When it comes to investing in real estate, you don’t need to be a U.S. citizen or even a U.S. resident to partake in the American dream of homeownership. The United States welcomes foreign buyers who wish to purchase property within its borders. In fact, between April 2021 and March 2022, foreign buyers invested a staggering $59 billion in residential real estate in the United States, according to the National Association of Realtors (NAR).
The majority of non-resident buyers hail from Canada and Mexico, with China following closely behind. Their favored choices for property acquisitions are typically detached single-family homes in sunny states like Florida and California.
While a significant portion (44 percent) of foreign buyers use cash to secure their real estate deals, it’s also feasible for non-residents to obtain mortgages in the United States to finance their home purchases. However, it’s worth noting that non-citizen homebuyers may encounter more intricate mortgage application requirements and face complex tax obligations as property owners.
Property Options for Non-Residents — can a foreigner buy a house in the United States?
The good news is that any non-U.S. citizen, irrespective of their immigration status, can purchase property in the United States. This includes permanent residents, temporary residents, non-residents, refugees, asylum seekers, and even recipients of Deferred Action for Childhood Arrivals (DACA) relief. There are no legal impediments preventing individuals falling into these categories from becoming property owners.
Furthermore, there are no limitations on the type of property that can be acquired. Non-U.S. citizens can buy single-family homes, condos, townhouses, duplexes, apartment buildings, or even vacant land.
Foreign nationals predominantly opt for detached single-family homes or townhomes, with 44 percent of them purchasing properties for use as vacation homes, rentals, or both, as reported by the NAR.
Documentation Requirements for Non-Residents — can a foreigner buy a house in the United States?
While non-U.S. citizen buyers can freely invest in U.S. real estate, they are typically required to provide additional documentation compared to U.S. citizens. The specific requirements vary based on whether the property is being purchased with cash or financed with a mortgage, as well as the buyer’s residency status.
Some of the fundamental documentation requirements for non-U.S. citizen buyers may include:
- A foreign passport, U.S. visa, or driver’s license — can a foreigner buy a house in the United States?
- Social Security number or Individual Taxpayer Identification Number (ITIN) — can a foreigner buy a house in the United States?
- Financial statements from the applicant’s foreign bank, if applicable — can a foreigner buy a house in the United States?
- Evidence of financial assets and income, such as bank statements — can a foreigner buy a house in the United States?
- Tax returns, preferably U.S. tax returns if applicable — can a foreigner buy a house in the United States?
For cash purchases, a foreign buyer or non-US resident will need proof of identity. If a mortgage lender is involved, they may request additional documentation as needed for the mortgage application.
Can Non-Residents Obtain Mortgages?— can a foreigner buy a house in the United States?
In general, mortgage lenders prefer working with applicants who currently reside in the United States, whether they are permanent or non-permanent residents. The reasoning behind this preference is that applicants living in the country are perceived as lower-risk borrowers, especially in cases of loan default.
Residency status plays a crucial role in the type of mortgage available. There are two main categories for non-citizen purchases. We have individuals who are foreign nationals and individuals living in the United States who have not yet obtained U.S. citizenship. Both categories can typically qualify for conventional mortgages backed by Fannie Mae, Freddie Mac, and government-backed Federal Housing Administration (FHA) loans. However, non-permanent residents must use the purchased property as their primary residence to secure mortgage approval.
Numerous banks and mortgage companies extend conventional and FHA home loan options to non-U.S. citizens, as long as they can substantiate their residency status, employment history, and financial track record.
Non-residents living overseas have the choice of obtaining a foreign national loan or a foreign national mortgage loan. These financial products are commonly provided by American financial institutions and are designed for individuals residing abroad who wish to buy or refinance properties. It’s essential to emphasize that foreign national mortgages do not have the backing of government-sponsored entities like Fannie Mae or Freddie Mac.
Property ownership in the United States comes with tax responsibilities for non-U.S. citizens. If non-U.S. citizen generates rental income from their property, they are obligated to report and pay taxes on that income both in the United States and in their home country. Additionally, non-U.S. citizens are responsible for paying local property taxes.
When selling a property in the United States as a non-U.S. citizen, capital gains tax typically applies. Specific withholding provisions must also be followed, and it’s advisable to consult with a tax advisor knowledgeable in international tax matters for proper guidance.
Despite these complexities, all Fair Housing Act, Title VII, and anti-discrimination protections extend to real estate transactions involving non-U.S. citizens. These laws ensure that non-U.S. citizens and non-residents enjoy the same legal protections as U.S. citizens during the property-buying process.
In conclusion, it is entirely feasible for non-U.S. citizens, whether they are foreign nationals or have temporary or permanent residency, to purchase property in the United States. The type of property and its use are not restricted, and legal safeguards are in place to protect the rights of all homebuyers. While residency status can add some complexity to the process, it does not impede the path to homeownership in the United States, which remains open for those willing to navigate through potential challenges.
If you have any questions and want to know more about whether foreigner buy a house in the United States, reach out to Jennifer Yoingco, REALTOR®, and her team, The Houston Suburb Group. They’ll help you get ready to EXPERIENCE LIVING IN HOUSTON TEXAS!
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