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Texas Mortgage With No United States Credit: A Guide

Q: How can I get a mortgage in Houston without a U.S. FICO score?

A lender's seasoning period is a mandatory waiting time after you purchase or refinance a property before you can access the full after-repair value (ARV) for a cash-out refinance. Most DSCR lenders require a seasoning period of 6 to 12 months. Refinancing before the seasoning period concludes typically means the lender will base the loan amount on your original purchase price plus rehab costs, which severely limits the amount of equity you can cash out. Waiting until after the period allows you to borrow against the full market value you created through your renovations.

Q: What documents can I use to prove my income as a foreign national buyer?

To justify a higher appraised value, you should provide the appraiser with a detailed and organized renovation packet. This packet removes guesswork and provides concrete evidence of the work performed. It should include: a cover letter summarizing the major upgrades, a detailed scope of work document itemizing all improvements, compelling before-and-after photos showing the property's transformation, copies of paid invoices and receipts for materials and labor, and copies of any official building permits that were issued for the work.

Q: Are interest rates higher for Foreign National loans, and why?

No, LTV limits for cash-out refinances vary significantly among different DSCR lenders, as each has its own guidelines and risk tolerance. While purchase loans may reach 80% LTV, cash-out refinances are often capped at 70% or 75% LTV. The specific LTV offered to an investor is influenced by several factors, including: Credit Score (higher scores typically qualify for higher LTVs), DSCR Ratio (a stronger income-to-debt ratio may result in a better LTV offer), Property Type (a single-family home might receive a higher LTV than a multi-unit property), and Loan Amount (some lenders may offer different terms based on the size of the loan).

Q: What is the typical down payment requirement for a non-U.S. home buyer in Texas?

Your property's monthly rental income is the foundation of a DSCR loan approval. The formula is: DSCR = Gross Rental Income / Total Monthly Housing Payment. A higher rent results in a higher DSCR. This proves to the lender that the property can comfortably support a larger loan payment, which in turn allows you to qualify for a larger loan amount and maximize your cash-out.

Q: What is the difference between an ITIN loan and a Foreign National loan?

Yes, it is often possible to pay for closing costs with the proceeds from your new loan, meaning you don't need to bring cash to closing. However, these costs are not added on top of your loan limit. Instead, the closing costs are subtracted from the total cash-out funds available to you after your existing mortgage is paid off. The total loan amount, including these costs, cannot exceed the lender's maximum LTV limit based on the property's appraised value.

Q: How do lenders verify assets and funds from a foreign country?

Investors can make several avoidable errors that reduce their available cash-out funds. The most common mistakes include: Poor Documentation (failing to provide an appraiser with a thorough renovation packet can lead to a conservative and lower valuation), Refinancing Too Soon (not waiting for the lender's seasoning period to expire is a costly mistake that forces the loan to be based on cost rather than value), Lacking a Tenant (attempting to refinance a vacant property is less favorable, as lenders prefer the security of a signed lease over estimated market rents), and Ignoring Lender Differences (accepting the first loan offer without comparing options can mean missing out on better LTV limits or shorter seasoning requirements from other lenders).

Q: Should I buy an investment property in my personal name or through an LLC?

The ideal time to begin the refinance process is 30 to 45 days before your lender's seasoning period expires. This allows you to gather all necessary documentation, secure an appraisal, and complete underwriting so that you can close immediately once the seasoning requirement is met. Crucially, by this time, the property should also be 'stabilized,' which means you have a qualified tenant in place with a signed lease and have collected at least the first month's rent.

Specialized In Jumbo Loans, Investor Loans, DSCR Loans, Non-QM Financing, Commercial Mortgages, and Tax-Informed Lending Strategies

Published By

David Ghazaryan

Owner / Broker / Banker

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TL;DR

For international buyers and investors looking to purchase property in Texas cities like Houston and Austin, specialized mortgage options are available even without a U.S. credit history. Here’s a summary of the key considerations:

No FICO Score Required: Foreign National loans use alternative methods to assess creditworthiness, such as international credit reports, bank reference letters, and a history of timely bill payments.
Alternative Income Verification: Since U.S. tax documents are unavailable, lenders accept employment verification letters, 12-24 months of bank statements, accountant letters for the self-employed, and translated foreign tax returns.
Higher Interest Rates and Down Payments: Expect interest rates to be higher than conventional loans due to increased lender risk. Down payments are also significantly larger, typically ranging from 25% to 40% of the purchase price.
ITIN Loans as an Alternative: For non-citizens who live and work in the U.S., ITIN loans are an option. They generally have more favorable terms than Foreign National loans but still require higher down payments than conventional mortgages.
Asset and Fund Verification: Lenders require meticulous documentation for assets, ensuring funds are legally sourced and have been "seasoned" (held in an account for 60-90 days). All foreign documents must be professionally translated.
Structuring the Purchase: Buyers can purchase in their personal name for simpler financing or use an LLC for liability protection, though LLC financing can be more complex and may come with higher rates.

