Buying a house in USA as an immigrant is not easy, so whether you’re an immigrant looking to own a property?
or a new resident starting the home search for the first time exploring the USA house market? it can seem like a huge undertaking.
Buying a house in the United States is a major financial decision, whether you are purchasing your first home, relocating to the country, or investing in real estate. The process may appear complicated at first, but understanding each stage can make it considerably easier.
The U.S. home-buying process generally involves determining your budget, arranging financing, searching for a property, making an offer, inspecting the home, completing legal and financial checks, and finally closing the transaction. The exact requirements can vary from one state to another
Use this guide to better understand how to prepare and what to expect when buying a home in the U.S. Just remember, it is no substitute for the expertise of experienced real estate agents, attorneys, mortgage brokers and accountants you’ll want to consult along the way.
Determine How Much You Can Afford
Before searching for houses, establish a realistic budget. The purchase price is only one part of the cost of owning a home. Buyers should also consider expenses such as:
- Down payment
- Mortgage payments
- Property taxes
- Homeowners insurance
- Closing costs
- Homeowners association (HOA) fees, where applicable
- Repairs and maintenance
- Utilities
The U.S. Department of Housing and Urban Development recommends considering your income, credit profile, monthly expenses, available down payment, and prevailing interest rates when determining affordability.
Having a clear budget before shopping can prevent you from committing to a property that becomes difficult to maintain financially.
Hire real estate professionals who specialize in working with foreign buyers
When finding, evaluating and financing real estate, it’s important to not only find licensed agents with local expertise, but ones that can offer advice in navigating complex transactions you might face as an international home buyer.
Assembling a qualified team will take some time ask associates for referrals, do website searches, find locals in real estate directories and check references. In the end, the expertise these professionals bring should help make the experience less stressful.
Your professional team might include:
- Buyer’s agent with CIPS designation: Licensed agents with expertise in foreign real estate transactions have often completed additional coursework to become Certified International Property Specialists (CIPS). Many of these specialized agents are fluent in multiple languages and can also help you navigate the unique rules and regulations of each state. Learn what questions to ask when shopping for an agent that’s right for you: How to Hire a Buyer’s Real Estate Agent.
- Real estate attorney: Some states require buyers to hire a real estate attorney to handle the paperwork, while others only require a buyer’s agent. In some states, you might see “real estate brokers” in addition to agents. Learn the differences between a broker and an agent here.
- Lender working for a global operation: Choose a bank with global services to help you navigate issues like currency exchange rates, multinational taxation and credit established in other countries.
- U.S.-based financial advisor/accountant: While you can find financial advisors through your local bank branch, it might also be handy to find a firm that specializes in working with international clients.
- Tax advisor/attorney: Speak to a tax professional that can advise on what forms you’ll need to provide a lender to indicate proof of work if applicable. You’ll also want to make sure you understand the tax implications and rules related to purchasing a property in the U.S.
Obtain an Individual Taxpayer Identification Number (ITIN)
You need an Individual Taxpayer Identification Number (ITIN) to buy a house in the US. An ITIN is issued by the Internal Revenue Service to people who are not eligible to obtain a social security number. To get an ITIN, you’ll need to contact a Certifying Acceptance Agent (CAA) to fill out Form W-7 — reference this guide for a list of accepted CAAs in the U.S. and internationally.
What you need to buy property in the U.S. as a non-citizen
If you’re using a mortgage lender, you may need to present any or all of the following:
- social security number or ITIN
- valid foreign passport, a U.S. visa, or a driver’s license
- bank statements and, if applicable, financial records from your overseas bank
- proof of reserves
- pay stubs
- credit score
- tax return
Build credit history
To obtain a home loan as a foreigner in the US, you must first establish credit and earn a good credit score. The stronger your credit score, the more favorable the interest rate on your future home loan.
If you don’t already have a U.S. bank and credit card account, prioritize this step and budget approximately three to six months to start building up your credit history. Contact your local bank to learn about various options and tools for building credit from scratch.
Want to learn more about a credit report in the U.S.? Explore how credit scores impact mortgage rates in our Mortgage Learning Center.
In addition to credit score, lenders also typically look at income information to determine loan eligibility, but there are numerous paths to mortgage approval regardless of employment status. A U.S. financial advisor and/or tax professional can provide information on your options and the documentation you’ll need to move forward.
Shop for a mortgage lender — but consult with an advisor first
Shopping for lenders alone can help you get a better rate, but you may want to take the time to first talk to a mortgage advisor that will help you navigate your unique circumstances. Your residency status — your terms of stay and how long you have been in the U.S. — can affect the loans you qualify for and the types of documentation needed. Green card holders, permanent residents, and refugees qualify for the same home loans as a U.S. citizen but may need extra documentation.
Depending on your situation, a larger down payment could improve your financing eligibility — think 30 to 40%. Generally, a 20% down payment is considered ideal when purchasing a home, and some lenders will even offer mortgages with as little as 3% down, so talk to your lender to determine what payment plans are right for you.
Decide Whether You Will Pay Cash or Use a Mortgage
There are two primary ways to finance a home purchase.
A cash purchase means paying the entire purchase price without taking out a mortgage.
A mortgage purchase involves borrowing part of the purchase price from a lender and repaying the loan over time with interest.
If you need financing, begin speaking with lenders before seriously shopping for properties. Compare several offers rather than automatically accepting the first mortgage available.
The Consumer Financial Protection Bureau recommends exploring loan choices, comparing official loan offers and understanding the costs associated with a mortgage before choosing one.
