As an immigrant, buying a house in the United States can be quite intimidating, especially if you don’t know how the US real estate process works. If you’re also an immigrant looking to buy a property in the US, you must read this article.
From basic information to the documents you need to buy a house in the US, this guide has everything you’re looking for.
Things you should know before buying a house in the US as an immigrant
Below, we’ll show some essential things you should know before buying a house in the US as an immigrant.
1. How much you can afford
When buying a house in the US, most immigrants prefer cash payments. They believe getting a loan can be difficult for them. But some immigrants believe in financing the house.
If you’re one of them, here are two factors you should consider;
- The amount of loan lent to you by a lending institution
- How much you can spend
According to a study, a buyer can only afford to finance a property that costs between 2 and 2.5 times their income. Suppose your earnings are $100,000 a year, and you can afford a mortgage of about $200,000 and $250,000.
Here are various things lenders will consider before determining how much they’ll lend you.
- Gross Income:- It included bonus income, Social security benefits, disability, alimony, part-time earnings and self-employment earnings.
- Front-end Ratio:- It is the percentage of your gross income that you can put towards your mortgage every month.
- Back-end Ratio:- A percentage of your income required to pay off your other debts such as credit card payments and other loans.
- Credit Rating:- Ratings that credit companies will give you to determine the risk of lending you money.
- Down payment:- It is the amount you will pay in cash to buy the house.
2. Documentation needed to get a loan
If you’re looking to finance a house, the lenders will likely request these documents.
- Last two months of statements
- Last two years’ tax returns
- Recent month’s pay stubs
- Profit and loss statement if you’re self-employed
- Last two years, W-2 forms
- Copy of Social Security card
- Driving licence copy
It’s obvious, as an immigrant, you can’t provide these documents. In this case, lenders will ask you something else that includes;
- Payment history for bills
- Rental history
- Credit history from a foreign independent credit agency
- Verification wrote by foreign creditors
- Payment history of school tuition
3. ITIN mortgages
You’ll be surprised to know that undocumented immigrants can also own a home in the US. Yes, they can by obtaining ITIN mortgages. It is an individual identification number issued by the IRS for immigrants who are not eligible for a Social Security number and wants to file taxes.
These types of loans come with a higher 7 to 8 percentage of interest rate. Below are the documents you need to get an ITIN loan.
- Minimum 20% down payment
- Two years of tax returns using ITIN number
- Government ID card or Passport
- Two-year employment in the same line of work
However, some entities on the internet provide home loans for undocumented immigrants.
4. Know your RIghts
When it comes to buying a house, immigrants have to face systematic discrimination. A Government agency known as housing and urban development oversees these issues.
But the case is different now; a law has been introduced, The Fair Housing Act, that makes it illegal for not allowing to rent or sell a house based on race, colour, national origin, sex, religion or disability.
Anyone violating this law has to suffer enforcement actions from HUD. HUD ensures that everyone, including immigrants, has to be treated equally while buying a new property.
So here are some things you should know before buying a house in the US as an immigrant. Immigrants are not aliens; they can also live a dream life in their dream house.