I thought long and hard about if I should write on this subject. Certainly, our national stage has combusted with issues that hit oh so very close to home. So many of our institutions and practices were dismantled so quickly that we can barely catch up. Yet my place as author is to present information that is relevant to our community, so here goes: How does immigration status impact financing a home?
As you may know, every investor has their own set of guidelines. Fannie Mae, Freddie Mac, Ginnie Mae, banks, hedge funds, credit unions, conglomerates — they each have nuances, opportunities, restrictions, and terms that determine one’s access to funding. You may also know that the first three are governed under the Federal Housing Finance Agency (FHFA). Thus, they have a general set of guidelines to which most lenders conform. The latter listed are not required to conform to these guidelines (a k a “nonconforming” loans), even if they have to abide by other federal regulations, such as the Truth in Lending Act, and Dodd–Frank Wall Street Reform & Consumer Protection Act. A bit nuanced, right? And so, what does that mean if you are a borrower who wasn’t born in the U.S.? Well, let’s dig in.
Fannie Mae & Freddie Mac — which both allow for loans up to the amount of $913,100 in Santa Barbara County, and $1,017,750 in Ventura County — essentially take the same stance. “A non-U.S. citizen who is lawfully residing in the United States as a permanent or nonpermanent resident alien is eligible for a Mortgage on the same terms as a U.S. citizen. A Mortgage to a non-U.S. citizen who has no lawful residency status in the United States is not eligible for sale to Freddie Mac.” They leave it up to the lender (a k a underwriters) the documentation needed to determine this. Visas that are typically accepted are those in the A-1 through A-3, E-1 though E-3, G-1 though G-5, and H1 classes. H2 and many others are either ineligible or have very specific parameters to be permitted.
Ginnie Mae has oversight over “government” loans, which are primarily FHA or VA in our area. Because VA loans requirements primary focus on military service, there is no focus on visa requirements. FHA, however, had a big change this past year: As of May 25, 2024, non-permanent residents are no longer eligible for FHA financing. This means individuals with temporary legal status, such as a H-1B or “DACA,” cannot get new FHA financing.
Sound restrictive? It can be, and yet there’s also many “foreign national” programs available. These programs exist mainly in the second home space (think snowbirds from Canada), though can also be for investment properties. With lower loan-to-value allowances, these programs do require the income and assets to be verified and be wired through a U.S. Banking Institution prior to closing — one cannot simply send funds overseas directly to the title or escrow company.
But what if you already own your home? Well, if you are look to refinance, then you are subject to the current terms on the market. We have clients that are in process now, and we must close them by the end of the month for their FHA loan eligibility.
Though if you are not looking to make any changes to your financing, AND you obtained your loan lawfully at the time of closing, then nothing should be in jeopardy. They can’t “just take” your property away from you. For any loan, if fraud was committed, then the lender has recourse for a much longer period of time. Once, a client said to me, “Oh, wait, don’t use that Social Security number, try this one instead.” Another time, a client lied about their citizenship and visa status, which we only found out about in a post-closing audit, and they actually had to sell the house because the loan itself was fraudulently obtained. That wasn’t fun.
The fact is that policy is the most impactful thing when it comes to opportunities in the housing market. While ads would have you focus on rates — it’s how we can get access to those rates and terms that are most important. As our local, state, and national policies and politics continue to evolve, expect guidelines and regulations to do so as well. Ask questions, be forthright, and let’s cooperate to achieve the American Dream together.