3Get Preapproved for a Mortgage
Mortgage preapproval can give you an idea of how much a lender may be prepared to lend you.
The lender may examine information concerning your income, assets, debts and financial history.
Self-employed buyers can expect lenders to request documentation supporting their income. The CFPB notes that people with irregular or self-employed income may need to provide additional documentation during mortgage underwriting.
Preapproval is particularly useful because you can search for homes within a more realistic price range.
Choose Where You Want to Buy
The United States is a large real estate market, and buying a $400,000 property in one location can be completely different from spending the same amount somewhere else.
Consider factors including:
- Employment and business opportunities
- Schools
- Crime and safety
- Property taxes
- Transportation
- Healthcare
- Climate
- Insurance costs
- Rental demand
- Future development
- Distance from major cities and airports
Investors should additionally investigate expected rent, vacancy levels, operating expenses and local landlord regulations.
Avoid choosing a property simply because the advertised price appears inexpensive.
Find a Suitable Property
Once you know your location and budget, you can begin searching for properties.
A real estate agent can help identify homes, arrange viewings, obtain information about properties and assist with preparing an offer.
When evaluating a property, look beyond its appearance.
Consider the condition of the roof, electrical and plumbing systems, heating and cooling equipment, foundation and other major components. Also research the surrounding neighborhood and comparable property values.
Make an Offer
Finding the right house does not automatically mean paying its advertised price.
You normally submit a formal offer stating how much you are prepared to pay and the proposed terms of the purchase.
Depending on the transaction, an offer can contain contingencies relating to matters such as financing and inspection.
The seller can accept the offer, reject it or make a counteroffer.
Once both sides reach an agreement and execute the appropriate contract, the transaction moves toward closing.
Arrange a Professional Home Inspection
A home can look excellent while still having expensive problems.
That is why an independent home inspection can be an important part of the purchasing process.
HUD specifically includes obtaining a home inspection as one of the major steps in buying a home.
Depending on the inspection results and your contract, significant problems may lead to further negotiations or other available options.
Complete the Mortgage Process
If you are financing the purchase, your lender will continue underwriting the loan.
You may need to provide additional financial documents and respond to requests from the lender.
The lender will also typically require certain steps to be completed before releasing the mortgage funds.
Keep your finances relatively stable during this period. Taking on significant new debt while your mortgage is being processed can complicate the transaction.
Complete the Title and Legal Checks
Before purchasing a house, you need confidence that ownership can legally be transferred to you and that relevant title issues have been addressed.
Depending on the state and transaction, a title company, escrow company, settlement agent or attorney may be involved.
Title insurance may also be purchased to protect against certain title-related problems.
The CFPB recommends shopping for title insurance and other necessary closing services during the closing process.
Review Your Closing Costs and Documents
Closing is the final stage of purchasing the property.
For many mortgage transactions, buyers receive a Closing Disclosure detailing the mortgage terms and closing expenses.
The CFPB states that borrowers generally receive their Closing Disclosure at least three business days before closing, giving them an opportunity to review the numbers and compare the document with their earlier Loan Estimate.
Review everything carefully rather than signing documents you do not understand.
12. Complete the Closing
At closing, the necessary documents are signed and funds are transferred according to the transaction.
Important documents can include the mortgage or deed of trust, promissory note, Closing Disclosure and deed.
The deed is the legal document transferring ownership of the property to the buyer. After the transaction is completed, the appropriate documents are generally recorded with the relevant local government office.
You are now the property’s owner.
FREQUENTLY ASKED QUESTIONS AND ANSWERS
Can Foreigners Buy Houses in the United States?
International buyers should obtain professional advice concerning immigration, financing, taxation and ownership structure before purchasing.
Foreign ownership can create tax considerations that differ from those faced by U.S. residents. One particularly important federal law is the Foreign Investment in Real Property Tax Act (FIRPTA).
FIRPTA generally imposes U.S. tax withholding when a foreign person disposes of certain U.S. real-property interests. The IRS states that the buyer can have withholding responsibilities when purchasing U.S. real property from a foreign seller, although exceptions and special rules exist.
International buyers should therefore consider consulting a U.S. real estate attorney and qualified tax professional before completing a significant purchase.
How Long Does Buying a House Take?
There is no universal timeframe.
A cash transaction may sometimes progress faster because there is no mortgage underwriting process. A financed transaction can require additional time for underwriting, inspection, appraisal, insurance, title work and closing preparations.
Unexpected inspection findings, financing issues or title problems can also delay closing.
Common Mistakes Homebuyers Should Avoid
One of the biggest mistakes is concentrating exclusively on the purchase price.
A $500,000 house does not simply cost $500,000. Over time, the owner may also pay mortgage interest, taxes, insurance, maintenance, HOA fees and other expenses.
Other mistakes include skipping an inspection, failing to compare mortgage offers, ignoring the neighborhood, underestimating repairs and signing closing documents without carefully reviewing them.
Buyers should also be extremely careful when transferring closing funds. The CFPB warns that criminals target homebuyers with mortgage-closing scams, sometimes attempting to redirect large wire transfers shortly before closing.
Conclusion
Buying a house in the USA becomes much easier when you approach it as a structured process:
The most important principle is not simply to buy the most expensive property you can afford. A successful purchase is one that fits your finances, location needs and long-term plans while leaving enough room for the ongoing costs of homeownership.
For buyers unfamiliar with the U.S. market, taking the time to understand the process and using qualified professionals where appropriate an prevent expensive mistakes and make the path to owning a home in the United States considerably smoother