AI Mortgage Rate

Yes, you don't need an SSN or US credit to buy a house in the U.S. Mortgages are available not only to U.S. citizens and permanent residents but also to work visa holders and other foreigners. There are mortgage programs designed explicitly for foreigners. They need to meet the following requirements to qualify:

1. Current Income: There must be sufficient income to repay the principal and interest.
2. Assets: Funds are needed for the down payment and closing costs.
3. Credit Score: Depending on the loan product, a credit score of at least 580 or 620 is required. For foreigners →
4. DTI (Debt-to-Income Ratio): The ratio of monthly debt payments to monthly income must be less than 50%.

Foreigners who meet these conditions can get a U.S. mortgage.

Income must be currently generated, and there is 2 main categories of income proof for mortgage. Meeting the criteria for one of these categories is sufficient.

1. Employment Income (Earned Income)
   
   • W-2 Income: Salaries, wages, tips, etc., received from an employer.
   • 1099 Income: Income earned from freelancing, contract work, self-employment, etc.
   • Pension: Social Security, pensions, IRAs, etc.
   • Disability Benefits: Disability pensions, SSI, etc.
   • Military Service Pay: Pay received during military service.
2. Asset Income (Capital Income)
   • Rental Income: Income from property rentals.
   • Investment Income: Stock dividends, financial interest income, etc.
   • Business Income: Self-employment income.

The most important thing is that you must have a record of income for at least two years from now. If you have income for the past two years, you could meet the income requirement.
Even if you start working immediately after graduating from college and generate income for one year, the combination of a college degree and experience amounts to more than two years, thus meeting the income requirement.

The documents to prove income are as follows:

1. W-2 forms and 1099 forms that can verify your annual income for the last two years.
2. Business income documents (business income tax returns, profit and loss statements, balance sheets, etc.)
3. Rental income documents (rental agreements, rent receipts, etc.)
4. Investment income records (stock transaction details, dividend payment records, interest income certificates, etc.)

These documents can be used to prove income, and you can prove your overseas income as similar way.

Assets play a crucial role in increasing the likelihood of loan approval and securing more favorable loan terms. Here’s why assets are needed:

1. Down Payment: Most homebuyers use assets to cover around 20-25% of the home price as a down payment.
2. Closing Costs: Buying a home involves various expenses during the real estate contract and loan execution processes. These closing costs typically range from 2-5% of the home price and can be covered using assets.

Assets recognized by lenders can broadly be categorized into liquid assets and non-liquid assets. Liquid assets are generally more advantageous when applying for a mortgage because they can easily be converted into cash.

1. Liquid Assets
   • Deposits: Funds in savings accounts, money market deposit accounts (MMDA), and certificates of deposit (CDs), etc
   • Stocks: Publicly traded stocks
   • Bonds: Government and corporate bonds, etc
   • Mutual Funds: Investments in stock funds and bond funds, etc
   • Retirement Accounts: 401(k) plans and IRAs, etc
2. Non-Liquid Assets
   • Real Estate: Properties like homes, commercial buildings, and rental properties, etc
   • Art: Paintings and sculptures, etc
   • Jewelry: Including diamonds, rubies, sapphires

The value of each asset can vary depending on the criteria used for appraisal, and different mortgage lenders may have their own standards for asset valuation. It is advisable to get your assets appraised before applying for a mortgage.

Mortgage lenders use credit scores to determine loan eligibility, interest rates, and other loan conditions. Credit scores are used to predict the likelihood of loan repayment (based on past loan repayment history) and to assess credit risk.

The minimum credit score required for a mortgage application in the U.S. varies depending on the type of loan product. Typical standards for some common loan types are as follows:

• Conventional Loan: Minimum 620
• FHA Loan: Minimum 580
• Jumbo Loan: Minimum 680 (Fixed) or 700 (ARM)
• Non-QM Loan: Minimum 660

For foreigners who do not have a credit history in the U.S., most lending institutions require a minimum credit score of 680. Some may accept a credit report from the applicant's home country, and they may uniformly recognize it as equivalent to a 680 score. However, if a foreigner has a U.S. credit history (for example, if they have previously lived in the U.S., obtained a home mortgage, and made regular mortgage payments), and their credit score exceeds 680, they may qualify for lower interest rates.

DTI stands for Debt-to-Income Ratio, which means debt-to-income ratio and is calculated by dividing an individual's total monthly debt payments by total monthly income.

DTI = Total Monthly Debt Payments / Total Monthly Income

Total monthly debt payment includes:

The DTI is a critical metric used to evaluate borrowers' eligibility for loans:

1. Likelihood of Loan Approval: Most mortgage lenders base their loan approval decisions on DTI. Typically, the lower your DTI, the more likely you are to be approved for a loan.
2. Interest Rate: The interest rate of your mortgage loan depends on your DTI. The lower your DTI, the lower interest rates you can qualify for.
3. Loan Details: DTI may also affect other loan conditions, such as the loan term and maximum loan amount.

When calculating the DTI after getting mortgage, the total monthly debt payment includes not only the repayment of the loan principal and interest but also any property taxes, homeowners' insurance, and Homeowners Association (HOA) fees, if applicable.
Methods to Lower DTI Include are accelerating debt repayment, increasing income, avoiding new debt, etc.
Many mortgage lenders recommend a DTI of 36% or lower. However, some lenders may still approve mortgages for applicants with a DTI of less than 50% as well.
Please consult with Loaning.ai to find better loan conditions. DTI is an important evaluation metric in mortgage, and a lower DTI can lead to more favorable loan products.