10 Easy Steps Tourist Can Buy a House in the USA (2024)

The answer to this question is a big YES! It is common for tourists to buy a house in the USA. As per theNAR report, 14% of the total homes sold last year were purchased by foreigners. So, if you’re a tourist looking to buy a house in the United States, the process of purchasing property as a foreigner is similar to that of anyone living there. However, it would be best to stay prepared to jump through a few extra hoops to get the process started. But once you’ve done that, you should be able to find and purchase the perfect home for your needs. Scroll down to learn more about how a tourist can buy a house in the USA!

Documents Required to Buy a House Tourist Visa

To buy property on a tourist visa (B1/B2) buyer must submit a few extra documents that may establish the identity and intent of the buyer.

• First, you’ll need a valid foreign passport. This is the most crucial document that you’ll need, as it will be used to prove your identity and citizenship status.
• You’ll also need a copy of your visa and any other immigration documents you might have.
• Next, you’ll need to have proof of financial stability. This can be in bank statements, pay stubs or tax returns. Anything that shows you have the income and assets necessary to buy a house.
• The lender would also want to see proof of employment, so be sure to have your employment authorization document in place.
• A good credit score is also crucial for getting the loan approved. However, given that you are a tourist, it is unlikely that you would have a U.S credit history. HomeAbroad would be happy to help you out of this limitation. At HomeAbroad, we have a vast network of mortgage lenders who can finance your home even if you lack U.S credit.

• Names and addresses of the employers for the past two years.
• Two months of bank statements. All pages should be initialed and dated by the bank representative.
• Non-U.S. driver’s license or Government-issued ID card from your home country

These documents will help get the ball rolling. Once you have all the documents in place, it is time to consider the best-suited loan option.

Loan Options for Buying House on Tourist Visa

If you are looking for a loan to buy property on a B1/B2 visa, the following are the options that you may choose.

DSCR Loans

DSCR loans are available to non-resident buyers looking to purchase a rental property in the United States for foreign investment. DSCR loans are designed for investors with no U.S. credit history and wish to skip the long wait and extensive paperwork related to income and employment verification.

An estimate of the cash flow generated from the investment property is the prime factor for having this loan approved. It usually requires a down payment of 20% of the purchase price.

Unlike conventional loans, a DSCR loan gives you the levy of negotiating terms and conditions with the lender. It is often considered one of the best loan options for foreign real estate investors.

HomeAbroad has a vast network of experienced DSCR lenders who can help you buy an investment home in America easily and quickly. Reach out to HomeAbroad and get in touch with DSCR lenders for free!

Freddie Mac Loans

These loans that are government-backed loans. Freddie Mac loans are available to both U.S. citizens and non-US citizens. However, as a non-resident buyer, it may not be your best bet, because it requires information related to immigration status, bank statements, proof of net income, tax return, details of bank account, individual taxpayer identification number, and employment authorization document. It can be very challenging for a tourist to meet these requirements in a profitable time frame.

Private Mortgage

Another option is to work with a private lender who specializes in working with international clients. These lenders typically have more flexible requirements than federal banks and may be willing to work with you even if you don’t have a U.S. credit history. However, private loans usually come with higher interest rates than conventional mortgages, so you’ll need to be sure that you can afford the monthly payments before you apply.

No Credit Check Loan

Tourists who do not wish to indulge in credit checks can apply for a no-credit-check loan. Approval of this loan is based on the property’s value and ability to generate income instead of your creditworthiness. No credit check loans can save you a lot of time as there is no need for verification of employment, bank statements, or tax returns. However, lenders would expect you to have enough cash reserves and collaterals to ensure timely monthly repayments.

Foreign National Loan

This is a specialized loan product for foreign buyers. The requirements of this loan are similar to the other government-backed mortgages, except that it does not require the borrower to have a U.S credit history. However, the process is time taking and tedious, making it challenging for a tourist to get this loan approved in the speculated time frame of a tourist visa.

Step-By-Step Procedure for Buying House on a Tourist Visa

Now that you know the various loan options let’s move a step forward and see the procedure involved in getting the finances for owning a home.

Step 1: Find a CIPS Agent

The first step is to find a CIPS real estate agent willing to work with you. Not all agents are familiar with the process of buying property for buyers on a B1/B2 visa. So it’s essential to find one who is. HomeAbroad has a huge network of CIPS agents who have extensive experience in overseas real estate and international real estate transactions. Reach out to HomeAbroad and connect with them for free!

