Just because you’re not a US citizen doesn’t mean your dreams of becoming a homeowner in Los Angeles can’t be realized. Read on for a guide to getting a mortgage in Los Angeles for non-US citizens.
Eligibility Requirements: US Residency Types
Though US citizenship isn’t required to apply for a mortgage, you must be able to prove you’re a legal resident. There are two types of legal residencies in the US: permanent and non-permanent.
Permanent: Permanent residents are classified as non-citizens who have an unexpired Green Card and a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). This documentation must be provided to the lender.
Non-Permanent: These residents have a social security number, but no Green Card. Instead, they might have an Employment Authorization Document (EAD) or a visa that’s been sponsored by their employer. To be eligible to apply for a mortgage, non-permanent residents must be able to supply some kind of proof that they can live and work in the US for at least the next three years.
As far as providing documentation, different lenders will require different proof of legal residency. It isn’t as straightforward as simply providing a Green Card. Whatever you have to provide will depend on your specific circumstances as well as that particular lender’s guidelines.
Eligibility Requirements: Underwriting
After proving your legal residency, you will have to prove your financial eligibility through the underwriting process. Like any US citizen, the lender will assess whether or not you are a delinquency risk. To determine whether or not you would be a trustworthy borrower, they’ll take into account what property you intend to buy, your employment and employment history, your income, assets, and credit score.
Credit Score
One roadblock you might run into as a non-citizen is not having a long enough US credit history to generate a credit report. You’ll need at least 12 months of credit history from 2-3 different accounts before you can receive a credit score. If you’ve just moved to the US, you might not be able to get a mortgage immediately, but you can at least prepare for the future by getting a few lines of credit right away so you can hit that year mark as soon as possible.
Additional FHA Requirements
FHA loans are a popular option for non-citizens. Their credit score standards are lower than that of conventional loans, which can be helpful if you don’t have much credit history yet. Their requirements include:
- 3.5% down payment
- An EAD or visa that will still be valid at least a year after the closing date of the loan, or–
- If it expires less than a year after the closing date, there must be proof that the EAD or visa has been renewed in the past, (allowing the lender to assume that a renewal will likely be granted).
- Two years of US employment history
- The borrower must have a Social Security Number (an Individual Taxpayer Identification Number won’t suffice).
Conventional Loan (Fannie Mae and Freddie Mac) Requirements
For a down payment, unlike an FHA loan, a conventional loan might only require a 3% downpayment. However, they’re less lenient when it comes to credit scores–requiring a 620 median FICO score or higher.
As far as other eligibility requirements, those are determined at the lender’s discretion on a case by case basis.
Fannie Mae’s policy states that they purchase and scrutinize mortgages under the same terms for both US citizens and non-citizen legal residents. They don’t specify what documentation is needed to prove legal residency status. Instead, “the lender must make a determination of the non–U.S. citizen’s status based on the circumstances of the individual case, using documentation it deems appropriate.”
They might accept a SSN or ITIN number along with a Green Card or unexpired DACA status. If you’re self-employed, they might require you have at least 2 years of US employment history. But, if you’re in a salaried position, they might take into account your foreign employment history.
Working with a Mortgage Professional
Whether you’re a US citizen or not, you should always work with a mortgage professional–but it’s especially important for legal residents to do so. Some lenders are more likely than others to approve non-US citizen borrowers, and a mortgage professional will help steer you toward those lenders. An insider’s guidance will provide you with the best chance for getting approved and getting a good mortgage rate.
Speaking of: mortgage rates are at historic lows, so if you’re a legal resident and want to apply for a mortgage, there’s no better time to do so than right now. If you’re ready, email us or gives us a call at (323) 412-9060 and we can get the ball rolling. Or, if you’re not eligible yet but hope to apply for a mortgage someday, we can discuss your situation and advise you on what to do going forward.