If you are an immigrant who wants to buy a home in the United States, you may wonder if you can qualify for a mortgage loan from Fannie Mae’s Mortgages Guidelines, the largest provider of mortgage financing in the country. Federal National Mortgage Association is a government-sponsored establishment that buys and guarantees mortgages from lenders, making housing ownership more accessible and affordable for millions of Americans.

Fannie Mae has different eligibility requirements for borrowers depending on their citizenship status and visa type. In this blog, we will explain the various visa types that Fannie Mae accepts for immigrants and what documents and criteria you need to meet to get approved for a mortgage loan.

Permanent Residents

A permanent resident is a person who has been granted the right to live and work permanently in the United States by the US Citizenship and Immigration Services (USCIS). They are also known as green card holders, and they have a Form I-551, or an Alien Registration Card, as proof of their status.

Fannie Mae treats permanent resident people the same as US citizens when it comes to mortgage eligibility. This means that you can qualify for a mortgage loan from Fannie Mae as long as you meet the following requirements:

• You have a valid Social Security number.
• You have a credit history and score that meets Fannie Mae’s standards.
• You have a stable income and employment history that can be verified by your lender.
• You have a debt-to-income ratio that does not exceed Fannie Mae’s limits.
• You have enough funds for the down payment, closing costs, and reserves.
• You meet the specific requirements for the type of mortgage loan you are applying for, such as VA, conventional, FHA, or USDA.

Non-Permanent Residents

A person classified as a non-permanent resident is an individual authorized to reside and work temporarily in the United States, courtesy of approval from the USCIS. These individuals possess various visa categories, each signifying the intent and length of their sojourn in the country. Among the prevalent visa types held by non-permanent residents are:

• H-1B: A visa for workers in specialty occupations that require a bachelor’s degree or higher.
• L-1: A visa for intracompany transferees who are managers, executives, or specialized knowledge workers.
• E-1/E-2: A visa for treaty traders or investors who engage in substantial trade or investment between the United States and their home country.
• O-1: A visa for individuals who have extraordinary ability or achievement in science, arts, education, business, or athletics.
• TN: A visa for professionals from Canada or Mexico who are eligible under the North American Free Trade Agreement (NAFTA).

Fannie Mae allows non-permanent resident aliens to qualify for a mortgage loan as long as they meet the following requirements:

• You have a valid Social Security number or an Individual Taxpayer Identification Number (ITIN).
• You have a credit history and score that meets Fannie Mae’s standards.
• You have a stable income and employment history that can be verified by your lender.
• You have a debt-to-income ratio that does not exceed Fannie Mae’s limits.
• You have enough funds for the down payment, closing costs, and reserves.
• You meet the specific requirements for the type of mortgage loan you are applying for, such as VA, conventional, FHA, or USDA.
• You have a valid and current visa that allows you to live and work in the United States for at least three years from the date of the mortgage application.
• You can reasonably expect to continue to receive income from your employment in the United States for the foreseeable future.

Foreign Nationals

A foreign national is a person who is neither a citizen nor a resident of the United States. Foreign nationals may visit the United States for various reasons, such as tourism, business, education, or family. Foreign nationals have different visa types that indicate the purpose and duration of their visit, such as:

• B-1/B-2: A visa for visitors who come to the United States for business or pleasure.
• F-1: A visa for students who pursue academic or vocational studies in the United States.
• J-1: A visa for exchange visitors who participate in cultural, educational, or professional programs in the United States.
• K-1: A visa for fiancés or fiancées of US citizens who intend to marry within 90 days of to into the United States.

Fannie Mae does not provide mortgage loans to foreign nationals who are not residing in the United States. However, Fannie Mae does allow foreign nationals who are residing in the United States to qualify for a mortgage loan under certain circumstances. These circumstances are:

• You are purchasing a second home or an investment property in the United States.
• You have a valid and current visa that allows you to reside in the United States for at least one year from the date of the mortgage application.
• You have a valid Social Security number or an Individual Taxpayer Identification Number (ITIN).
• You have a credit history and score that meets Fannie Mae’s standards.
• You have a stable income and employment history that can be verified by your lender.
• You have a debt-to-income ratio that does not exceed Fannie Mae’s limits.
• You have enough funds for the down payment, closing costs, and reserves.
• You meet the specific requirements for the type of mortgage loan you are applying for, such as VA, conventional, FHA, or USDA.

Eligibility Criteria for Mortgages

Besides having a valid visa and a work history in the US, non-immigrants also need to meet other criteria to qualify for a mortgage. These include:

• Credit Score: To secure conventional loans, most lenders typically expect a credit score not less than 620. For FHA loans, the benchmark is around 580, while VA loans usually necessitate a minimum credit score of 620. It’s worth noting that certain lenders might entertain lower scores or consider alternative credit references, such as rent payments, utility bills, or bank statements.
• Debt-to-Income Ratio: Your debt-to-income ratio reflects the percentage of your monthly earnings allocated to settling debts like credit cards, car loans, student loans, or personal loans. While most lenders favor a debt-to-income ratio of 36% or lower, some may entertain higher ratios based on factors like your credit score, assets, and down payment.
• Down Payment: When purchasing a home, the down payment is the initial sum you pay. The minimum down payment that you have to make depends on the loan type and lender. Conventional loans generally need a down payment of 5%, but some lenders extend programs with as little as 3% or even 0% down. FHA loans generally call for a 3.5% minimum down payment, though some lenders may offer programs with as low as 0.5% down. VA loans, on the other hand, don’t demand a down payment, but a VA funding fee, calculated as a percentage of the loan amount, is applicable.
• Reserves: These are the funds that you have left after paying the down payment and the closing costs. Most lenders require you to have at least two months of mortgage payments in reserves, but some may require more or less depending on your credit score, debt-to-income ratio, and loan amount.

