-
ITIN LOANS
I have a client who has been in the United States for 20 years and runs a successful construction company but don’t have a green card. Can we do ITIN loans or what other loan program can this person qualify for. His son can buy it as an investment property. His son has a green card. Can his son buy it as an investment property on a hard money loan? Or how about a DSCR LOAN?
-
2 Replies
-
If your client has been living in the United States for 20 years and owns a successful construction company but doesn’tdon’t possess a green card, there are still several mortgage loan possibilities:
ITIN Loans (Individual Taxpayer Identification Number):
Eligibility:
- ITIN loans can be obtained by borrowers who do not have Social Security Numbers (SSNs).
- However, borrowers have Individual Taxpayer Identification Numbers (ITIN).
- ITIN loans were created for non-citizens with good incomes who can show the ability to pay back.
Requirements:
Lenders may require higher down payments, often 20% or more. Proof of steady earnings, clean credit history, or alternate credit sources may also be necessary.
Interest Rates:
- These types of mortgages usually have higher interest rates than conventional ones.
- ITIN loans have higher rates because lenders think they carry greater risks.
Hard Money Loans:
Eligibility:
- Hard money loans are asset-based loans.
- Hard money loans are used mainly for investment properties.
- Or short-term funding, where the property’s value is considered more important than the borrower’s credit history or income level.
Requirements:
- The property secures the loan, so loan-to-value (LTV) ratios should be between 65% and 75%.
- His son has a green card, which could enable him to qualify for a hard money loan as an investor buying it as such.
Interest Rates:
- They tend to attract higher interest rates ranging from 8 to 15%.
- Hard money loans have shorter terms, usually lasting one to three years.
Debt Service Coverage Ratio Loans (DSCR):
Eligibility:
- These are perfect options when buying rental homes that you want them to pay off themselves through rents collected.
- There is no need to consider much about your income since tenants’
Requirements:
- One should consider if lenders expect a minimum debt service coverage ratio to be at least one point two to five times the amounts applied during the month based on net operating income.
- Yes, more weight will shift towards the property’s cash flow capability rather than the borrower’s credit score or earnings.
Interest Rates:
- Interest Rates vary from lender to lender.
- Rates depend on property cash flow.
- Mortgage rates are generally very competitive with other non-QM loans.
Bank Statement Loans:
Eligibility Requirements of Bank Statement Loans:
- Self-employed borrowers who can’t provide traditional income documentation such as W-2s or tax returns should consider bank statement loans.
- Lenders will assess 12-24 months’ worth of bank statements to determine income.
Requirements:
- A larger down payment (10-30%) is often required.
- Bank statement loans, good credit, and solid bank statement history.
Interest Rates on Bank Statement Mortgage Loans:
- Bank statement mortgages have higher interest rates than conventional ones.
- Bank statement mortgage loans have higher rates because they rely on alternative income verification methods.
Foreign National Mortgage Loans:
Eligibility of Foreign National Mortgages:
- Mortgage options are still available for foreign nationals without green cards or US citizenship.
- Foreign National Loans were created for people who do not reside permanently in America but want to invest here.
Requirements:
- Foreign National Loans require larger down payments (30-50%).
- Require proof of income.
- Sometimes, a US bank account may also be needed.
- Some lenders might also ask for a valid passport plus a visa before approving a loan application form.
Interest Rates:
- Typically higher than normal loans.
- Thus, terms depend on the lender chosen while applying for them differ, too.
Son Being Buyer: Suppose your client has a son investing in the property and holding a green card. In that case, he might qualify for various types of loans, including hard money, DSCR, or bank statements based on the rental potential of the property and his financial position, among other factors.
Gustan Cho Associates specializes in non-traditional alternative financing. Therefore, these options may work well for your client’s situation. In other words, depending on the specifics of their financials and what they’re trying to achieve, an ITIN loan, hard money loan, or any other non-QM type might be worth looking into.
-
Based on your scenario, your client and his son have several options. Here are the different possibilities:
ITIN Loans:
Suppose someone doesn’t have a social security number but files taxes using an ITIN (Individual Taxpayer Identification Number). In that case, they can avail of ITIN loans. This might be a good choice if your client has filed with an ITIN.
However, interest rates tend to be higher on ITIN mortgage loans. ITIN loans have higher requirements, which are stricter than those for other types of loans.
Investment Property Loan for the Son:
Since he has a green card, the son qualifies for more conventional financing options. As such, he could buy the property as an investment if he is eligible based on income and credit.
Hard Money Loan:
Another option is for the son to purchase it as an investment property. With hard money loans, short-term funds are lent out primarily based on collateral value, unlike traditional bank lending requirements, which focus heavily on borrower creditworthiness. These loans also often come with higher interest rates and fees but are generally easier to qualify for.
DSCR (Debt Service Coverage Ratio) Loan:
This may work well for him if rental income is generated from this property. DSCR loans look at whether or not there’s enough income coming in from a rental unit(s) rather than personal earnings when determining qualification amounts. Here, what matters most is that one demonstrates how much they expect to earn in rent against their monthly mortgage payment and other costs associated with owning such real estate investments.
Bank Statement Loans:
Your client or his son might want to consider bank statement loan programs if either is self-employed or receives substantial cash flows into business accounts under their control during any 12 months. Bank statement mortgage loan products use personal bank statements instead of tax returns to verify income reported by borrowers. Borrowers may have lower levels due to write-offs against gross receipts from self-employment activities carried out each month over time.
Foreign National Loans:
Despite having been here for two decades already, lenders may still treat your client as though she were an alien with no green card. If so, foreign national loan products are available for people like her who lack US citizenship status or SSNs but have valid ITINs.
Regarding Gustan Cho Associates:
Considering their specialization in nontraditional and alternative financing options. Gustan Cho Associates could be a great resource during this process by providing information about such programs and potentially connecting clients with lenders who offer unique products that match their needs, given their current situation.
Recommendations:
If he has been filing taxes with an ITIN number, we should look into ITIN loan options for your client. The son should purchase the property as an investment, using a DSCR loan if it can generate rental income. If either of them has strong cash flow in their business accounts, then bank statement loans might work for you guys. You should consult specialists within alternative financings, such as Gustan Cho Associates, so that all possible avenues can be explored.
Consider seeking legal advice to ensure compliance with relevant laws and regulations, especially considering his immigration status. Remember that each option will come with different requirements, benefits, and drawbacks, so take time to compare rates/terms before making any decision.