Buying a House in the US? A Beginners Guide for International Buyers

Whether you’re an international investor looking for a vacation property, or a new resident starting the home search for the first time, buying a house in the U.S. can seem like a huge undertaking. But while U.S. real estate practices and mortgage requirements may differ from those in your home country, there are numerous resources and options available to foreign buyers at every stage of the journey.

Use this guide to better understand how to prepare and what to expect when buying a home in the U.S. Just remember, it is no substitute for the expertise of experienced real estate agents, attorneys, mortgage brokers and accountants you’ll want to consult along the way.

Hire real estate professionals who specialize in working with foreign buyers

When finding, evaluating and financing real estate, it’s important to not only find licensed agents with local expertise, but ones that can offer advice in navigating complex transactions you might face as an international home buyer.

Assembling a qualified team will take some time — ask associates for referrals, do website searches, find locals in real estate directories and check references. In the end, the expertise these professionals bring should help make the experience less stressful.

Your professional team might include:

• Buyer’s agent with CIPS designation: Licensed agents with expertise in foreign real estate transactions have often completed additional coursework to become Certified International Property Specialists (CIPS). Many of these specialized agents are fluent in multiple languages and can also help you navigate the unique rules and regulations of each state. Learn what questions to ask when shopping for an agent that’s right for you: How to Hire a Buyer’s Real Estate Agent.
• Real estate attorney: Some states require buyers to hire a real estate attorney to handle the paperwork, while others only require a buyer’s agent. In some states, you might see “real estate brokers” in addition to agents. Learn the differences between a broker and an agent here. 
• Lender working for a global operation: Choose a bank with global services to help you navigate issues like currency exchange rates, multinational taxation and credit established in other countries.
• U.S.-based financial advisor/accountant: While you can find financial advisors through your local bank branch, it might also be handy to find a firm that specializes in working with international clients.
• Tax advisor/attorney: Speak to a tax professional that can advise on what forms you’ll need to provide a lender to indicate proof of work if applicable. You’ll also want to make sure you understand the tax implications and rules related to purchasing a property in the U.S.

Obtain an Individual Taxpayer Identification Number (ITIN)

You need an Individual Taxpayer Identification Number (ITIN) to buy a house in the US. An ITIN is issued by the Internal Revenue Service to people who are not eligible to obtain a social security number. To get an ITIN, you’ll need to contact a Certifying Acceptance Agent (CAA) to fill out Form W-7 — reference this guide for a list of accepted CAAs in the U.S. and internationally.

What you need to buy property in the U.S. as a non-citizen

If you’re using a mortgage lender, you may need to present any or all of the following:

• social security number or ITIN
• valid foreign passport, a U.S. visa, or a driver’s license
• bank statements and, if applicable, financial records from your overseas bank
• proof of reserves
• pay stubs
• credit score
• tax return

Build credit history

To obtain a home loan as a foreigner in the US, you must first establish credit and earn a good credit score. The stronger your credit score, the more favorable the interest rate on your future home loan.

If you don’t already have a U.S. bank and credit card account, prioritize this step and budget approximately three to six months to start building up your credit history. Contact your local bank to learn about various options and tools for building credit from scratch.

Want to learn more about a credit report in the U.S.? Explore how credit scores impact mortgage rates in our Mortgage Learning Center.

In addition to credit score, lenders also typically look at income information to determine loan eligibility, but there are numerous paths to mortgage approval regardless of employment status. A U.S. financial advisor and/or tax professional can provide information on your options and the documentation you’ll need to move forward.

Shop for a mortgage lender — but consult with an advisor first

Shopping for lenders alone can help you get a better rate, but you may want to take the time to first talk to a mortgage advisor that will help you navigate your unique circumstances. Your residency status — your terms of stay and how long you have been in the U.S. — can affect the loans you qualify for and the types of documentation needed. Green card holders, permanent residents, and refugees qualify for the same home loans as a U.S. citizen but may need extra documentation.

Depending on your situation, a larger down payment could improve your financing eligibility — think 30 to 40%. Generally, a 20% down payment is considered ideal when purchasing a home, and some lenders will even offer mortgages with as little as 3% down, so talk to your lender to determine what payment plans are right for you.

Frequently asked questions

What should I expect from my first meeting with my real estate agent?

This is the perfect time for you to tell your agent exactly what you're looking for in a property and your budget. It might also be a good idea to take the time to tell your agent how the home-buying process works in your native country and ask about any differences in the U.S. market. The more you know, the less stressed you’ll be when you enter into the negotiation process.

Will I need to hire a real estate lawyer?

Although not mandated, depending on which state you’re looking to buy in, you may want to seek the services of a real estate attorney to help with any legal issues or questions you may encounter along the way. A real estate lawyer can review the sales contract for you, check the title and other documents relating to your purchase, and advise on legal and tax issues concerning your property.

Is there a type of property I can't purchase in the U.S.?

Foreign buyers are eligible to buy single-family homes, condominiums, duplexes, triplexes, quadplexes and townhomes.

Housing cooperatives or co-ops often have rules prohibiting foreign ownership. That's because co-ops generally require that a buyer's source of income be from the U.S. and that most of the majority of the buyer's assets be kept in the U.S.

Should I purchase U.S. property in my name?

Foreign investors can purchase property directly — in their own names — or through a business entity, such as a domestic corporation, foreign corporation, limited partnership, joint venture, real estate investment trust or limited liability company.

How the property will be used should play into your decision. Additionally, whether or not you purchase the property in your name can have dramatic tax consequences. Your real estate attorney and accountant should be able to provide counsel concerning your options.

Can I pay for my property in cash?

Yes, all-cash purchases are permitted, but U.S. law mandates that cash transactions over $10,000 be reported to the federal government. The requirement for reporting involves everyone connected to the transaction (purchaser, real estate agents, attorneys, title companies, etc.). You’ll need to show how you earned the money and that it was legally obtained.

Cash buyers can potentially save money on mortgage application fees, loan origination fees, appraisals and title insurance.

Do I have to travel to the U.S. for the closing?

While you may very well want to attend your real estate closing, it is not necessary. In the event that you cannot or choose not to attend your closing, you must execute a 'Power of Attorney.' This is a written document authorizing another person to represent you and sign on your behalf.

Are there additional fees I will need to pay at closing?

Yes. In addition to your downpayment, the buyer typically is responsible for paying for the title search and insurance, legal fees and recording fees, amounting to an additional 1 percent to 2.25 percent of the total cost of the transaction. On a $300,000 home, that amounts to another $3,000 to $6,750. Learn more about closing costs in our Mortgage Learning Center.

How long does it typically take to buy a home in the U.S.?

You can expect to budget, on average, 4.5 months for the home buying process up until your home is under contract. It takes about another 30 to 45 days to close on the home and move in. Learn more about the steps that go into buying a house in our Home Buyers Guide.

How will a U.S. real estate purchase affect my taxes?

A foreign property owners' tax liability in the U.S. and/or their home country will vary depending upon their residency status, where the purchaser is from and whether that country has a tax treaty with the United States. Consult a tax attorney familiar with your home country's treaty to get answers to tax-related questions.