April 4th, 2013 11:47 AM by Richard T. Cirelli
Financing the Foreign Buyer
The housing market is hot and the economy in some foreign markets is much stronger than our own. And, our housing prices are still a bargain compared to our over-priced real estate of several years ago and the U.S. dollar devaluation against foreign currencies makes U.S. real estate an even better investment. All this adds up to foreign investors buying prime real estate in California’s most desirable markets.
According to the California Association of Realtors, it is estimated that in 2012, foreign buyers accounted for over 6% of all California home sales. They don’t keep statistics by County but it is assumed that the percentage of foreign buyers in Orange County was higher than the State average. Chinese buyers account for the largest population of foreign buyers. Other Asian countries such as India, Korea, Viet Nam and Japan account for many home sales too. Canada, Mexico and Saudi Arabian buyers are prevalent too.
Is Financing Available?
In short, the answer is “yes”! The terms are not necessarily the same as they are for U.S Citizens but there are options a with a few lenders specializing in financing the foreign buyer.
The first step is to determine the status of the foreign buyer. Are they a Permanent Resident Alien, Non-Permanent Resident Alien or a Foreign National? The chart below will assist in determining the proper classification.
General Loan Parameters
Loans to all classifications require:
· 2 years of credible documentation of Income + Year-to-Date income
· U.S or Foreign Credit Report to demonstrate credit worthiness and history
· Source of down payment and assets in a known institution
Loans are available for Purchase and Refinance transactions.
Primary, Second and Investment properties are eligible.
The information here is intended to provide a general guideline for lending to foreign borrowers. Guidelines will vary among lenders and not all borrowers may qualify. Other policies or restrictions may apply and may change without notice.
Permanent Resident Aliens:
· The Borrower lives and works in the U.S. and has a Green Card
· Borrower can provide 2 years U.S. Tax Returns
· Has U.S Income, Credit & Assets
· Borrower can utilize all loan programs as U.S citizens.
Non-Permanent Resident Aliens:
· Borrower lives & works in the U.S. and has a VISA (L1, H1, E3, B1) with at least 3 years remaining
· Borrower has a Social Security Card and Employment Contract if borrowing > 50% of purchase price
Can borrow up to:
· 70% to $1M
· 65% to $2M
· 60% to $3M
· 55% to $5M
· Borrower does not have a Green Card or Visa
· Income can be documented from foreign sources for 2 years
· Down payment must be verified in foreign or U.S. account
· U.S credit history not required but must have 4 credit references from country of origin
· 50% of Purchase Price or Value
We continue to see additional programs and lenders and a return to niche lending that has been absent for several years. Please call for more details.