If you currently live and work in a foreign country but are a US citizen, you can still qualify for a conventional mortgage under conforming (Fannie Mae and Freddie Mac) guidelines. However, the requirements are more complex. These “expat loans” require a manual underwrite, involving additional paperwork and stricter guidelines. Not all banks or mortgage lenders accept these transactions, even though conforming guidelines explicitly allow foreign income as a valid source of income. Some banks, credit unions, and mortgage banks impose “overlays” that disqualify such loans due to the complexity of underwriting and the potential for fraud.
Because of the complex nature of these transactions, it’s essential to work with a loan officer who understands how to underwrite foreign income and is employed by a company that accepts foreign income and addresses. During the start of the pandemic, I learned how to handle these loans after connecting with the owner of expatmortgagebroker.com. Initially catering to Australian expats, he discovered significant interest from American expats as well.
If you are a US expat living and working abroad and want to purchase or refinance a home in the US, ensure that you complete the following steps:
1.) File your US Taxes
Most conventional programs require that you have two years of US Taxes filed that show your form 2555, Foreign Earned Income. Although in many cases you are not taxed on that income guidelines require that you have filed your US Taxes
2.) File your Foreign Taxes
Not all countries require foreign tax filing, but many do. If your taxes are not in English, you’ll need a third-party translation. Lenders require evidence of two years of foreign income earned.
3.) Maintain a US Credit Score
A US credit score is necessary for these loans. Maintain your credit score through a mortgage, credit card, or a combination of both. If you need to build credit, consider starting with a secured credit card and becoming an authorized user on a trusted family member’s credit card.
4.) Maintain a Physical US Mailing address
You’ll need a physical US mailing address (not a P.O. box). This could be a relative’s home or a second home. Use this address for receiving mail and associating bank accounts or credit cards.
5.) Hold a Valid US Passport
You must provide a valid US passport as part of the application process.
6.) Sign Final Documents in a US Embassy or on US Soil
Final loan documents must be signed in the presence of a notary public either on US soil, at a US Embassy, or on a US military base. A specific Power of Attorney (POA) is acceptable but must be approved by the lender and title company. The POA also needs to be signed on US soil with a notary public. While Remote Online Notaries (RON) are gaining acceptance, many states, lenders, and title companies do not yet accept them.
7.) Verifiable Income
Income documents must be translated by an approved third party. Additionally, the underwriter will need to confirm your employment in writing directly with your employer.
8.) Verify Housing Payments
You’ll need to verify rent or mortgage payments for the past 12 months using bank statements and lease agreements.
This is not an exhaustive list of items to prepare when considering attaining a conventional loan as a US Expat living and working abroad. While these loans are complicated, they are doable and often worth the better terms that are associated with conventional loans. If you are a US Expat that is unable to provide some or many of these items there are other speciality loan options available to you on the marketplace.
If you would like to schedule a consultation on attaining a mortgage as a US Expat please click here.