Real Estate Financing in the USA for Foreigners: How It Works

The possibility of financing a property in the United States without being an American resident is a recurring question among Brazilians planning to invest abroad. The answer is yes – foreigners can obtain real estate credit in the US, although the process involves specific requirements that differ significantly from conventional financing for citizens and residents. The American real estate market continues to attract international investors due to its legal stability, transaction transparency, and the potential for appreciation in strategic regions. Understanding the rules of the game before taking the first step is essential to avoid surprises and take advantage of the best available conditions.

Investing in Real Estate in the US

The United States real estate market is one of the most solid in the world. The combination of legal security, liquidity, and a diversity of regions with distinct economic profiles makes it an attractive destination for asset diversification. States like Florida, Texas, and California have their own dynamics of demand and appreciation, catering to different investor profiles.

For Brazilians, investing in real estate in the US represents a dollarization of assets strategy – a natural protection against the volatility of the real. In addition to the potential for appreciation, properties can generate passive income through rent, especially in tourist and relocation markets such as Orlando, Miami, and Tampa. The transparency of the American market, with public transaction data and price history, allows for well-founded investment decisions with less information asymmetry.

Differences for Non-Residents

The main barrier for foreigners in obtaining real estate financing in the US is the absence of a local credit history. The US banking system uses the credit score – a score based on consumer credit behavior – as a central analysis criterion. Since non-residents do not have this history, financial institutions apply alternative criteria.

• Higher down payment: most banks require between 25% and 35% of the property value as a down payment for foreigners, compared to the typical 3% to 20% for residents with a good credit score
• Strict income verification: detailed analysis of income sources in the country of origin, with translated documentation and, in some cases, certified by an accountant
• Financial reserves: requirement to prove sufficient resources to cover between 6 and 12 months of installments in addition to the down payment
• Different interest rates: rates for non-residents are usually slightly higher than those offered to buyers with an established credit score, generally between 1% and 2% above conventional rates

These conditions reflect the risk perceived by financial institutions when lending to profiles without a local credit history. Despite these additional requirements, real estate financing for foreigners is a well-established and widely accessible practice in the United States.

Financing Options

Foreigners seeking real estate credit in the United States find two main options, each with its own characteristics that cater to different buyer profiles.

Portfolio Loans are loans held in the bank’s own portfolio, not sold on the secondary market. Since they do not need to meet the criteria of government agencies such as Fannie Mae and Freddie Mac, these loans offer greater flexibility for international profiles. Banks that work with portfolio loans can customize terms, deadlines, and documentation requirements.

Regional banks and credit unions in regions with a strong presence of foreign investors – such as South Florida – often offer specific programs for international buyers. These institutions understand the Brazilian investor profile and may accept alternative documentation to the traditional credit score. Some international banks with operations in the US also offer real estate credit lines to their existing clients, using the previous banking relationship as a basis for analysis.

Required Documentation

Proper preparation of documents is one of the determining factors for financing approval. Organizing this documentation in advance significantly speeds up the process and avoids unnecessary delays.

• Valid passport with current US visa
• ITIN (Individual Taxpayer Identification Number) – tax number issued by the IRS for people without a Social Security Number, essential for real estate transactions and tax returns in the US
• Bank statements from the last 12 to 24 months from the country of origin
• Income tax returns from the country of tax residence
• Proof of assets and financial reserves
• Bank reference letter issued by the financial institution in the country of origin
• Updated proof of address

All documents in a language other than English must be translated, and some banks require a certified translation. Obtaining the ITIN, in particular, should be arranged in advance, as the process with the IRS can take several weeks.

Purchase Steps

The process of acquiring a financed property in the US follows a well-defined sequence that, from start to finish, usually takes between 30 and 60 days.

1. Pre-approval: the buyer submits their financial documentation to the bank and receives a letter indicating the maximum approved financing amount. This letter is essential for negotiating with sellers and demonstrating seriousness in the offer.
2. Search and offer: with pre-approval in hand, the buyer identifies properties within their budget and makes a formal offer through a licensed real estate agent in the state.
3. Contract and deposit: once the offer is accepted, the parties sign the purchase and sale contract, and the buyer deposits an earnest money, usually between 1% and 3% of the property value.
4. Inspection and appraisal: a technical inspection identifies any structural problems, while the bank conducts an independent appraisal to confirm the market value.
5. Closing: the final stage involves signing the financing documents, paying the closing costs (which range between 2% and 5% of the value), and the official transfer of ownership.

Tax and Legal Aspects

Foreigners who acquire properties in the United States must be aware of specific tax obligations. Rental income is subject to IRS taxation, and the sale of the property may trigger the mandatory withholding provided by FIRPTA (Foreign Investment in Real Property Tax Act), which corresponds to 15% of the gross sale price for non-residents.

Obtaining the ITIN before the purchase is essential not only for financing but also for fulfilling annual tax obligations. It is advisable to have an accountant specialized in international taxation to ensure compliance with both the IRS and the Brazilian Federal Revenue, since Brazil taxes income of tax residents earned abroad.

Most Sought-After Regions

Among the regions that attract the most Brazilian investors, South Florida stands out. Miami, Orlando, and the metropolitan area concentrate a large part of real estate transactions involving Brazilian buyers, driven by factors such as geographic proximity, the presence of an established Brazilian community, absence of state income tax, and strong demand for vacation rentals.

Texas and southeastern US states have also been gaining relevance, with more affordable prices and expanding job markets that sustain demand for residential properties. The choice of region should take into account not only the potential for appreciation but also maintenance costs, property taxes (which vary significantly between states and counties), and the local supply and demand dynamics.

Victoria Harper

Editor-in-Chief

Meet the author

Leading journalism and editorial content at Visto n’ Visa, Victoria helps make immigration topics clear, trustworthy, and easy to understand. Her focus is on delivering useful, human, and relevant content for people exploring new paths abroad.