What Is a Foreign National Loan?

Short answer

A foreign national loan is a mortgage for a buyer who lives outside the United States and has no U.S. credit history or Social Security number. The lender verifies income and assets from the home country, often accepts a credit reference letter from a foreign bank instead of a FICO score, and requires a larger down payment, commonly 25% to 40%. Miami is the largest foreign national mortgage market in the U.S., with buyers from Latin America, Canada and Europe.

Definition

Foreign national loans are non-QM or portfolio mortgages for non-U.S. residents buying second homes or investment properties. They qualify on foreign income documented by an accountant or employer, on assets, or on the property's rent (DSCR).

Worked example

A buyer from Bogota purchases a $700,000 condo in Brickell as a second home. The lender requires 30% down: $210,000, loan $490,000. He documents income with a CPA letter and six months of foreign bank statements, and provides two credit reference letters from his banks in Colombia. Reserves required: 12 months of the $4,200 payment, or $50,400, which can sit in his foreign account. Closing costs include Florida doc stamps $490,000 x 0.0035 = $1,715 and intangible tax $490,000 x 0.002 = $980. Funds are wired from abroad with a documented paper trail. If he preferred not to document income, a DSCR foreign national loan would qualify the condo on its market rent instead.

Typical requirements

• Valid passport and visa (B-1/B-2 or other), or visa waiver entry; some lenders accept buyers who never enter the U.S. and close by power of attorney.
• Down payment of 25% to 40% depending on lender, property type and documentation.
• Income: employer letter, accountant letter, or two years of foreign tax returns, translated; or DSCR qualification on rent.
• Credit: foreign credit report where available, or two or three bank or creditor reference letters.
• Reserves: often 6 to 12 months of payments, which may remain abroad.
• A U.S. bank account for automatic payments.

Pricing and structure

Foreign national loans are priced above conforming and often come as 30-year fixed or 5- and 7-year ARMs, sometimes interest-only. Investment purchases are business-purpose loans. Rates vary daily; call for today's pricing. A broker with many foreign national lenders can match your country, documents and building with a lender that accepts all three.

In South Florida

South Florida has built an entire lending ecosystem around foreign buyers: lenders that read Spanish and Portuguese documents, title companies that handle remote closings through consulates or with powers of attorney, and loan officers who understand income from Latin American businesses. Points to plan for: a U.S. bank account is usually required for payments, funds must be wired with a clear source trail, FIRPTA withholding applies when a foreign owner later sells, and condotels and non-warrantable buildings are common targets that need the right lender. QMS Lending works bilingually, EN/ES. See foreign national loans.