California Foreign National Mortgage Loans

Foreign Nationals purchasing California homes are being offered more options for home financing in 2011 than in recent memory. Finally! Although Conventional and Government (FHA and VA) mortgage guidelines tend to be tightening, there are Portfolio lenders stepping up and offering “makes sense” home loan programs.

A Foreign National is someone who visits the United States for short periods of time, typically on vacation or short business trip. California cities such as Newport Beach, Laguna Beach, and Malibu are seeing an influx of Foreign Nationals from Canada, Europe, and Asia who are taking advantage of low prices for luxury homes.

Foreign National Home Loan Program Guidelines

The Foreign National home loan programs in California are truly “niche”. And because of that, the down payment requirements are a little stiff, but the underwriting is actually fairly flexible. Below are the general guidelines and requirements.

• No FICO score is required. This is important since most most Foreign Nationals have not established credit in the United States.  Instead of a FICO, four credit references are needed. Alternate credit from their Foreign National’s home country is okay.
• The maximum loan loan to value is 50%. Second homes are okay.
• The minimum loan amount is $300,000. The maximum is $5,000,000.
• Interest Only programs are available. The loan programs tend to be fixed for the first 3, 5, or 7 years before becoming adjustable rate programs.
• It is not necessary to have US Tax returns (kind of obvious). Tax documents from the country of origin are okay, but may need to be translated by an Accountant.
• The assets used for down payment and reserves must be from a verifiable institution. For example, Credit Suisse, Citi, UBS, etc.
• Borrower needs a Passport and a second for of ID.
• Borrower must have either a Social Security number or Tax Identification Number (TIN) which can be easily acquired through a CPA. The lender just needs evidence that an application to obtain the TIN has been submitted.
• Vesting can be in a Trust, corporation, LLC, or Partnership.

Flexible Underwriting for Foreign Nationals in California

Although the down payment requirements may seem a little stiff, it is possible to lower the amount of down payment required by “Pledging Assets” towards the down payment. While some California lenders would require Assets to be moved to the lender institution, this program allows the assets to remain where they are currently invested. So for example, a Foreign National purchasing a Second home in Orange County for $2,000,000 would need a $1,000,000 down payment. But they could “Pledge” $600,000 without actually withdrawing the funds, and put only $400,000 down. This loan can also be used in conjunction with Asset Depletion qualifying.

Who is Eligible for the California Foreign National Home Loan Program?

The first step to determine eligibility is to contact a California Foreign National Lending Expert who can answer questions and prepare custom scenarios. As more Portfolio lenders begin to step in with “makes sense underwriting” programs, expect sales of high priced California homes to pick up.