How to Obtain a US Mortgage for Foreign Nationals with No US Credit

US Mortgage with no US credit history
9 min read

One of the most important financial decisions a person can make is buying a house in a new country as a foreign national. Mortgage rates in the U.S. are low, and now might be the perfect time to take advantage! However, if you are not a US citizen with an established credit history in America, it may seem like there is no way for you to get approved for this type of loan. The truth is there are mortgage lenders in the USA that provide mortgage options to foreign national borrowers with no US credit history at competitive rates – this is applicable for both U.S. newcomers on visas and Non-resident buyers of U.S. real estate.  This blog post will explore the various mortgage options available for foreign nationals with no credit history who want to buy property in America.  

This article will discuss the high-level landscape of international transactions in U.S. real estate and how foreign nationals can obtain a home loan or financing without a US credit history. We’ll cover: 

Foreign National Mortgages for Immigrants and Non-Resident Buyers

In 2021 (Apr’20-Mar’21), 61% of all non-resident foreign buyers made an all-cash purchase while 66% of U.S. newcomers on non-immigrant visas financed their home through a U.S. mortgage, most waiting for 2+ years to establish a U.S. credit history. Thus, there is a general lack of awareness about financing options available as a foreign national buyer with no or thin U.S. credit history. This might explain why U.S. Newcomers generally wait for 2-3 years to establish credit before buying a house and is one of the drivers for Non-resident buyers to make all-cash home purchases. 

U.S. newcomers on visas have a higher median salary than an average U.S. worker and an essential need to build good credit in the U.S., making them anecdotally low credit risk. The non-resident investor in U.S. real estate is generally high net worth clients with good credit in their home country. This realization has led to the development and growth of creative mortgage programs for Foreign Nationals with No or Thin US Credit history – including recent immigrants to the US on Visa and Non-residents. 

Home Financing by foreign nationals
Home Financing Trend by Foreign Nationals, Source: NAR

Step-by-step process to obtain foreign national mortgage loans in the US

The following is a step-by-step process to obtain a US mortgage for foreigners with no US credit history. It also explains the US mortgage process from the perspective of a foreign national borrower:

Step 1 – Estimate your budget: How much home can you afford?

The first thing to consider while obtaining home financing in the USA as a foreign national is how much you can afford as your maximum monthly payment rather than the home purchase price, as this is what you will be paying for every month.  

Mortgage lenders use two main methods to calculate your maximum monthly payment: the front-end and back-end. The front-end ratio considers all your housing costs, including property taxes, homeowner’s association dues, etc., whereas the back-end calculation does not consider these additional fees.

Therefore, while considering how much home can you afford to keep into mind the following components of your monthly payment: 

  • Mortgage principal and interest 
  • Property taxes (your monthly payments are placed in an escrow account, where they are used to pay your real estate taxes) 
  • Homeowners insurance premiums 
  • Homeowner’s association dues/assessments (if applicable) 

Step 2 – Obtain Mortgage Pre-approval for your foreign national mortgage 

As a foreign national, whether you’re buying a home in the U.S. to live in or use as an investment property, home-financing solutions are available without US credit history to meet your need. These are US Mortgage lenders specializing in foreign national mortgage loans and take into account non-traditional data points to assess your credit risk, including your credit history outside the US. 

Obtaining a pre-approval for a foreign national mortgage loan will give you the confidence in knowing how much your lender will loan to you before beginning your search. This way, real estate agents will know upfront whether or not a buyer knows what they want and take you more seriously.

This allows them to spend more time only with buyers interested in the property. It also assures sellers of seriousness from the prospective buyers and may allow them to take less risk with their own homes throughout negotiations. 

US Mortgages with no US credit history

US Mortgages for Foreign Nationals & Expats

Get pre-qualified for a US Mortgage as a foreign national buyer without US credit history.

Step 3 – Prepare your documents for a foreign national home loan 

To obtain the pre-approval for your foreign national mortgage loan, you will generally need documents that verify three things: first and foremost is identity verification. Second are income statements that demonstrate an ability to make payments on a new home. And finally, there needs to be evidence of assets such as stocks or savings accounts which can help with down payment costs associated with buying property abroad.  

There will be additional document requirements for international clients in addition to the ones outlined above: 

  • Copy of passport 
  • Valid U.S. Visa, unless country participates in the Visa Waiver Program 
  • You might need to complete International Credit Report Form provided by the lender 
  • Two years’ history of employment with contact information 
  • Two years’ history of residency (to include address, own/rent, start and end dates) 

Understanding International Credit Report  

US lenders might use an International Credit Report (ICR) might be used to determine your eligibility for an international or foreign national mortgage product if you have no or thin US credit history. These foreign credit reports are third-party reports used to compile credit information from your home country or any countries where you might have a financial history. For example, this report provides data such as the following: 

  • Credit history of the foreign national applicant in the home country if applicable 
  • Property ownership inside and outside the U.S. 
  • Property tax and insurance amounts 
  • Public records: liens, judgments, foreclosures 
  • Verification of two-year employment history 
  • Verification of two-year residency history 

In most situations, the lender will order an ICR for you after obtaining the required details from your end.  

Step 4 – Shop for your home and make an offer 

Now that you’ve been pre-approved for an international mortgage, it’s time for the fun part — house hunting. First, find a good agent experienced in international real estate transactions and qualified certification such as a CIPS (Certified International Property Specialist) designation in the U.S. 

Your real estate agent will guide you through the home shopping experience in the U.S.  and help you find the perfect property for you. After selecting one of them, it’s time to make an offer!  Your real estate agent will help structure the offer and incorporate contingencies that must be met before the deal is complete. 

