Are you a foreign national looking to invest in the US real estate market but unsure about your financing options? In this Q&A session, Bo Eckstein, host of the Investor Financing Podcast, sheds light on the DSCR loan programs available for foreign national borrowers.
Eligibility Requirements
A foreign national borrower is defined as someone who does not live or work in the US. To be eligible for a DSCR loan, you must provide a valid passport, and the loan must be made for business purposes only, such as buying a property for investment. The property can be in your name or a business entity, but the entity must be registered in the US. Some lenders have restrictions on the countries they lend to, so it's essential to check with your lender before applying.
Financing Availability
There are plenty of DSCR funding options available for foreign national borrowers. However, one of the challenges is that you may not have any US-based credit history, so lenders will not pull a credit score. It's crucial to have a US-based business entity set up and a US-based bank account to facilitate the loan process. This will also help to avoid paper trail issues when executing the purchase.
Loan Terms and Rates
Foreign national borrowers may face higher interest rates and lower loan-to-value (LTV) ratios than US-based borrowers. Lenders typically cap the LTV at 70 to 75%, which is a five to ten percent haircut from what they would lend to a US-based business or individual.
Conclusion
Foreign national borrowers have access to DSCR loan programs that are tailored to their unique needs. While the eligibility requirements and loan terms may differ from those for US-based borrowers, there are plenty of financing options available. It's essential to work with a lender who is experienced in lending to foreign national borrowers and to have your US-based business entity and bank account set up before applying. With the right preparation, foreign national borrowers can take advantage of the opportunities in the US real estate market.