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

The cost of property, such as a home owned for tax purposes. For example, a home was purchased for $150,000. capital improvements to it cost $15,000. The house was later sold for $230,000. ...

Annual Percentage Rate (APR) is a measure of the cost of credit that must be reported by lenders under the Truth in Lending regulations. The Annual Percentage Rate (APR) takes into ...

Any geographic taxing division where the legally chosen representatives are charged with the responsibility of assessing taxable property and collecting tax revenue. ...

Owner has rights to water on his land. He also has a reasonable privilege to water adjacent to his property that flows through it or abutting it. ...

If you are involved with real estate, chances are you've come across the term "convey" or conveyance. But what does convey mean in real estate? This term is crucial whether you're buying, ...

Situation in which an owner of property sells the property to an investor and then leases the property back, usually for a 20- or 30- year term. ...

Market price pf all the property prior to a condemnation proceeding. ...

Offering price. ...

You can frequently encounter “circa” in everyday discourse, referring to an approximation as an approximate date. Variations of circa are: about, near, and roughly.  The ...

Popular Real Estate Questions