Is it possible for a non-resident to purchase real estate in the United States? You don’t even have to be a U.S. resident. Anybody who wants to may acquire property here.
Between April 2021 and March 2022, the value of residential property in the United States that was sold to overseas buyers was $59 billion, according to the National Association of Realtors (NAR) International Transactions in U.S. Residential Real Estate Report. Most non-resident purchases are from Canada and Mexico, followed by China. They’re mostly acquiring detached single-family houses in Florida and California.
While over half (44 per cent) of international purchasers rely exclusively on cash to make these purchases, it’s also feasible for non-residents to secure a mortgage in the United States to help fund the new properties. It’s not all smooth sailing, though. Non-citizen purchasers must cope with significantly more difficult mortgage application criteria confirming their financial eligibility. They will also have more difficult tax requirements to comply with as homeowners.
What sort of property may a non-resident buy?
Any non-U.S. citizen, including permanent residents, temporary residents, non-residents, refugees, asylum seekers and recipients of Deferred Action for Childhood Arrivals (DACA) relief, can acquire property in this nation. There are no legal constraints banning real estate acquisition by persons who fall into any of these groups.
“Purchasing a residential property in the U.S. is open to any individual regardless of their citizenship,” says Jen Horner, a Realtor with RE/MAX Masters in Salt Lake City, Utah.
There are also no boundaries regarding the property that may be acquired. A non-U.S. citizen can acquire a single-family home, condo, townhouse, duplex or apartment complex – or even property without construction.
“There are no restrictions in the United States on purchasing a property as a foreign national. This applies to resident foreign nationals who might want to buy property for primary residence based on where they currently live in the United States, or non-resident foreign investors looking to buy property for other reasons — such as investment use or a vacation home,” says Chase Michels, of the Michels Group at Compass in Hinsdale, Illinois.
According to the NAR, between the spring of 2021 and the spring of 2022, 74 per cent of international purchasers acquired a detached single-family house or townhome. In addition, 44 per cent of international purchasers acquired the property for use as a holiday home, rental or both.
What documentation is a non-resident required to buy a home?
While they can buy freely, non-U.S. citizen purchasers often need to produce more paperwork to finalize a house purchase in the United States, compared with U.S. citizens.
The exact criteria differ, however, depending on whether the residence is being acquired with cash or a mortgage and depends on the buyer’s unique resident status. Some of the essential requirements for non-U.S. citizen buyers, notes Michels, generally include:
- A foreign passport, U.S. visa or driver’s license
- Social Security number or Individual Taxpayer Identification Number (ITIN)
- Financial statements from the applicant’s foreign bank, if relevant
- Evidence of financial assets/income (bank statements, etc.)
- Tax returns (ideally U.S., if applicable)
- “Cash purchases will require proof of identity and reporting the purchase to the federal government,” adds Horner. “If a mortgage lender will be used, they can request as much documentation as they feel necessary to advance [the] mortgage application.”
Which begs the question: Are non-U.S. citizens eligible to acquire mortgages to fund house purchases in the United States? The short answer is yes. But it’s complex.
How can a non-resident finance a home?
In general, mortgage lenders prefer to engage with candidates presently living in the United States and designated as permanent or non-permanent residents. (Individuals with a green card and a Social Security number are permanent residents, whereas individuals with a Social Security number but no green card are non-permanent residents.)
Their argument is simple: Applicants residing in this nation are seen as less of a danger, particularly in situations of default on the loan.
Their resident status determines the exact form of mortgage that can be used. There are two basic kinds of financing for non-citizen acquisitions, explains Michael Cantwell, loan officer with Guild Mortgage.
“One major classification is that of a foreign national, and the other would be those currently living in the United States who have not received U.S. citizenship yet,” adds Cantwell.
Applicants who fall into any of these groups can generally qualify for a conventional mortgage sponsored by Fannie Mae and Freddie Mac and Federal Housing Administration (FHA) government-backed loans. However, non-permanent inhabitants will need to utilise the house as a primary residence to secure mortgage approval.
“Many banks and mortgage companies offer conventional and FHA home loans to non-U.S. citizens provided they can verify their residency status, work history, and financial track record,” adds Michels.
And for non-residents? Applicants residing overseas can buy houses in this country using what’s known as a foreign national loan or foreign national mortgage loan, says Cantwell. U.S.-based banks and lenders primarily give these loans. They are meant for borrowers outside the nation who want to acquire or refinance. Fannie Mae or Freddie Mac does not guarantee foreign national mortgages.
Additional regulations and limitations for non-residents
Tax restrictions also apply to properties owned by non-U.S. citizens. For instance, if a non-U.S. citizen rents out the property purchased to generate income, that income must be reported.
Taxes must be paid in the United States and the property owner’s home country, says Bruce Ailion, a real estate attorney and Realtor with Re/Max Town & Country in Atlanta. In addition, non-U.S. citizens are accountable for paying municipal property taxes. Also, some cities like New York have special tax law and policy fellowship.
Capital gains tax will also apply when selling a property in the United States as a non-U.S. citizen. “When selling a property in the U.S., special withholding provisions must be complied with,” adds Ailion. “A tax advisor with specific knowledge in international tax should be consulted.”
Additionally, all Fair Housing Act, Title VII, and other anti-discrimination laws apply to real estate transactions involving non-U.S. citizens. These laws are in place no matter who the customer is, explains Michels.
Final Words
It is feasible to acquire a property as a non-U.S. citizen – whether you’re a foreign national or a permanent or temporary resident. There are no constraints on the property that may be acquired or how the property is used. Furthermore, U.S. laws that safeguard the rights of all homebuyers encompass non-U.S. nationals and non-residents as well.
In terms of problems, what’s more relevant is not a person’s citizenship but their place of domicile. If you don’t live in the U.S., purchasing a property can grow more complicated — especially if financing is needed.
Non-residents must be prepared to cope with additional complexity, including more rigorous paperwork requirements verifying their identity, income and assets. They are confined to particular loans or mortgages, not guaranteed by the major mortgage market-makers. But the route to U.S. homeownership is surely not barred — it may have a few speed bumps.