Proving Creditworthiness for a Houston Mortgage Without a FICO Score

In the United States, the entire mortgage lending system is built around the FICO score. This three-digit number is the primary indicator of your financial reliability. Without one, most traditional lenders will automatically deny your application, regardless of your income or assets. This presents a significant hurdle for foreign nationals and non-residents looking to invest in the booming Houston real estate market.

However, specialized loan programs, often called Foreign National loans, are designed specifically for this scenario. Instead of relying on a FICO score, lenders use alternative methods to assess your creditworthiness. This approach acknowledges that a lack of U.S. credit is not the same as having bad credit.

Here are the common ways you can prove your financial reliability:

International Credit Reports: Many lenders partner with services that can pull and translate credit reports from your home country. These reports serve the same function as a U.S. credit report, showing your payment history on loans and credit lines.
Bank Reference Letters: A formal letter from your primary banking institution in your home country can be a powerful tool. The letter should be on official bank letterhead and state the length of your relationship, the average balance you maintain, and confirm that your accounts are in good standing.
Verification of Timely Payments: Lenders may accept proof of consistent payments for recurring bills. This can include 12 months of statements from:
- Your landlord or property manager (verifying on-time rent payments).
- Utility companies (electricity, gas, water).
- Insurance providers.

These alternative methods allow underwriters to build a comprehensive financial profile, demonstrating a history of responsible debt management even without a traditional U.S. credit file.

What Alternative Documentation Can I Use for Income Qualification?

Just as credit verification is different for a foreign national, so is income qualification. Since you likely don't have U.S. tax returns or W-2s, lenders need other ways to verify that your income is stable and sufficient to cover the mortgage payment.

When applying for a mortgage in a competitive market like Austin, be prepared to provide a robust set of documents. Lenders need to see a clear and consistent income stream, and all documents must typically be translated into English by a certified third-party service.

A person reviewing financial documents for a mortgage application.

Key documents for income verification include:

Employment Verification Letter: A letter from your employer on official company letterhead is crucial. It should state your position, your salary in both the local currency and U.S. dollars, your start date, and the terms of your employment. It should also include contact information for verification.
Bank Statements: You will likely need to provide 12 to 24 months of personal and business bank statements. (The data, information, or policy mentioned here may vary over time.) Lenders analyze these to see consistent salary deposits and to ensure you have sufficient liquid assets for the down payment and closing costs.
Accountant's Letter: If you are self-employed, a letter from a certified accountant in your home country can verify your income for the past two or more years. This serves as a substitute for tax returns.
Foreign Tax Returns: If you file tax returns in your home country, providing translated copies for the last two years can also support your income qualification.

Are Interest Rates Higher for Foreign National Investor Loans in Austin?

Yes, you should expect interest rates for Foreign National loans to be higher than those for conventional mortgages. This applies whether you are buying a second home or an investment property in a high-demand area like Austin.

Lenders view these loans as having a higher level of risk. This isn't a reflection on you personally, but rather a result of several factors:

Complexity of Verification: Verifying international income, assets, and credit is more complex and time-consuming for the lender.
Jurisdictional Risk: If a borrower defaults, the lender may face challenges in pursuing legal action or recourse across international borders.
Lack of U.S. Credit History: While alternative credit verification is used, the absence of a long-established FICO score is still considered a risk factor.

To compensate for this perceived risk, lenders use risk-based pricing. This means the interest rate is adjusted upwards. For example, if a conventional 30-year fixed mortgage for a U.S. citizen is at 6.75%, a Foreign National loan might be offered at a rate between 7.75% and 9.5%. (The data, information, or policy mentioned here may vary over time.) The final rate depends heavily on the down payment amount, the property type (investment vs. second home), and the overall strength of your financial profile.

Understanding the Down Payment for Non-United States Buyers

The down payment is one of the most significant differences between a conventional loan and a Foreign National loan. While U.S. buyers can often secure loans with down payments as low as 3-5%, non-U.S. buyers are required to contribute a much larger amount.

Typically, the minimum down payment for a Foreign National loan is 25%, but it is more common for lenders to require 30% to 40%. (The data, information, or policy mentioned here may vary over time.) A larger down payment reduces the lender's risk by increasing your vested interest (equity) in the property from day one. This gives the lender a bigger financial cushion in case of default.

Exterior of a modern home in Houston, representing a real estate investment.

Let's consider a practical example. If you are purchasing an investment property in Houston for $500,000:

A 30% down payment would be $150,000.
A 40% down payment would be $200,000.

