You do not need a social security number to secure a mortgage. Shocking, I know. Foreign nationals working in the United States may be eligible without a social security number. As long as you have an ITIN number and certain qualifications, you may find a loan. Here we will look at the minimum requirements of most lenders. However, since you will use a portfolio lender for this loan, the requirements may vary by lender. Shopping around with different lenders can help you find one willing to accept your situation.
Create a Credit Score
You need a credit score. Most people start by applying for a few credit cards. Luckily, you do not need a social security number to get a credit card. Many companies provide credit with an ITIN. Your best bet is to start with a secured credit card. Your credit limit is the size of the deposit you put down. For example, a $500 credit limit requires a $500 deposit. The creditor can then use these funds if you default on your payments.
Secured credit cards report to the credit bureaus. This helps you build a credit history and/or score. Once you build up a score, you can apply for unsecured credit cards. These cards can then help you build an even stronger credit history and/or score. With a good credit score, you may be able to secure a mortgage down the road.
Building Alternative Credit
If you can obtain an unsecured credit card or any other credit, you still have an option. You can build up an alternative credit history. These are things you pay for on a regular basis but that do not report to the credit bureaus. Rent, insurance, and tuition are a few good examples. Any bill you pay on a monthly basis that a 3rd party can verify can help. Lenders will verify the last 12 months of these payments. They want to see on time payments every month. They can usually use 3 alternative credit lines in place of a credit score. Of course, this varies by lender.
Save Money for a Loan with an ITIN Number
Most lenders prefer money in US dollars. You do not need a social security number to open a bank account here, so saving is easy. Open a bank account and make regular deposits for a year or two. The longer your bank statement history and the more money you have, the better your chances of approval. You will need these assets for a few reasons for mortgage approval:
- Down payment money – You will need a down payment on the home. The amount varies by loan program and lender. But, the more you put down, the greater your chances of mortgage approval.
- Reserves – Lenders prefer that you have money set aside to cover your mortgage should your income stop. The more reserves you have the better your chances of approval. Lenders measure your reserves based on the number of months they can cover your mortgage. For example, $3,000 is 3 months’ of reserves for a $1,000 mortgage.
- Closing costs – Closing a loan costs money. Each lender charges a different amount, but you can expect to pay around 5% of the loan amount in closing costs. Having verifiable money for these costs can help your case.
The reason you are here with an ITIN number is likely due to your employment. The longer you are in the US and working for the same employer, the better your chances of approval. As a general rule, lenders prefer a 2-year history. This varies by lender and program, though. If you have shorter than a 2-year history, you should have other compensating factors. These show that you can afford the loan and are not a high risk.
The largest risk factor regarding foreign nationals is how long you will be in the country. If your employment is temporary, say 12 months, you are a high risk for a loan. If however, you have a contract for the next few years, it provides the lender with reliability.
Using Household Income
In some cases, an entire household contributes to the monthly expenses. Traditional loan programs do not include this income. They only look at the borrower and co-borrower’s income. Portfolio lenders can create their own rules, though. Some lenders allow the use of household income for ITIN number applicants. You will have to prove the same consistency and reliability of the income, though. Lenders like to see the income occur for at least 2 years with the likelihood of another 3 years of consistency. For example, a brand new job or money from abroad may not help you qualify.
Sometimes foreign nationals have documents in their native language. Asset and employment documents are the most common. Before you can turn them into your lender, they must be translated. There may be some loss of information during the translation, though. It’s best if you have all US based documentation for your best chances at loan approval.
The most important thing you can do as a foreign national is to make sure you have compensating factors. Just being a foreign national poses a risk to lenders. You are not a permanent resident, which means you could leave at any time. Having compensating factors such as the following may help:
- Large down payment (more than the minimum required)
- A low debt ratio
- 12 – 24 months of reserves
- Stable employment
The lower your risk level, the higher your chance of approval. Of course, you may have to shop around for a lender. Not all lenders offer mortgages to those with an ITIN number. It is not impossible to find a lender, though. Working with a broker can help you find a lender faster. As with anyone, though, make sure you compare your Loan Estimate. Look at the costs of the loan and the interest rate. Most foreign nationals’ mortgages have higher interest rates than those for permanent residents. It does not mean you must pay outrageous fees and rates, though. Some lenders specialize in these loans and provide attractive terms. Find the loan that suits your finances the best and enjoy home ownership in the United States!