Find the best real estate agent with international expertise

Connect with a local US real estate agent(s) with CIPS designation

You will work with your real estate agent to draft an agreement to purchase a home in the US. This house purchase includes your offer to buy and any property listed inside of the house you want to include with that sale. It’s at the offer letter stage that you’ll give an earnest money deposit. This is money given to the seller to show your intent to purchase, and it’s typically a percentage of the purchase price. 

If you want to know more about the U.S. home buying process or working with a real estate agent experienced in international real estate transactions, check out this definitive guide on Buying a house in the U.S. as a foreign national.   

Step 5 – Finalize your foreign national mortgage loan application 

After you’ve formalized your offer with a purchase agreement, you’re ready to begin the mortgage application process with the lender who specializes in foreign national US mortgage and finalize the terms of the loan.  

You’ll need to consider: 1) the types of mortgages 2) compare their respective rates 3) settle on a down payment amount 4) choose a term length.

Completing your paperwork is the next step. Although you may have already completed a good portion of your application paperwork during preapproval, you’ll need to gather some final documentation as outlined in Step 3 above. In addition, loan officers will need any information you haven’t yet provided surrounding your debts, assets, credit, and income. 

Within three business days of applying, your loan officer must provide you with a Loan Estimate. The Loan Estimate provides you with an estimate of your mortgage loan terms and closing costs (also called closing charges, or costs to complete your mortgage transaction) if you are approved for a mortgage loan. With this information, you can evaluate your mortgage loan offer and even explore a few other possibilities before accepting it. In addition, you can refer to our guide Mortgage Loan Estimate: All You Need to Know, for a detailed understanding of the loan estimate and various costs involved in the mortgage process in the US.

Mortgage Closing process

US Mortgages for Foreign Nationals & Expats

Get pre-qualified for a US Mortgage as a foreign national buyer without US credit history.

Step 6 – Lock the interest rate on your mortgage loan 

In the United States, the mortgage rates fluctuate daily based on the bond market. Locking your mortgage rate will ensure that your interest rate stays the same until the loan’s closing. Your loan officer will help you with the rate lock process. In general, you should consider locking the rate on your loan once you decide to accept the loan estimate and move forward with the lender for home financing needs in the U.S. 

Step 7 – Mortgage Loan Processing and Underwriting 

Once you have accepted and signed your Loan Estimate, the loan processing will begin. At this stage, you will work with a loan processor whose job is to prepare your mortgage loan information and application for presentation to the underwriter. The loan processor will ensure that all documentation needed to decide on your loan file is included in the submission to the underwriter. A well-processed loan application can help speed up the approval process for your mortgage loan. 

Your mortgage underwriter is the professional authorized to assess if you qualify for the mortgage loan based on the lender’s underwriting guidelines. An underwriter will verify your income, assets, employment, and other information regarding your mortgage application during the underwriting process and decide to either approve or deny the loan. The underwriter can request additional documentation as needed to make this decision.  

Step 8 – Conduct Property Appraisal  

During the underwriting process, your lender will review the home appraisal report that a real estate appraiser would have prepared at the lender’s request. The real estate appraiser’s job is to look at the property you are purchasing and determine how much it’s worth (or its fair market value). Real estate appraisers determine a home’s value in several ways, including comparing the similar homes recently sold nearby. The appraisal protects the buyer and lender by confirming the house is worth the agreed-to price.  

If the appraisal comes in lower than your sales price, there are three options: you can offer to pay for the difference, re-negotiate with them, arrive at an agreement, or walk away if you had an appraisal clause in the purchase agreement. 

Step 9 – Prepare for Closing 

Congratulations, the difficult part is over with the completion of the underwriting process. The hard work you put into the underwriting process has paid off, and now it’s time for closing day! You’ll bring your photo ID, a copy of your Closing Disclosure, and any other final paperwork to the settlement table, as well as all necessary funds. It’s finally here – taking ownership of this awesome home that will be YOUR HOUSE in the USA!! 

Your loan officer or processor should provide you with a copy of the Closing Disclosure at least 3 business days before you sign the mortgage loan documents at your closing. This document discloses the actual dollar amounts you will pay for the various fees and services associated with your mortgage loan closing. In addition, you can read our guide Mortgage Closing Process: All You Need to Know About Your Closing and Closing Disclosure to get a detailed understanding of the various steps involved during the closing of your home loan.

If everything is in order, you’ll sign all your documents, receive your keys, and just like that — You’re a homeowner! Congratulations on purchasing a house in the USA as a foreign national.

Now that you understand the mortgage process for a foreign national, are you ready to get started? Then, you can go ahead and start the pre-approval process for a foreign national loan. 

US Mortgages with no US credit history

US Mortgages for Foreign Nationals & Expats

Get pre-qualified for a US Mortgage as a foreign national buyer without US credit history.

Frequently Asked Questions

Can a foreign national apply for a mortgage loan?

Yes, there are financial institutions in the US that offer foreign national mortgages to non-US citizens, both US residents and non-resident investors, at competitive rates with no US credit.

What is a foreign national loan program?

Certain lenders in the US offer foreign national loan programs tailored for US newcomers or non-residents with no US credit.

Can non-residents apply for mortgages?

Yes, non-residents can apply for mortgages with certain US lenders. These lenders use credit information from your home country or non-traditional data points to determine credit risk.

Can a US financial institution do international mortgages?

Yes, certain US financial institutions can do international mortgages based on credit information from your home country or non-traditional data points to determine credit risk.

Can you buy a house in America without credit?

Yes, you can buy a house in the USA without an established US credit. In addition, there are mortgage financing options available in the US for foreigners with no US credit.