Non-U.S. citizens looking to buy property in the U.S. aren’t limited to purchasing pre-owned, fully built homes. With the right type of lender, foreigners can get new construction home loans to execute their real estate goals.
Who is the “right lender” in this situation? A hard money lender. These types of lenders don’t require the strict red tape of banks or other financial institutions, and instead will help a foreigner acquire a loan based on the merits of the deal.
To get started, read our tips for foreigners getting new construction home loans, and how to find a trustworthy hard money lender with the right experience.
Considerations for foreigners getting a new construction home loan
First things first, when any non-U.S. citizen wants to purchase property in the U.S., they need to have one of the following:
- An Individual Taxpayer Identification Number (ITIN)
- An LLC corporation
- A limited partnership in the U.S.
Foreigners don’t need to be citizens, live in the U.S., or plan to live in the U.S to purchase property. They don’t even need to have a green card. However, foreign buyers face unique challenges of their own.
These challenges don’t mean the process is going to be difficult, but it does mean that extra considerations must be addressed prior to entering the process. This will ensure everything goes as smoothly as possible.
What does a new construction loan cover?
A new construction loan covers the costs of building a home. This typically includes:
- Purchasing the land
- Taking out permits
- Drafting building plans
Lenders will be interested in the budget and estimated timeline for your project prior to lending you the funds, so there’s a lot of initial planning and research involved.
New construction homes may start with purchasing an empty plot of land, but they also may be purchased completely built or semi-built.
Part of your initial planning and research needs to involve putting together your real estate team, which will offer support and guidance during this phase.
Who should be on my real estate team?
Your real estate team needs to be filled with professionals who are well versed in the type of loan you need, the property type, and the rules and regulations not only from the state you are purchasing in, but your home country as well.
Consider hiring these professionals to ensure your real estate goals are successful and properly executed:
- Real estate attorney
- Real estate agent
- Hard money lender
- Tax professional
- Mortgage broker
Why do you need a tax professional? Because if you fail to file your taxes, or file them incorrectly, you could owe the IRS a lot of money. A tax professional will ensure you are filing accurately for your unique situation.
You also need to find out if there are any tax treaties between the U.S. and your home country, which is why it’s important for your expert team to have knowledge and experience with your home country.
What’s your loan scenario?
Tips for constructing a new home
Non-citizens constructing a new home in the U.S. must be fully aware of their options, limitations, and opportunities. The following tips will help you get started.
1. Find a hard money lender
Foreigners purchasing property in the U.S. will find it extremely difficult, and sometimes impossible, to acquire a loan through traditional lenders. Even for U.S. citizens, the strict requirements can make it a lengthy and challenging process.
Hard money lenders are the best choice for foreign buyers because they are focused on the property you want to purchase above your ability to repay the loan.
These lenders use their deep understanding of the industry to make deals based on common sense, and the relationship-building opportunities.
2. Do your research — and understand the choices you are making
There’s a lot of moving pieces that come with new construction loans.
Your team of professionals will help guide you through what can be a confusing process, but in order to make the right decisions and structure your investments properly, you need to understand the reasons behind them.
Consider which options fit with your current situation, and the overall purpose of the build. It’s one thing to be moving to the U.S. to live in your home, but these other choices will create different considerations to discuss with your team:
- Vacation home
- Investment property
- Business property
You might choose to rent out the property when you’re not there, or simply use the property to add to your investment portfolio.
3. It’s all about location
Regardless of the property type, you’re going to want to spend a lot of time researching the right location.
For example, California is an investment hotspot due to the many popular cities, beaches, and tourist attractions — all thanks to the state’s pleasant, year-round climate and positive multi-industry job outlook.
But even within a state that’s rich with opportunity, you’ll need to dig into the perfect spot for your unique purposes.
How to find a hard money lender for your new construction loan
Now that you have an overview of the considerations and starting points for your new construction home, you can confidently take the first steps.
In California, Marquee Funding Group is the ethical standard of the hard money loan industry.
This full-service mortgage banking firm funds loans that traditional lenders can’t or won’t, backed by years of industry experience and a transparent, respectful approach.
Marquee offers in-house underwriting, processing, and servicing, plus:
- Same-day approvals
- Closings in seven to 10 days
- Loan amounts from $50,000 to $20 million
- Loan-to-Value up to 70% (no U.S. credit required)