Salt lakes real estate

Buying a home in the United States as a non-resident

You do not need to be a US citizen to buy a home in the United States. You don’t even have to be a US resident. Anyone who wishes can buy a property here.

Between April 2021 and March 2022, the value of residential properties in the United States that were sold to foreign buyers totaled $59 billion, according to the International Transactions in US Residential Real Estate report by the National Association of Realtors (NAR). . The vast majority of non-resident buyers come from Canada and Mexico, followed by China. They largely buy detached single-family homes in Florida and California.

While almost half (44%) of foreign buyers rely entirely on cash to make these purchases, it is also possible for non-residents to obtain a mortgage in the United States to help finance new homes. . It’s not all smooth sailing, however. Non-citizen homebuyers will face slightly more complicated mortgage application requirements establishing their financial qualifications. They will also have to comply with more complex tax laws as owners.

What type of property can a non-resident buy?

Any non-U.S. citizen, including permanent residents, temporary residents, nonresidents, refugees, asylum seekers, and Deferred Childhood Arrivals (DACA) recipients, can purchase property in this country. There are no legal restrictions prohibiting the purchase of real estate by persons belonging to any of these categories.

“Buying residential property in the United States is open to anyone, regardless of nationality,” says Jen Horner, realtor at RE/MAX Masters in Salt Lake City, Utah.

There are also no limits on the type of property that can be purchased. A non-US citizen can buy a single family home, condo, townhouse, duplex or apartment building – or even land without any structure.

“There are no restrictions in the United States on purchasing property as a foreign national. This applies to resident foreign nationals who may wish to purchase property for primary residence depending on where they reside. current situation in the United States, or to non-resident foreign investors who are looking to purchase property for other reasons, such as investment use or a vacation home,” says Chase Michels, of the Michels Group at Compass at Hinddale, Illinois.

According to the NAR, between spring 2021 and spring 2022, 74% of foreign buyers purchased a single-family home or townhouse. Additionally, 44% of overseas buyers purchased a property to use as a vacation home, rental, or both.

What documents does a non-resident need to buy a house?

Although they can buy freely, non-US citizen buyers are generally required to provide additional documentation to complete the purchase of a home in the United States, compared to US citizens.

The exact requirements vary, however, depending on whether the home is purchased with cash or a mortgage, and depending on the buyer’s specific residency status. Some of the basic requirements for non-US citizen buyers, Michels says, often include:

  • A foreign passport, U.S. visa, or driver’s license
  • Social security number or individual tax identification number (ITIN)
  • Financial statements of applicant’s foreign bank, if applicable
  • Proof of financial assets/income (bank statements, etc.)
  • Tax returns (preferably US, if applicable)

“Cash purchases will require proof of identity and reporting of the purchase to the federal government,” says Horner. “If a mortgage lender is used, they have the option of requesting as many documents as they deem necessary to move forward [the] mortgage loan application.

Which begs the question: Can non-US citizens get mortgages to finance the purchase of a home in the United States? The short answer is yes. But it’s complicated.

How can a non-resident finance housing?

In general, mortgage lenders prefer to work with applicants currently living in the United States and classified as permanent or non-permanent residents. (People who have a green card and social security number are permanent residents, while those who have a social security number but no green card are non-permanent residents.) Their rationale is simple. : Applicants residing in this country are considered less risky, especially in case of default on the loan.

Their residency status impacts the specific type of mortgage loan that can be used. There are two main categories of loans for non-citizen purchases, says Michael Cantwell, loan officer for Guild Mortgage. “One major classification is that of a foreign national and the other would be people currently living in the United States who have not yet received US citizenship,” Cantwell explains.

Applicants who fall into either of these categories are generally eligible for a conventional mortgage backed by Fannie Mae and Freddie Mac, as well as government-backed loans from the Federal Housing Administration (FHA). However, non-permanent residents will need to use the home as their primary residence in order to get mortgage approval.

“Many banks and building societies offer conventional and FHA home loans to non-US citizens on the condition that they can verify their residency status, employment history, and financial history,” says Michels.

And for non-residents? Applicants living abroad can buy properties in that country using what’s called a foreign national loan or a foreign national mortgage, Cantwell explains. These loans are typically offered by US-based banks and lenders and are designed for borrowers living outside the country who are looking to purchase or refinance. Foreign national mortgages are not guaranteed by Fannie Mae or Freddie Mac.

Additional rules and restrictions for non-residents

The tax rules also apply to properties owned by non-US citizens. For example, if a non-US citizen is renting the purchased property to generate income, then that income must be declared and taxes must be paid both in the United States and in the owner’s home country, explains Bruce Ailion, a real estate lawyer. and realtor with Re/Max Town & Country in Atlanta. Additionally, non-US citizens are required to pay local property taxes.

And when selling property in the United States as a non-US citizen, capital gains tax will generally also apply.

“When selling property in the United States, there are special withholding provisions that must be observed,” says Ailion. “A tax advisor with specific knowledge of international taxation should be consulted.”

On the positive side, all of the protections of the Fair Housing Act, Title VII, and other anti-discrimination protections apply to real estate transactions involving non-US citizens. These laws are in effect regardless of who the buyer is, Michels says.

Final word on home purchases by non-residents

It is entirely possible to buy a home as a non-US citizen, whether you are a foreign national, permanent or temporary resident. There are no limitations on the type of property that can be purchased or how the property is used. Additionally, US laws that protect the rights of all homebuyers also cover non-US citizens and non-residents.

What is really more important, in terms of complications, is not a person’s citizenship, but where they live. If you don’t live in the United States, buying a home becomes more difficult, especially if financing is required for the purchase.

Non-residents should be prepared to deal with additional complexities, including more extensive documentation requirements establishing their identity, income and assets. They are limited to certain types of loans or mortgages, those that are not guaranteed by major mortgage market makers. But the path to homeownership in the United States is certainly not blocked – there may just be a few speed bumps.

Mary Cashion

The author Mary Cashion