How to Improve Your Chances of Getting a Mortgage with a Non-Immigrant Visa

If you are a non-immigrant visa holder who wants to buy a home in the US, here are some tips to improve your chances of getting a mortgage:

• Start planning early: Buying a home is a serious financial decision that requires careful planning and preparation. You should start saving for your down payment and closing costs, building your credit history and score, and researching the housing market and mortgage options at least six months to a year before you apply for a loan.
• Compare different lenders and loan programs: Not all lenders and loan programs are the same. Some lenders may have more experience and flexibility in working with non-immigrant visa holders, while others may have more stringent requirements and higher fees. Similarly, some loan programs may be more suitable and affordable for your situation than others. You should shop around and compare different financiers and loan programs to find the best deal for you.
• Secure Loan Pre-Approval: Securing pre-approval for a loan involves a careful assessment of your financial standing and credit history by a lender. Upon completion, the lender commits to providing you with a specific amount of money at a designated interest rate, pending final approval. The pre-approval process assists in gauging the manageable borrowing limit, signaling to sellers that you are a committed and eligible buyer. Moreover, it expedites the loan approval process when you identify a home you wish to purchase.
• Have a co-signer or co-borrower: Consider enlisting a co-signer or co-borrower: If you encounter challenges securing a loan independently, contemplating the inclusion of a co-signer or co-borrower might be beneficial. The presence of a co-signer or co-borrower can assist you in meeting the lender’s criteria and enhancing your loan terms. A co-signer agrees to repay the loan in the event of your default, while a co-borrower jointly shares ownership and responsibility for the loan. However, exercise caution in selecting a co-signer or co-borrower, as they bear equal responsibility for the loan, and their credit could be impacted by the loan’s performance. Ideally, opt for someone with a solid credit history, a dependable income, and a close personal relationship with you—this could be a spouse, parent, or trusted friend.

What are the Best Mortgage Options for Foreign Workers in the US?

There are many mortgage options available for foreign workers in the US, but some are more suitable than others depending on your situation. Here are some of the best mortgage options for foreign workers in the US:

Conventional loans

These are loans that comply with the standards established by Freddie Mac and Fannie Mae, the two government backed enterprises that buy and sell mortgages in the secondary market. Conventional loans are the most common and flexible mortgage option for foreign workers in the US, as they offer competitive interest rates, low down payment requirements, and various loan terms and types. 

You can get a conventional loan on any type of visa or EAD, as long as you meet the credit, income, and employment requirements. However, you may need to pay PMI if you put down less than 20% of the purchase price, and you may face higher interest rates or fees if you have a lower credit score or a shorter visa or EAD duration.

FHA loans

These loans receive backing from the Federal Housing Administration, a governmental body safeguarding lenders from potential losses in the event of borrower default. FHA loans specifically aim to assist individuals with modest to moderate incomes, particularly those with restricted credit or savings.

FHA loans offer low down payment requirements (as low as 3.5%), low credit score requirements (as low as 500), and flexible debt-to-income ratio requirements (as high as 50%). You can get an FHA loan on any type of visa or EAD, as long as you have a valid social security number and a valid work authorization. 

However, you will need to pay an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP), which can increase your monthly expenses and the overall cost of the loan.

VA loans

VA loans are offered by the Department of Veterans Affairs, a governmental body dedicated to providing benefits and support to veterans and their families. VA loans are specifically crafted to assist active-duty service members, eligible veterans, and surviving spouses in purchasing, refinancing, or enhancing their homes.

These loans come with the advantage of no down payment requirement, no mandatory credit score, no need for Private Mortgage Insurance (PMI), and attractive low-interest rates. Eligibility for a VA loan extends to individuals with any type of visa or Employment Authorization Document (EAD), provided they qualify as a veteran, active-duty service member, or surviving spouse and possess a valid Certificate of Eligibility from the Department of Veterans Affairs. Nevertheless, it’s important to note that a VA funding fee is applicable. This fee can be paid outright or incorporated into the loan balance. Additionally, individuals opting for VA loans may encounter slightly higher closing costs or fees compared to alternative loan choices.

USDA loans

USDA loans are financial arrangements supported by the United States Department of Agriculture, a governmental body dedicated to offering programs and services to rural communities and farmers. These loans aim to assist individuals with low to moderate income levels who are looking to buy, refinance, or enhance a residence in a specified rural locale.

USDA loans offer several benefits, including no down payment requirement, low credit score requirement (as low as 640), and low interest rates. You can get a USDA loan on any type of visa or EAD, provided that you meet the income and property eligibility requirements. However, you will need to pay a USDA guarantee fee, which can be paid upfront or rolled into the loan balance. Additionally, the availability of loan options may be limited depending on the location and demand of the property.

Conclusion

Buying a home and getting a mortgage in the US is possible for non-immigrants, but it requires some preparation and research. Non-immigrants need to understand their visa status, their eligibility criteria, and their loan options. They also need to compare different lenders and find the best one for their needs. By following these steps, non-immigrants can achieve their dream of homeownership in the US.

If eligible, contact Matthew Fischman at (908) 500-0891 to learn more about how we can help you buy your dream home in America.

Navigate the path of homeownership in the USA with a non-immigrant visa! Explore loan options, documentation, and expert tips for securing your dream mortgage.