Definition of "Foreign National Loan"

America remains a top tourist attraction worldwide, with over 79 million foreign visitors a year. Many are seduced by the American Dream and sooner or later they wonder how they could become owners of real estate in the US. Although more than 70% of foreign real estate investors had paid in full for their purchases, the remaining buyers have to qualify for a mortgage. And since conventional mortgages are out of their reach, the only option is a foreign national loan, or real estate investment trusts (REIT).

What makes foreign national loans appealing? The fact that there is no age restriction. Individuals may qualify for a 30-year mortgage even if they are 70 years old. Foreign National Loans can be secured by individuals, LLCs, corporations, or offshore companies. The interest rates can be both fixed and adjustable, with amortization periods of 15, 20 and 30 years. Foreign National Loans, also known as ITIN loans, as the borrower must obtain an international tax identification number from the IRS, must be used only for real estate investments, or non-owner occupied properties. They cannot be used to finance a primary residence.

ITIN loans are usually used to buy properties in the US by undocumented immigrants as well as by foreign investors. They have to save at least 20% for a downpayment, but most of them keep up with their monthly payments, and so far defaults have been extremely rare.

Credit unions are more likely to lend money under the provisions of a Foreign National Loan, as they compete against larger banks and online lenders. In the absence of a social security number, they rely on ITINs, driver license, letters from employers and bank statements. ITIN loans are available from a few dozen lenders across the US, such as Illiana Financial, Point West, Guadalupe Credit Union, Latino Community Credit Union, and Alterra Home Loans. All in all, Foreign National Loans are quite easy to obtain and will continue to lure real estate investors both inside the US borders and outside of them.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Mortgage banker is the person or business that originates mortgages and receives payments. The mortgage banker typically sells these mortgages to investors and obtains service fees for the ...

Insurance coverage provided for an individual having a lease at a favorable rate, one which is less than the market value of the property. The insurance indemnifies the tenant for business ...

The definition of the price-to-rent ratio is very important for real estate investors. This ratio is a measurement for the affordability of a particular rental property and tells investors ...

Agequake is not the era of earthquakes! It’s a term that was coined by author Paul Wallace in his 1999 book “Agequake: Ridding the demographic rollercoaster shaking business, ...

Bank modifies the borrower's mortgage obligation, such as when the bank approves the homeowner's request for an extension of time to pay because of illness or loss of a job. One's ...

Personal income minus personal income tax payments and other government deductions. It is the personal income available for people to spend or save; also called take-home pay. It may be a ...

Combination of IRC 1034 and 121 dealing with the sale of a personal residence with the once-in-a-lifetime $125,000 exclusion that may be available for the "over-55" seller. Should the ...

Map presented to a municipality's planning agency by a real estate developer for consideration and approval. ...

A method of purchasing real estate whereby a maximum amount of leverage is used. Normally the seller will finance the down payment necessary to acquire a mortgage. Thus, the purchaser is ...

Popular Real Estate Questions