Step 2: Find the Property

The next step is to start looking for properties that fit your budget and needs. When you find a property you’re interested in, your agent will help you negotiate a purchase price and terms that are agreeable to you and the seller.

Here is the list of top states where foreign investors prefer buying homes.

List of top states where Foreigners buy property in the USA:

Once you’ve found a property and negotiated a price, the next step is to find the right lender.

Step 3: Find the Right Lender

There are a few things to keep in mind when you’re looking for a lender:

1. You’ll need to find a lender who is familiar with the process of lending to foreign buyers.
2. You’ll need to ensure that the loan interest rate is within your budget.
3. You’ll need to ensure that the loan terms are agreeable to you and the lender.

Reach out to HomeAbroad to get in touch with reliable and experienced mortgage lenders for free!

Step 4: Have an Overview of the Tax Rules and Implication

The U.S. government does not levy any extra taxes on foreign buyers who intend to use their property as their primary residence. Like U.S. citizens, foreign buyers only have to pay the property tax. However, if you purchase property to generate income, you will owe taxes on gross rental income but not on the appreciation of the property’s value.

Non-Us citizens must have a Taxpayer Identification Number (ITIN) to purchase property in the USA. A real estate professional who is well-versed in foreign real estate transactions can guide you through ITIN.

Step 5: Search Your Home with a Real Estate Professional

A professional real estate agent can help you find the right home, in the right neighborhood, at the right price. They can also help you negotiate a purchase price and terms agreeable to you and the seller. And they can help you find a lender who is familiar with the process of lending to foreign buyers. Finally, even when you return to your home country, your agent can shop for houses on your behalf and arrange virtual home tours and meet with the sellers.

Step 6: Get Pre-Approved for a Loan

Getting pre-approved will give you an idea of how much money you’ll be able to borrow, and it will also help your agent know what price range to look in when they’re searching for properties on your behalf. Also, once have an estimate of the minimum and maximum loan amount that can be granted, you can plan your repayment strategy better.

Step 7: Make an Offer

Once you’ve found the right property and pre-approved for a loan, the next step is to make an offer. Your agent will help you negotiate a purchase price.

Step 8: Get a Home Inspection

Once your offer has been accepted, the next step is to get a home inspection. This is an important step in the home-buying process, as it will help you identify any potential problems with the property that you may not have been aware of.

Step 9: Underwriting

Once you’ve completed the home inspection and your offer has been accepted, the next step is to begin the underwriting process. This is where the lender will verify your income, employment, and credit history. They will also order a home appraisal to ensure that the property is worth the purchase price.

Step 10: Closing

The final step in the process is to close the property. This is when the loan is funded, and the property title is transferred to you. Once the closing is complete, you’ll be the proud owner of your new home!

HomeAbroad can help you through each step of buying a house in the U.S. We have a vast network of experienced CIPS real estate agents and DSCR lenders who can help you at every step of the home-buying process.

Now that you are aware of the documents required, loan options, and the process of buying a home in America as a tourist. Let’s move ahead and understand the tax implications that are levied on foreign real estate investors, as it will give you an overall perspective of the federal tax obligations that will come along with the purchase of the property.

Tax Implications of Buying a House In the USA as a Tourist

There are a few tax implications to be aware of when you’re buying property as a tourist.

• You’ll need to pay capital gains tax on any profits you make when selling the property.
• You will be subjected to annual property taxes.
• You must note that income from real estate property in the U.S. owned by a foreigner, is taxed at a 30% rate if it is not effectively connected with a U.S. business or trade.
• You’ll need to pay taxes on the rental income if you’re renting out the property.
• Also, the estate tax is charged based on the value of your property, and currently, themedian property tax ratefalls between 0.2-1.9%.

It’s important to consult with a tax advisor to ensure you’re aware of all the tax implications of buying property as a foreigner in the U.S.

Conclusion

Buying a house in America as a tourist is a great way to invest in real estate. However, before you begin, it’s important to be aware of the process and its implications. With the help of an experienced CIPS agent and right lender, you can navigate the process smoothly and make your dream of owning a home in America a reality. Reach out to HomeAbroad and get in touch with the best agents and lenders for free!

Frequently Asked Questions