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Foreign nationals eyeing the U.S. real estate sometimes assume that obtaining financing is an insurmountable challenge. However, the reality is quite different.
Contrary to popular belief, there’s a diverse array of loan options specifically tailored for foreign investors. From new purchase loans to cash-out refinances, and even options for fix-and-flip projects or new construction, the U.S. real estate market is more accessible than ever for international investors.
While it’s true that the requirements for foreign investors differ slightly from those for U.S. citizens – for instance, lenders may look at your credit score from your home country rather than requiring a U.S. credit score – these differences are by no means deal-breakers.
In this post, we’ll navigate loans for foreign nationals, explaining the requirements and exploring the various options at your disposal.
Loan Requirements for Foreign Investors
Two key considerations often come into play: underwriting guidelines and the necessary down payment amounts. These factors can vary depending on the type of loan, the property type, and the lender. Let’s take a closer look at what lenders typically expect.
Underwriting Guidelines
When it comes to underwriting guidelines, lenders typically base their decisions on 4 main factors:
- Property Value: The current market value of the property you’re interested in purchasing or refinancing.
- Property DSCR (Debt Service Coverage Ratio): This measures the property’s ability to cover its debt obligations through its income.
- Borrower’s Liquidity: Your financial resources and ability to make payments.
- Borrower’s Credit Profile: While U.S. credit history isn’t required, lenders will look at your credit profile in your country of origin.
Down Payment Amounts
One of the most attractive aspects of foreign national loans is the relatively low down payment requirements.
For a new purchase loan, you may be able to secure financing with as little as 25% down. This means you could potentially triple your purchasing power, allowing you to invest in higher-value properties or diversify your portfolio across multiple properties.
If you already own property in the U.S. and are looking to access your equity, cash-out refinance loans are available with down payments as low as 30%. This option allows you to leverage your existing investments to fund further opportunities or improvements.
Using a U.S. Entity
It’s important to note that these loans are typically made to business entities rather than individuals. Most foreign investors choose to form a Limited Liability Company (LLC) in the U.S. for this purpose. This structure makes the loan process easier while providing beneficial tax treatment and liability protection.
Getting Pre-Approved: Your First Step to Success
Obtaining a pre-approval from you lender is a key step before you start your property search. A pre-approval letter is an official document indicating how much they’re willing to lend you based on your financial profile. This process typically takes just a few minutes and can be done online.
One of the biggest advantages of a pre-approval letter is that it can give you a competitive edge in hot real estate markets. It demonstrates to sellers and agents that you’re a serious buyer with financing in place, potentially setting you apart from other bidders.
Financing Options for Every Investment Strategy
As the #1 choice for global investors, Lendai offers a variety of financing options to help foreign nationals achieve their American property dreams:
New Purchase Loans
Financing for buying new investment properties:
- Max Loan Amount: $4,000,000
- Term: 30-year fixed rate loan
- Loan to Value: Up to 75% LTV
Benefits:
- Triple your purchasing power
- Start with as little as $50K investment
- Diversify your portfolio across multiple properties
Cash-Out Refinance Loans
Extract equity from existing properties:
- Max Loan Amount: $4,000,000
- Term: 30-year fixed rate loan
- Loan to Value: Up to 70% LTV
Benefits:
- Low amortization for better cash flow
- Lower your rate and extend the term
- Reinvest extracted equity in additional properties
Fix and Flip Loans
Short-term financing for property renovation and resale:
- Max Loan Amount: $5,000,000 (higher loan amount can be approved)
- Term: Typically 6-24 months
- Loan to Value: Varies based on project
Benefits:
- Quick access to capital
- Opportunity for high ROI
- Flexibility in property choice
Bridge Loans
Short-term financing to “bridge” gaps between transactions:
- Max Loan Amount: Based on property value
- Term: Usually 6-24 months, interest-only with balloon at maturity
- Loan to Value: Up to 70% ARV (after repair value)
Benefits:
- Seize time-sensitive opportunities
- Avoid contingent offers
- Flexibility to manage multiple investments
New Construction Loans
Financing for building new properties:
- Max Loan Amount: $5,000,000 or higher, based on project scope
- Term: Construction period + permanent financing option
- Loan to Value: Lower of 65% LTC (loan to cost) or 55% ARV for experienced investors
Benefits:
- Fund both construction and permanent phases
- Customize properties to market demand
- Potential for higher returns on investment
Ready to Turn Your U.S. Real Estate Dreams into Reality?
Don’t let international borders hold back your investment potential. Lendai is here to provide foreign nationals loans for the U.S. real estate market. With our tailored financing solutions for foreign investors, you’re just a few clicks away from unlocking a world of opportunities.