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

Real estate property incentive offered for reasons other than individual merit. A discriminatory inducement is an effort to get an individual to buy or sell, rent, or lease real estate ...

Also called a title defect. Any claim, lien, or encumbrance which, if valid, may impair the owners title to the property. This cloud does not hinder transfer of ownership on the property, ...

(1) Methods that involve discounting the future cash flows generated by an income property. These techniques are used primarily for valuation. (2) Methods of selecting and ranking ...

A Homeowner’s Association (HOA) is an organized group of homeowners in a home subdivision, condominium, or cooperative complex. They come together and found a Homeowner’s ...

The apportioning, disbursing, dividing, offering, or parceling out of property among individuals. (1) Probate: Court order to divide up and distribute the contents of an estate after the ...

Also called demand note. A loan with no established maturity period, callable on demand by the lender for repayment. The interest on this type of loan is calculated on a daily basis and ...

Also called interim financing. A mortgage that provides the funds necessary for the building or construction of a real estate project. The project can be a residential subdivision, a ...

Simply put, probate is a legal proceeding whereby the will of a deceased is tested for validity. The definition of probate is not known to most Americans. According to a Gallup survey, ...

An increase in the price or market value of real estate. ...

Popular Real Estate Questions