Why buy a house on an H1B visa? Should you buy a house on an H1B visa?

Michele Lawrie, CREO - HomeAbroad  by Michele Lawrie
11 min read
why buy house on H1B visa

If you are currently on an H1B visa, you may be wondering should I buy a house when I am on h1b now?

The major concern is the uncertainty of your visa extension or renewal. What if you have to return to your country.

Let’s go through the pros and cons of buying a house on H1B, so you can make your decision to buy a house as an H1B visa holder.

Pros and Cons of Buying a House on H1B Visa

Reasons to Buy House on H1B Visa (Pros)

1. Buying a house can help you establish roots in the United States.

Purchasing a house is one of the most significant investments that you will make in your lifetime. Not only is it a financial investment, but it also allows you to put down roots in a community. Owning a home gives you a sense of stability and belonging.

When you buy a house, you become part of the fabric of the neighborhood. You get to know your neighbors, and they get to know you. This sense of community can be especially important if you are new to the United States.

Establishing roots in a community can help you feel like you belong in the United States. It can give you a support system as you adjust to life in a new country. Moreover, you’ll be able to enjoy an enhanced quality of life in the US.

2. Monthly mortgage payments can be lower than rent payments.

A US house is a good investment for many reasons. For one, your monthly mortgage payments will likely be lower than your rent payments. The USA has relatively lower house prices than other big real estate markets like Canada, the UK, China, etc. On the other hand, the rental yields are high, and you might have to pay hefty rent as compared to mortgage installments. And even if your EMIs are a bit higher, you are getting more and more equity in your house with each payment. Lastly, owning a home can give you a sense of stability and security that renting cannot provide.

3. Mortgage payments are less likely to fluctuate than rent payments.

A mortgage is a loan that is used to purchase a property. The monthly payments are typically fixed, which means they will not fluctuate. This can provide peace of mind for homeowners, as they know exactly how much their mortgage payment will be each month. In contrast, rent payments can often fluctuate depending on the lease agreement. This can make budgeting and planning difficult for renters. Therefore, getting a house on an H1B visa makes more sense than renting.

4. If you have a family, buying a house gives you more space and privacy than an apartment.

If you have a family, buying a house gives you more space and privacy than an apartment. You will have your own backyard and can decorate your home however you want. You won’t have to worry about noise from neighbors and can make long-term plans for your home.

5. Home prices are affordable in the US.

Home prices in the US are very affordable compared to other countries. The average price of a home in the US is around $200,000, while the average price of a home in London is over $1 million. This makes the US a great place to buy a home, especially for families who are looking for a place to live that is both affordable and comfortable.

Per square meter of residential real estate in San Francisco costs $5,890 in the United States compared to $26,262 in London (UK), $28,570 in Hong Kong (China), and $10,947 in Toronto (Canada), among other places. (NAR)

Home Price Comparison Among Global Cities and US Metros 
Source: NAR

6. Get a loan with a lower interest rate if you have a good credit score.

A good credit score can help you get a loan with a lower interest rate. This is because lenders see people with good credit scores as being less of a risk. They are more likely to repay their loans on time and in full. This means that the lender can offer them a lower interest rate, which can save you money. So, if you have built a good US credit score, then you’ll get a mortgage loan easily to buy your home and an appreciating asset.

H1B Visa Mortgage with No US Credit

If you just came to the US and have no US credit, you can still get the mortgage for your home. You just need to find the right lender who provides mortgages to H1B visa holders with no US credit history.

US Mortgages with no US credit history

Find the Best Mortgage Lenders for H1B Visa Holders

Get pre-qualified for a H1B Visa Mortgage. No US credit needed for US Newcomers

7. Build equity in your home.

If you own your home, you may be able to use it as collateral for a loan. This means that if you default on the loan, the lender can take your home. However, if you make all of your payments on time, you can build equity in your home. Equity is the portion of your home that you actually own—it’s the difference between your home’s market value and the amount of money you still owe on your mortgage. You can use this equity as collateral for future loans, which can give you a lower interest rate and better loan terms.

