In the U.S., as in many countries, credit scores are essential for lenders to gauge borrowers’ ability to repay debt.
However, certain types of borrowers may not have credit histories, which can make it difficult—if not nearly impossible—to acquire a mortgage loan from traditional institutions.
If you are one of these borrowers, read on to discover your options for getting a mortgage loan without credit in the U.S.
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Why is credit history considered necessary for mortgage loans?
Many countries have some form of a credit score, which is calculated based on an individual’s credit report.
Credit reports reflect details about past and current debts, payment history, and types of credit.
Traditional mortgage lenders use this information to determine the following:
- Eligibility for loan approval
- Loan terms
- Loan type availability
- Mortgage insurance
A higher credit score generally indicates that a borrower makes their debt payments on time and has a lower debt amount, reducing a lender’s risk.
Beyond approval, good credit scores help borrowers access more favorable interest rates, terms, and loan options.
The problem is that many borrowers lack credit histories, making it difficult to get a mortgage loan.
What types of borrowers may not have a credit history?
Borrowers who may not have a credit history include:
- Foreign investors: Nonresident aliens, foreign corporations, and foreign trusts or estates may have yet to establish a credit history in the U.S.
- New immigrants: Individuals who have recently moved to the U.S. from a different country will not have a credit history, even if they had established credit in their home country
- Students or young adults: Young adults often have not had a chance to establish credit yet and will need to take out a credit card or loan to earn their score
- People who have avoided debt: Some people avoid credit cards or loans because they prefer to live debt-free, but this leaves them without a credit history
- People with interrupted credit activity: If individuals go a long time without any credit activity, their history may not be sufficient for lenders
- People who have had their debts fall off: After a certain period, negative credit information like bankruptcies and unpaid loans will fall off a report—if this were the only credit on the report, the individual would be left with no history
If credit history is vital for mortgage lenders, how should these borrowers acquire a loan?
Fortunately, they can seek support from an alternative lending source that doesn’t evaluate credit: hard money lenders.
Can you get a mortgage loan without credit in the U.S.?
The short answer is yes, you can get a mortgage loan without credit in the U.S.
The key to securing a no-credit mortgage is to work with the right team of real estate professionals with the experience you need to support you throughout the process.
This team might include:
- Hard money lender
- Real estate attorney
- Real estate agent
- Tax professional
- Mortgage broker
- Property manager
A hard money lender and real estate attorney are essential members of this team, especially if you are a foreign investor or entering a foreign investment partnership.
Real estate professionals with experience with non-U.S. citizen investment partnerships will ensure you follow the rules of the states you’re investing in and your home country.
Non-U.S. citizens seeking a mortgage loan will have difficulty with traditional institutions such as banks due to their lack of credit history.
On the other hand, hard money lenders are far more concerned about the deal’s merits and leverage their real estate experience and expertise to make lending decisions. Not only leveraging the borrowers real estate experience, but also the value of the property rather than their lack of credit scores.
Options to get a mortgage with no credit
Hard money lenders may allow or require a combination of solutions to help borrowers prove their ability to repay the loan and acquire a mortgage.
These requirements might include:
- An Individual Taxpayer Identification Number (ITIN)
- An LLC corporation
- A limited partnership in the U.S.
- Partnership with a U.S. citizen
- Business plan and exit strategy
- Proof of funds
Foreigners don’t need to be citizens or have a green card to purchase property in the U.S.; they don’t even need to live in the U.S. or plan to move here.
Instead, supplying an ITIN or proof of an LLC corporation or limited partnership in the U.S. is sufficient.
How does hard money lending work?
Hard money lenders fill the gap left behind by other financing institutions.
They understand that not everyone can meet strict bank requirements—but that doesn’t mean they aren’t able to fulfill their debt obligations.
Rather than the “red tape” of traditional institutions, hard money lending is based more on the value of the property and the borrower’s business plan and exit strategy.
Hard money benefits include:
- Fast approval and funding
- Flexible loan terms tailored to the individual’s unique scenario
- Approval based on property value, not credit
- Renovation and development options
- Bridge financing options
- Higher borrowing limits
- Less strict requirements than traditional institutions
- Can help foreign investors build a portfolio
Non-U.S. citizens and other investors who face barriers to traditional financing can succeed with the flexibility of hard money lending.
Work with Marquee Funding Group
Marquee Funding Group is a tight-knit group of experienced hard money lending experts.
We want to build genuine partnerships with our borrowers for years of mutually beneficial real estate deals.
With our team, borrowers have numerous lending options including:
- Owner-occupied and non-owner-occupied
- Residential and commercial properties
- Purchase money, rate-and-term refinance, and cash-out refinance options
- Short-term and long-term options
Submit your loan scenario now to access your personalized options, or call us at (818) 222-5222 to get our quick feedback on your unique lending scenario.