In addition to the down payment, you must also have funds for closing costs, which can range from 2% to 5% of the purchase price, and reserves, which are typically 6 to 12 months of mortgage payments (including principal, interest, taxes, and insurance) left in your account after closing. (The data, information, or policy mentioned here may vary over time.)

Securing a Home Loan With an ITIN

An Individual Taxpayer Identification Number (ITIN) is a tax-processing number issued by the Internal Revenue Service (IRS). It is for certain non-resident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN). An ITIN loan is a distinct product from a Foreign National loan and serves a different type of borrower.

Can I Get a Home Loan Using an Individual Taxpayer Identification Number (ITIN)?

Yes, it is possible to get a mortgage using an ITIN. ITIN loan programs are designed for individuals who live and work in the U.S. and have a history of filing U.S. taxes using their ITIN. This is the key difference from a Foreign National loan, which is for buyers who primarily live and earn income outside the U.S.

Not all lenders offer ITIN loans, but specialized mortgage brokers can connect you with portfolio lenders and banks that do. To qualify, you will generally need to provide:

A valid ITIN.
Proof of U.S. tax filings for the last two years.
Alternative credit verification (utility bills, rent history) if you don't have a FICO score.
Proof of stable U.S.-based income.

How ITIN Loans Differ from Traditional Mortgages

ITIN loans function similarly to conventional loans but have some key differences. Like Foreign National loans, they typically require a higher down payment, often in the 15-25% range, and have slightly higher interest rates. (The data, information, or policy mentioned here may vary over time.) However, because the borrower lives and works in the U.S., the perceived risk is often lower than that of a Foreign National loan, resulting in more favorable terms.

How Lenders Verify Your Foreign Income and Assets

The process of verifying foreign income and assets is meticulous. Lenders must ensure all funds are legally sourced and readily accessible. The first step is often translation; any document not in English must be translated by a certified professional service.

For income, underwriters will scrutinize your employment letter and bank statements to confirm regular deposits that match the stated salary. They may also contact your employer directly for verbal verification.

For assets, lenders will review your bank statements to verify you have enough cash for the down payment, closing costs, and required reserves. They will look for:

Seasoned Funds: The money must have been in your account for a certain period, typically 60-90 days, to ensure it is not a last-minute loan from an unverified source. (The data, information, or policy mentioned here may vary over time.)
Source of Large Deposits: Any large, unusual deposits will need to be explained and documented to comply with anti-money laundering regulations.
Asset Location: Some lenders may require the funds to be transferred to a U.S. bank account prior to closing, while others are comfortable with the funds remaining in a foreign institution until the wire transfer is initiated.

Structuring Your Purchase: LLC vs. Personal Name

A common question from international investors is whether to buy a property in their personal name or through a legal entity like a Limited Liability Company (LLC). Both options have distinct advantages and disadvantages.

Buying in Your Personal Name

Pros: The financing process is generally simpler and more straightforward. You may have access to a wider range of lenders and potentially slightly better interest rates because the loan is tied directly to you.
Cons: Your personal assets are exposed. If a legal issue arises with the property (e.g., a tenant lawsuit), your other personal assets could be at risk.

Buying in a Limited Liability Company (LLC)

Pros: The primary benefit is liability protection. The LLC owns the property, which shields your personal assets from business-related debts and lawsuits. This structure also offers potential tax advantages and enhanced privacy. This is a very common strategy for investors purchasing multiple rental properties in Houston.
Cons: Obtaining financing can be more complex. Fewer lenders offer loans to LLCs, especially foreign-owned ones. The interest rates and fees may be higher, and the lender will almost always require a personal guarantee, meaning you are still personally responsible for repaying the loan if the LLC defaults. Navigating Foreign National or ITIN loans in Texas requires expert guidance. If you're ready to explore your options in Houston, Austin, or beyond, working with a mortgage strategist who specializes in these complex scenarios can simplify the process and connect you with the right lenders.

The path to securing a Texas mortgage without a traditional credit history can be complex. If you're ready to explore your options in Houston or Austin, our mortgage strategists specialize in these unique scenarios. Take the first step towards your investment goals and apply now to see what you qualify for.

Author Bio

David Ghazaryan is the expert mortgage strategist and founder behind iQRATE Mortgages. With a mission to fund home loans that traditional banks won't touch, David specializes in helping clients with unique financial situations, including those recovering from foreclosure or bankruptcy. He expertly crafts smart, strategic, and stress-free mortgages by leveraging a vast network of over 100 lenders to secure competitive rates for investors and homebuyers alike. Praised for exceptional customer service, David has helped hundreds of families with a 97% satisfaction rate, guiding them to the mortgage they deserve.