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

Mortgage for an extended time period (e.g., 25 years) Type of real estate investment trust (REIT) that gives long-term mortgages to real estate developers and contractors on new or ...

U.S. tax law that consists of regulations and rules to be followed by taxpayers. The Internal Revenue Code of 1954 is continually revised and amended over time. ...

A business in which one or more person, with unlimited liability, called general partners, manage the partnership. There are also limited partners who contribute capital, but do not manage ...

Pitched roof that looks like a saw. ...

The apportioning, disbursing, dividing, offering, or parceling out of property among individuals. (1) Probate: Court order to divide up and distribute the contents of an estate after the ...

(1) Revising the selling price of real property to reflect what it would be worth if typical financing was available. (2) How much real property would be sold for if all cash was involved. ...

Fee simple estate is a term used to describe ownership or freehold of an estate and the type of ownership of an estate. The possessory interest, also referred to as fee (a word derived from ...

Methods of owning real estate. Ownership form has important consequences for income tax, estate tax, corporate income tax, and survivorship. Real estate may be owned by one or more persons. ...

An investigation to ascertain who legally has the title to property. For example, when a house is sold, the attorney for the purchase will do a title search to guarantee that the seller ...

Popular Real Estate Questions