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

Legal responsibility for something. For example, an owner of commercial property (e.g., restaurant) is legally obligated for damages on that property (e.g., restaurant patron falls and ...

The right to possess, exclusively occupy, enjoy, control, and dispose of real estate. Ownership rights to realty are granted by the ownership of a title to real property. ...

Same as term soil porosity: Extent to which soil has cavities or pores, thereby allowing water to pass through. ...

Agreement to exchange real estate upon specific terms. ...

Buildings in England in the 16th and 17th century with strong foundations, supports, studs, and knees. In American architecture this originally building has been combined with the English ...

The equity in property because of work in it by the buyer or holder which directly increases its value. ...

Payment of the minimum tax by using legal tax planning opportunities such as estate planning. The use of tax avoidance strategies is a sound approach to retaining cash flow. On the other ...

To sign a note on behalf of another individual and, therefore, to guarantee payment. The cosigner is responsible for the loan if the borrower defaults. Such an agreement may occur in ...

Descriptive of the architectural development of property in a certain area. For example, a housing subdivision may use very similar building architecture throughout the development. All the ...

Popular Real Estate Questions