for the seller to buy the house.

The offer letter is a legal document that follows the real estate laws in your state. The following are the most common pieces of information included in an offer letter:

• The final amount for the house that you have decided to pay
• Down payment
• Pre-approval status

Try negotiating or providing other discriminating information to increase your chances of making the sale.

Step 7: Get a home inspection done.

Before you move into a home for the first time, getting an inspection is a must to ensure that there are no issues or modifications to the property. As the property owner, you will need to schedule a date and time for a home inspection. Hiring a qualified house inspector will cost you extra money, but it’s worth it because one will inspect every aspect of the property, from the building to the roof, windows, power backup, and other functions. You can enlist the aid of your real estate agent in finding a home inspector.

Step 8: Closing

Finally, you’ve completed the last stage of becoming a homeowner as an international student in the United States!

The final paperwork for your new home is a formality, so you must meet with your real estate agent and sign it. The final settlement paperwork may include your mortgage documents, final costs of the house, and any repairs redone by the home inspector, down payment details. Congratulations! You’re a homeowner now!

Getting an US Mortgage as an International student

There are several sorts of mortgage loan option programs accessible to foreign students and American residents, including:

Foreign National Mortgage

A foreign national mortgage is a type of home loan for international students or non-U.S. citizens who want to buy a house in the United States. Since they often have little to no U.S. credit history, these mortgages have different requirements. International students typically need a valid student visa, a larger down payment (20-25% of the property’s value), and proof of income (parent’s or co-signer’s income). They may need to show a positive credit history from their home country.

HUD

The HUD, which is known as the US Department of Housing and Urban Development, is best known for its service of providing affordable housing and creating solid communities for everyone. The HUD is a federal agency in the United States that strives to provide greater homeownership possibilities at lower prices.

HUD also has several special programs mainly designed for first-time home buyers in the United States and some state-specific initiatives for house purchasers.

FHA Loans

You may qualify for a mortgage loan under Federal Housing Administration (FHA). The FHA provides mortgage insurance on loans made through particular FHA-approved lenders under the HUD umbrella. These FHA-approved lenders are inclined to give out FHA home loans with lower down payments and provide a government guarantee. For example, as a student in the US, you can easily secure a loan with a 3.5% down payment on the purchase price, unlike conventional mortgages.

FHA loans also provide lower interest rates. The majority of these loans are guaranteed with a set interest rate, allowing borrowers (including students) who meet the criteria to finance up to 96.5% of the home’s purchase price.

This can help you save money on closing costs. It may also assist you in keeping your mortgage payments lower. In addition, you may be eligible for a 203(b) home loan, which allows you to pay 100% of the closing costs from a family member, government agency, or charitable organization.

Conventional loans

If you’re financing a single-unit primary residence, the required down payment can be as little as 3%, depending on your specific home loan.

You can avoid paying for monthly mortgage insurance with a down payment of 20% or more. If your initial down payment is less than this amount, you can request that the mortgage insurance be removed once you have acquired 20% equity.

Steps to Get a Mortgage Loan as a Foreign Student

Here are seven steps through which you can get a mortgage home loan-

Step 1: Plan a budget

Step 2: Get a pre-approval for your mortgage

Step 3: Get your paperwork ready for a foreign national home loan.

Step 4: Make a final offer on the house you want to buy

Step 5: Lock in your interest rate on your mortgage

Step 6: Mortgage underwriting process

Step 7: Your residential property appraisal

Consider Your Student Loans and a Co-Signer

Effects of Student Loans

You can defer the payment on your student debt while you are still in school or college if you have student loans already weighing you down. This simply means that you can lower your overall debt being a student. This helps while the lender calculates the debt to income ratio to see if you can afford the mortgage, and your student loan payments will not be counted in as a factor in determining your credibility to buy a house.

Another thing to keep in mind is to pay your student loans promptly. Paying your debt on time can help you create a positive outlook and a good credit profile for yourself. While repaying your student loan, you may want to explore using one of the government’s income-driven repayment options, which lets you make lower monthly payments. The majority of federal student loans are eligible for one of these arrangements.

Have a Co-Signer

If you work part-time as a student or have a full-time job, you may qualify for a modest loan if you can prove that your earnings are stable, but if you cant qualify for a loan due to insufficient income, you can still get a mortgage loan with the help of a co-signer. Suppose you don’t have the financial means to get a mortgage loan on your own. In that case, you may get one through a relative, legal guardian, or even a known individual with sufficient resources, such as good income and an excellent credit profile. The co-signer on the loan does not get the cash but is responsible for repayment if you do not make loan installments.

Requirements to Buy a House as a Foreign Student in the USA

Have a source of income

Being a foreign student in the United States, you will need a CPT or an OPT. A CPT is the Curricular Practical Training that lets you work for an internship before you graduate from college. The OPT is the Optional Practical Training which permits you to work after your graduation as a full-time employee. In addition, you will need to show your tax documents to the lender as proof to verify your income for them to find out how much you can afford in terms of the mortgage loan.

Credit score

When looking for a home loan approval, having a good credit score is a requirement most of the time. A good credit history proves how responsible you can be with borrowed money. It is preferred that you build a good credit score before buying a house, and the higher your credit score goes, the lower the interest rate you will have to pay on your mortgage.

But as a foreigner in the US, you might not have a good credit score in a short time if you are looking to buy a house immediately. So, the other option is to get a mortgage loan with a zero credit score–yes, that’s right. Here’s a how-Guide to Foreign National Mortgage Loans with No US Credit

Savings

You need to have enough savings before purchasing a house as a student. You will most likely qualify for a down payment of 3% as an international student when buying your first home. Along with all the other house expenses, from buying to setting up, you need to save for the additional closing costs. The closing cost might be as little as 3% to 5% of the overall value of your property. As a result, you’ll need cash on hand for a down payment and closing expenses. Although international citizens need a few more documents, such as a passport and Visa, the loan process is otherwise the same. Your lender will help guide you through it with ease.

What is the Cost of Living in the US for an International Student?

The cost of living in the United States varies from state to state, but here is an average calculation of how much international students will spend on common expenses. Note: Remember, these are only averages. Your expenses depend on your lifestyle and how you spend your money.

An estimated student cost of living in the United States could vary from $1,000 to $1,500 per month and $10,000 to $20,000 per year.

As a foreign student, you will need to pay the tuition fee, which can go about $8,000 to $55,000 annually.

Renting an apartment can cost you from $450 to $600 if you share a room on your campus.

Conclusion

If you are an international student in the US and want to buy a house, there is no need to be discouraged. Buying a house as a foreigner is similar to that of the citizens and permanent residents here. Also similar in terms to getting a mortgage loan. You just have to ensure that you are financially stable and can afford your monthly payments and other expenses. Buying a house is one way for you to invest in your future here in the US. Are you ready to start looking for your dream home? Go ahead and live your dream of owning a house!

Moreover, allow HomeAbroad to provide you with the right resources (CIPS agent and lender) to make your buying process as smooth as possible.

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