1. Definition of Non-Permanent Resident Aliens and Foreign Nationals
2. The Financing Requirements
3. Tax Return and Withholding
Definition of Non-Permanent Resident Aliens and Foreign Nationals
Non-Permanent Resident Aliens are foreigners who reside in the United States on a temporary basis and have documentation of a government issues work visa (H-1s), and could be purchasing a primary home while working in the U.S.
Foreign Nationals, known as International Investors, are foreign citizens who are resident or nonresident alien visiting the United States on a temporary visa, and would only be purchasing a second home as an investment.
The Financing Requirements
The requirements for buying a residential property in California are different between Foreign Nationals and Non-Permanent Resident Aliens.
For Non-Permanent Resident Aliens, such as H-1 Visa, who want to buy a primary residence in California, the basic requirements are:
– 2 years residence in the U.S.
– 2 years credit history rating in the U.S.
– 2 years income/employment in the U.S.
– A minimum of 4 tradelines on credit report (items of credit, such as credit card, student loan, car loan, phone bill, water bill, etc).
– At least 20% down payment.
For Foreign Nationals (The International Investors) who want to buy a Residential Property in California as a second home, buying all cash is ideal but it is also possible to qualify for a loan with stricter terms.
For instance, you may be required to give 25% or more for down payment, show one year's worth of liquidity reserves, and there will be a loan value limit. During the purchase transaction, many lenders require funds equivalent to closing costs plus six to twelve months of PITI (Principle Interest Taxes and Insurance) payments to be placed in a US bank account. You will need to deposit the PITI reserves and your down payment 2 months prior to loan approval in order for the lender to verify that the funds have been seasoned.
However, we suggest to Foreign Nationals that they choose to start an account in their home country with a large international bank, preferably with branches in California to avoid some issues such as US banks having problems accepting and translating or exchanging checks from International Accounts.
Several banks have International branches in California such as Bank of America, HSBC, or Citibank. When the Foreign National is in the loan process, monies can easily be transferred and verified at these banks. They may even create U.S. based accounts for automatic monthly payment options. High Net Worth Clients can also use the Private Wealth Management departments of these three International banks to get their accounts set up and verified.
Tax Return and Withholding
When Non-Permanent Resident Aliens and Foreign Nationals buy or sell properties in the United State are subject to withhold certain % of tax. Please talk to your accountant or lawyer for more details.