8. Eligibility for certain tax deductions if you own your home.

There are a number of tax deductions that homeowners may be eligible for. These can include deductions for mortgage interest, property taxes, and more. The IRS has created various tax benefits for purchasing a home, including deductions, to assist individuals in becoming homeowners. A tax deduction lowers your adjusted gross income, lowering your tax burden. The following are some of the most frequent housing tax deductions that can be taken under an H1B visa:

Mortgage Interest Deduction

The mortgage interest deduction is one of the most common deductions taken by H1B homeowners. It allows you to deduct the interest you pay on your mortgage from your taxes. This can save you a significant amount of money each year, especially if you have a high mortgage interest rate. In order to take this deduction, you must itemize your deductions on your tax return.

The IRS Form 1098, which will list the amount of interest you paid in the prior year, will be delivered to you by your lender to help you claim the deduction.

Property Tax Deduction

Another common deduction taken by H1B homeowners is the property tax deduction. This allows you to deduct the amount of property taxes you pay from your taxes. This can save you a significant amount of money each year, depending on the amount of property taxes you pay. In order to take this deduction, you must itemize your deductions on your tax return.

Private Mortgage Insurance (PMI) Deduction

If you are required to pay private mortgage insurance (PMI), you may be able to deduct the premium from your taxes. PMI is insurance that protects the lender in case you default on your loan. It is typically required if you have a down payment of less than 20% on your home.

Home Energy Tax Credits

You may be eligible for a home energy tax credit if you make certain energy-saving improvements to your home. Some of the eligible improvements include energy-efficient windows, doors, and insulation. The amount of credit depends on the type of improvement made.

Home Office Deduction

If you use a portion of your home for a home office, you may be able to take a home office deduction. This allows you to deduct a portion of your mortgage interest, property taxes, insurance, and utilities. The deduction is based on the percentage of your home that is used for work purposes.

Tax benefits of selling your home on an H1B visa

If you sell your home on an H1B visa, you may be eligible for certain tax benefits. These can include an exclusion of up to $250,000 ($500,000 if married filing jointly) of capital gains from the sale of your home, as well as a deduction for any mortgage interest and property taxes paid. To qualify for these benefits, you must have owned and used your home as your primary residence for at least two of the past five years.

If you have any questions about which deductions you may be eligible for, it is best to speak to a tax professional. They will be able to advise you on the best way to maximize your deductions and minimize your tax liability.

9. A surefire way to build wealth for H1B visa holders.

The US real estate market is growing at an unprecedented rate. This provides a unique opportunity for H1B visa holders to invest in a profitable asset. By buying a house, H1B visa holders can create wealth for themselves and their families.

The typical cost of a home in the United States has risen by almost 46% in the last five years, from $208,000 in August 2016 to $304,000 in August 2021, and will rise to $335,000 (approximately 12.4%) by July 2022. (Source: Zillow Home value index).

So, if an H1B visa holder purchased a home for $500,000 in July 2016, the property’s value would have appreciated to around $800,000 by July 2022 (according to anticipated home value predictions) over the course of 6 years. This is almost $300,000 worth of wealth production in 6 years.

This is the perfect time for H1B visa holders to invest in a property. The rise in property value not only allows you to make a profit when you sell but also provides equity that can be used as collateral for other investments.

There are many ways to buy a property, but here is the easiest guide to help you buy a house on an H1B visa and get a mortgage. H1B Visa: Buying House and Obtaining a Mortgage Home Loan

10. If you plan to get PR (green card) in the US, buying a house can be a wise investment.

There are many benefits to owning a home in the United States, especially if you plan to stay in the country for the long term. Owning a home can provide you with stability and security and can also be a wise financial investment. The value of your home may appreciate over time, and you may also build equity by paying down your mortgage. Additionally, owning a home can give you tax breaks that renting does not. So, if you have plans to be a permanent resident of the US, then buying a house on your H1B visa is a wise decision.

The Cons of Buying a House on H1B

From investment perspective there are no donwside of buying house on H1B visa. Still, here are some cons or risks associated with buying a house on an H1B visa. With proper planning and appropriate legal actions you can mitigate these risks. 

1. One of the biggest cons of buying a house on an H1B is the potential for job loss. If you were to lose your job, you would not only have to deal with finding a new one but also with the financial burden of having a mortgage. In such a situation, you could save some money to support your mortgage, or you could talk to your lender to increase your tenure, which will reduce your monthly payment.

