Can Foreigners Buy Property In The U.S.? What Non-U.S. Residents Should Know

If you're living outside the United States, you may dream about lounging on a beach in Florida or living in the mountains of Tennessee. But does that dream have to come to a screeching halt because you're not a U.S. citizen? Can foreigners buy property in the U.S.?

Yes, foreigners can buy property in the U.S. International buyers purchased $53.3 billion in U.S. real estate between April 2022 and March 2023, with 84,600 existing homes sold.

Neither U.S. citizenship nor permanent residence is a legal requirement for real estate ownership. Keep reading to learn the rules, steps and some frequently asked questions about purchasing real estate in the U.S., and whether it's the right move for you.

Can Foreigners Buy Property In The US?

Foreigners, or non-U.S. citizens, can buy property in the U.S. In fact, it’s very common. There aren’t any laws that prohibit non-U.S. citizens from buying a house in the U.S., but the process can be more complicated. This is especially true for foreigners applying for a mortgage because they must meet certain criteria.

Rules For Foreigners Buying Property In The US

You now know the answer to non-U.S. citizens buying homes, but how does it work?

You must follow a few rules for buying property in the U.S., and that includes understanding residency, financing and taxes. Let's dive into each.

Residency

A permanent resident refers to someone who can work in the U.S. for most employers and themselves but hold citizenship of another country. Permanent residents receive what's called an "alien registration card," also known as a "green card." Green cards qualify you to prove employment and Social Security card eligibility. Permanent residents can qualify for a mortgage like a U.S. citizen, pending eligibility.

On the other hand, a nonpermanent resident is a non-U.S. citizen living in the U.S. for a specific period of time. Once that time expires, nonpermanent residents must leave the country, unless their immigration status changes and they can stay in the U.S. The government will not give a nonpermanent resident a green card.

Nonresidents may need to show proof of the following:

• A foreign passport, U.S. visa or driver's license
• Social Security number or Individual Taxpayer Identification Number (ITIN)
• Financial statements from their foreign bank
• Evidence of assets and income
• Tax returns (if possible, provide U.S. tax returns)

Financing

The typical financial requirements for non-U.S. residents to get a mortgage include:

Federal Housing Administration (FHA) loans: FHA loans are loans backed by the U.S. Department of Housing and Urban Development. Permanent citizens can obtain an FHA-insured mortgage under the same terms as U.S. citizens, and nonpermanent citizens can qualify as long as they plan to live in the home as their primary residence, have a valid Social Security number and can work in the U.S. Nonpermanent residents will need to provide acceptable visa and employment authorization paperwork.

Conventional loans: A conventional loan is a mortgage offered through a private lender without backing from a government agency. Conventional loan requirements for nonresident borrowers must show their green card as proof of residency status as well as a Social Security number. Nonpermanent citizens must have a Social Security number, employer-sponsored visa and/or a work permit to obtain a conventional mortgage loan.

Foreign national loans: You may also be able to tap into foreign national loans for nonresident borrowers. They may have higher down payment requirements, require a letter from an accountant or auditing firm verifying income figures, a letter from an employer stating your pay, a letter of reference from a bank or financial institution that shows borrowing history and relationship status, utility bills to prove residency, passport and visa and a banking relationship with a U.S. bank.

Taxes

Non-U.S. citizens must be aware of some typical tax requirements when buying a house in the U.S. because the Internal Revenue Service (IRS) must make sure that foreigners will pay taxes. Foreign property owners should understand U.S. tax code implications by consulting with a tax professional to help you comply with the tax laws.

Income from real property generally gets taxed at a 30% rate if it's not connected with a trade or business in the U.S. You may pay less if your resident country has a tax treaty with the U.S.

When you sell the U.S. home, the Foreign Investment in Real Property Tax Act (FIRPTA) requires a 15% withholding of the sale price to be deposited with the U.S. government pending the completion of the sale to ensure that the foreign national files a U.S. tax return and pays capital gains income.

How You Can Buy A House As A Non-US Resident In 6 Steps

What are the exact steps to purchasing a house as a non-U.S. resident? Let's take a look.

1. Research The Area’s Market And Regulations

First, research the local real estate market (tax laws, cost of living, etc.) before buying property in the area and determine how much you can afford. Knowledgeable experts include real estate agents or lenders in the area. Asking these individuals questions might help you zero in on the right real estate agent for you, as mentioned in the next step.

2. Find A Real Estate Agent

Find an agent that has experience with foreign home buyers. Ask for agent references from friends and family. Seek advice from other buyers who have purchased property in the U.S. Finding the right agent will save you time, particularly if you can't frequently travel back and forth between your home country and the United States to search for available property.

3. Gather Documentation

What are the documents required by lenders to apply for a mortgage as a non-U.S. citizen? They include:

• Identification: Have your passport, green card, visa, Social Security number and individual taxpayer identification number (ITIN) handy.
• Residency: You must prove where you reside using a driver's license or other official paperwork. If you plan to live in the new property, you may need to prove that you are a legal resident.
• Income and debts: If you plan to get a mortgage, you'll need to prove to a lender that you can pay for the property, which may include providing pay stubs and tax returns. You'll need to show a lender any of your outstanding loans or debts.

4. Apply For Financing

Next, find and choose a mortgage lender as a foreign buyer if you do not plan to purchase property with cash. Note that the process can take some time, and the options and terms may not be as favorable as those available to U.S. residents. In addition, lenders may require you to put down a larger down payment or provide additional documentation. Some lenders may not offer loans to non-U.S. citizens at all.

Learn more about the total costs, including closing costs, down payment requirements and more. Learn about the ongoing costs of the property, such as utilities, taxes, upkeep and maintenance.

5. Make An Offer

Once you've found the right home, make an offer on a U.S. property as a foreign home buyer. Work with an agent to write up an offer and ensure the sellers agree to the sale price and terms. Talk to your agent about making an earnest money deposit, which is a small percentage of the purchase price. It can help the seller build confidence knowing that you are serious about the sale.

The deposit gets credited against your closing costs or down payment. However, you could lose it if you back out of the sale. You can withdraw without penalties by adding contingencies into the offer. Contingencies protect you if something happens, such as if the home inspection fails. In this case, you can get your earnest money deposit back.

6. Close On The Property

Finally, complete a remote closing or travel to the U.S. to complete the closing process. In this process, you and your lender will sign documents electronically using a remote notary. Be ready to read through documents, pay closing costs and your down payment.

The Bottom Line

Can a foreigner buy a house in U.S.? Absolutely.

However, it’s a matter of knowing the rules for foreigners buying property in U.S. Foreign buyers may face extra scrutiny and taxes, and it may take extra time to go through the process. Learn more from a real estate agent who has experience working with non-U.S. citizens and a lender who lends to non-U.S. citizens.

If you're a noncitizen who wants to buy a house in the U.S., start the approval process with Rocket Mortgage^®.