Using Foreign Income and Assets to Qualify for a U.S. Mortgage

You can use foreign income and assets to qualify for a mortgage in the U.S.

Non-U.S. citizens will receive the same rates, fees, and terms as citizens.

However, qualifying will require more documentation if you earn your income in foreign currency.

Following are the rules about foreign income and assets.

Rules for All Loan Types

No matter which loan type you get, you’ll need to meet the following criteria.

• Prove lawful permanent or non-permanent residency in the U.S.
• Have a U.S. credit history, credit score, and adequate credit accounts (typically 3 open accounts for 12 months)
• You have filed U.S. tax returns for the past 2 years
• Allow extra time for translation of any documents not in English

If you meet these general guidelines, here are specifics for each major loan type.

Using Foreign Income for Conventional Loans

Most lenders offer conventional loans. Lenders examine the loans according to rules from Fannie Mae and Freddie Mac.

Conventional loans are available to U.S. citizens and lawful permanent and non-permanent residents.

Anyone in these groups who earns income in foreign currency must file taxes in the U.S. and provide:

• Two years of filed U.S. tax returns
• Two years of business tax returns, if applicable
• Pay stubs and W-2s, if applicable
• Human resources contact. The lender must request a verbal or written verification of employment in English

Pay stubs and other employer documentation should be in English. If that’s not possible, the lender will use a translation service.

If you own a foreign business, the lender will verify the stability of the business and income. This could require a foreign business license, CPA letter, or other documentation.

The lender will convert currency to U.S. dollars based on the exchange rate at the time.

How Income Is Calculated

Conventional loans will use the current income shown on pay stubs for salaried employees. Self-employed individuals can use the average income over the last two years minus expenses. This information will be taken from tax returns.

If you receive variable income like a bonus or commission, the lender will use a two-year average.

Foreign Income for FHA Loans

Like conventional, FHA loans are available to permanent and non-permanent residents. These groups and U.S. citizens can use foreign income to qualify.

Provide:

• Two years of filed U.S. tax returns; include business returns if applicable
• Pay stubs and W-2s, if applicable
• Human resources contact for a verbal or written verification of employment in English

The lender will translate income documents into English and calculate income amounts based on current exchange rates.

How Income Is Calculated

FHA states that the lender must average the past two years of foreign income based on tax returns instead of pay stubs.

VA Loans and Foreign Income

After separating from service, U.S. military veterans might go work for U.S. or foreign companies. If this is your situation, you can qualify for a zero-down VA home loan with this income.

Note that VA loans are only for owner-occupied residences and are only available on U.S. soil. So, if you are working overseas, you may not be able to purchase a home if you have no plans of returning to the U.S.

Lenders will review income similarly to how they would for conventional and FHA loans, as described above.

USDA Loans

The popular zero-down USDA loan is available in designated rural areas in the U.S.

This loan program allows foreign income with at least one year of history.

Documentation:

• One year of U.S. tax returns
• Current pay stubs and W-2s
• A source for a verification of employment in English

How Income Is Calculated

The lender will calculate income based on current pay stubs unless self-employed or earn commissions. Then, a two-year average will be required.

Using Foreign Assets for Down Payment and Reserves

If you make foreign income, you might also have funds in foreign currencies.

You can use these funds for the down payment, closing costs, and reserves.

All statements and documents should be in English. If it’s not possible, the lender will hire a service to translate the documents, which could take extra time.

You must transfer funds for the down payment and closing cost to a U.S. financial institution and exchange them for USD. The lender may need to review 60 days of account history in the foreign account to check for large deposits and verify the source of these funds.

Buying a House With Foreign Income

U.S. mortgages are available to eligible buyers with foreign income and assets. Rates, terms, and fees are the same as if you were purchasing with U.S. income.

Request your homebuying pre-approval. The lender will review your income and assets to ensure you are approved before shopping for a home.