2. Another con is that, since your visa is tied to your job, you may have to move if your company relocates. This could make it difficult to sell your house or even to keep up with mortgage payments if you can’t find a new job right away. If your H1B got denied and you have to return, you could always rent out your property to cover your mortgage payments and even make some additional cash.

3. Finally, if you plan on returning to your home country someday, what will you do to your property? How will you manage it? It may be difficult to keep up with the mortgage payments from afar, and you may have trouble finding someone you trust to manage your property. These are all important factors to consider before buying a house on an H1B visa.

Managing a US property from your country is never a problem; you can ask a friend or hire a property management company to easily manage your house remotely. For mortgage payments, you can make payments internationally; just do your research on the associated costs.

What to do with the US home, If you have to return to your native country?

If you are not buying a house in the US, because you have this question. Well! Here are some of the options you can consider for your house if you have to return to your native country.

Renting out the home:

This option may be ideal if you plan on returning to the US at some point in the future. By renting out your home, you can maintain ownership and potentially generate income that can help offset mortgage costs or other expenses.

Selling the home:

Selling your home may be a good option if you do not plan on returning to the US in the near future. This will allow you to cash in on your investment and use the proceeds for other purposes. When selling your home, it’s important to work with a real estate agent who is familiar with the market in your area. They can help you price your home competitively and market it to potential buyers.

Allowing friends and family to use the property:

If you have friends or family members who are interested in using your home while you’re away, this may be a good option for you. This can help to offset some of the costs associated with owning a home, and you may even be able to negotiate a rent-free arrangement. However, before allowing anyone to use your home, it’s important to draw up a formal agreement that outlines the terms of the arrangement. This will help to protect both parties involved and avoid any misunderstandings.

Conclusion: Is it worth it to buy a house on H1B?

There is no easy answer when it comes to whether or not it is worth it to buy a house on an H1B visa. It really depends on a number of factors, such as your income, your job security, and the housing market in your area. However, if you are comfortable with your situation and feel like you can afford it, then buying a house on H1B can be a great investment. Just be sure to do your research and work with a real estate agent with international expertise to help you with the US home-buying process for H1B visa holders.

HomeAbroad can help you connect with a CIPS (Certified International Property Specialist) agent to help you buy the right property according to your case and expectations. Moreover, we can connect with you the lenders that provide mortgages to the H1B visa holders with no US credit history.

Find the best real estate agent and mortgage lender with international expertise.

Connect with a local international real estate agent and mortgage lender

FAQ

Is buying House on H1B Visa in USA Profitable?

Seeing the growth and value appreciation of US real estate, buying a house in the US on your H1B visa is definitely profitable. Check out the aforementioned pros or reasons to buy a house as an H1B visa holder.

Can I Buy A Home On An H-1B Visa?

Yes, you may buy a home on an H-1B visa if you meet the requirements of the visa. Please note that you will need to provide documentation proving your eligibility to purchase a home in the US, as well as proof of funds to cover the costs of the purchase.
Refer to this guide, H1B Visa: Buying House and Obtaining a Mortgage Home Loan, to know the step-by-step US home buying process for H1B visa holders and how you can get a mortgage with no credit history in the US.

What are the mortgage options for H1B visa holders?

Here are some H1B visa mortgage options.
FHA Loans: The Federal Housing Administration (FHA) offers a mortgage program that allows for low down payments and is available to borrowers with less-than-perfect credit. Borrowers can qualify for an FHA loan with a down payment as low as 3.5% of the purchase price of the home, and they do not need to have perfect credit to qualify.

Conventional Loans: Conventional loans are those that are not backed by the government (like FHA loans). They typically require a higher down payment than FHA loans, but they also usually come with lower interest rates and better terms. Borrowers with good credit may be able to qualify for a conventional loan with a down payment as low as 5% of the purchase price.
For detailed information, check out our H1B home buying and mortgage guide.

Michele Lawrie, CREO - HomeAbroad
About the author:
Michele Lawrie is the Chief Real Estate Officer at HomeAbroad and has worked as a real estate professional for the past 15 years, helping domestic and foreign national clients navigate the home buying and selling process.
She is passionate about real estate and strives to educate read more...