Are you looking to buy a home in the United States, but you don’t have a social security number? It may be easier than you think to settle here in the U.S. Rather than a social security number, you will need an ITIN, Individual Taxpayer Identification Number. If you have an ITIN and you have the qualifications we discuss below, you could be well on your way to an approval for your home loan without a SSN.
Have Some Credit
Most importantly, you’ll need a credit history. This shows lenders how you handle your finances. Without a social security number, this could seem impossible. There are ways around it though. Typically, foreign nationals with an ITIN are able to obtain a secured credit card. This type of credit card has a security deposit that you put down on it. The security deposit is equal to your credit line. Let’s say you put down $500, then you have a $500 credit line. If you default on the debt, the credit card company will use the deposit money to pay your bill.
Once you have established a history with a secured credit card for 6 to 12 months, you can apply for a standard credit card or two. An unsecured credit card doesn’t have a security deposit. You are assigned a credit line that you can spend. You must then make at least the minimum monthly payments on time. Of course, it works best if you pay more than the minimum payment, even paying the bill off in full. Regular use of the credit card will help you build up credit.
Alternative Credit Options are Available
In addition to the secured and unsecured credit cards, you can show an alternative credit history. Any bills that you pay on a regular basis that don’t report to the credit agencies may count as alternative credit.
The most common alternative credit options are rent, tuition, and insurance payments. If you pay utilities or any other bills regularly each month, they may count as well. In order for a lender to establish a credit history with these accounts, you’ll need proof of your on-time payments.
You can show lenders your canceled checks for the payments every month as well as your bank statements showing the withdrawals. It helps even more if you have proof from the vendor that you pay your bills on time. Your landlord can complete a Verification of Rent form and your insurance company, utility company, or school can write a letter stating whether or not you pay your bills on time. Typically, a history of 12 to 24 months will suffice.
Make a Large Down Payment
Lenders want to see that you have your own money invested in the home. You won’t be able to get the 3% down payment programs that borrowers with a social security number get. Typically, you’ll need at least a 20% down payment, but an even larger down payment will increase your chances of approval.
You’ll need to be able to verify where your funds originated for the down payment. This means you’ll need to show at least the last two months of bank statements. Some lenders may require as much as 12 months of bank statements, though, to ensure that the money you use for the down payment isn’t a loan and is your own money that you’ve saved for the down payment.
Most lenders also require you to have reserves on hand. This is money you have a liquid U.S. bank account that can cover the cost of the mortgage. This is like an ‘emergency fund’ should your income stop and you be unable to pay the mortgage.
Lenders measure your reserves based on the number of mortgage payments it covers. If your mortgage payment is $2,000 and you have $20,000 saved, you have 10 months of reserves. The more mortgage payments that you can cover with your reserves, the better your chances of getting approved for the mortgage become.
Have a Decent Employment History
Finally, lenders want to know that you have stable employment. It’s probably the reason you want to settle down in the United States, but you need to prove it. Without stable employment, lenders could look at you as a high default risk. If this isn’t your home country and you get in trouble financially, it could be easy to walk away from the home.
With stable employment, you have a reason to stay here. It also shows lenders that you have a reliable income to help make your mortgage payments. Typically, a history of 2 years at the same employer is ideal for your home loan approval.
In addition to your employment history, though, you’ll have to prove that you have a future at this employer. In other words, your lender must be able to tell beyond a reasonable doubt that you’ll be employed at the same place for the foreseeable future. If you have a contract that ends soon, for example, that’s not proof of stable employment.
You can get a mortgage without a social security number as long as you have the qualifying factors. Finding a lender may be a little trickier than if you had a social security number too, but there are lenders out there. Keep shopping around until you find the lender that will accept your ITIN and give you good rates and terms on the loan.Click to See the Latest Mortgage Rates»