Moving to a different country can be financially strenuous.
Moving costs, flights and everything else that comes along with it can leave you feeling stretched. When US residents feel the financial pinch, they can simply take out a loan to pay for extra expenses. As a non US citizen, can you do the same?
Even though you don’t have access to all of the financial benefits that come with being a US citizen or resident, you are able to get a loan for personal use, for business use, to buy a home and to pay for your studies. Though it may be more challenging for nonresidents, there’s no reason for you to give up on the American dream.
Can I get a loan as a nonresident?
The simple answer: yes! For lawful permanent and nonpermanent residents, applying for a loan is the same process as for citizens. There are no higher costs or fees, though interest rates may vary.
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Are there restrictions for nonresidents?
Like most options for nonresidents of any country, there are restrictions — including for loans.
- If you are a nonresident who will be in the US for a limited time, approval for a loan may be hard.
- If you are a foreign national or have diplomatic immunity, it’s much more difficult to get a mortgage because you are not subject to US law. This leaves lenders unprotected should you default on the loan.
What about my credit history?
For nonresidents to get a loan, a two-year credit history and valid credit score within the United States ideal. That’s a difficult requirement for nonresidents. But depending on the lender, there are ways you can still get a loan.
- Assemble a credit report with three nontraditional credit accounts — for example, a rental, utility or life insurance bill.
- Obtain your credit history from a foreign independent credit reporting agency.
- Get written verification from foreign creditors to establish a credit history.
Getting your paperwork together is only the first step in getting a loan. If you are emigrating from your home country to the US, you will need to convert your existing credit into US credit in order to apply for any kind of loan.
How to get nontraditional credit references
For many nonresidents, it may be possible to do a nontraditional credit check. This could help you get a loan without a credit score. You will need sufficient nontraditional credit references, and your credit accounts must be free of late payments, collections or foreclosure. Nontraditional credit references can include:
- Your rental history
- A history of payments for such utility bills as gas, electric, water or cable TV
- Non-payroll-deducted medical, life, auto or renters insurance
- School tuition
You should gather at least three nontraditional credit references, each showing 12 months of on-time payments.
Can I get a personal loan?
When applying for a personal loan in the US, you’ll quickly realize that they are not designed for nonresidents. The good news is that you are still eligible to apply for personal loans that include mortgages and auto loans. There will be plenty of paperwork, so your patience is required.
What do I need to apply for a personal loan?
If you are a nonresident, required paperwork depends on the type of loan you’re applying for. Loans are only granted to those who plan to continue working in the US for at least three years of the loan.
If you’re applying for a traditional loan, you’ll need:
- A valid visa — E1, E2, H1B, H2 A, H2B, H3, L1, G series or 0-1
- Employment authorization Form I-766 or I-765 to prove that you are eligible to work in the US
- Form I-797A with an attached I-94 or any other documentation that can prove you are authorized to work in the US
Types of personal loans
As a nonresident, you can apply for three main types of personal loans. They can be used to get you through a financial pinch or build your creditworthiness for bigger loans.
|Types of loans||Description||Maximum loan|
|Installment loans||With a set number of payments over a scheduled period of time, installment loans can last for a few months or more. An installment loan is ideal if you’re needing a mortgage or trying to improve your credit history. It shows potential creditors that you can make payments responsibly.||Up to $35,000 from LendingTree and from $5,000 to $100,000 from SoFi.|
|Short-term personal loans||With repayment terms of three to five years, short-term personal loans are typically for smaller sums of money. These type of loans can be used for any purpose, including auto loans.||Up to $35,000 from Discover, and more than $5 million from Wells Fargo.|
|Unsecured loans||Unsecured loans are not backed by other property you own and have fixed terms and interest rates. You can use this loan for consolidating debt on credit cards or student loans or to help with home improvements.||Between $1,000 and $35,000 from Avant, and between $3,000 and $100,000 from Wells Fargo.|
A secured loan is a loan that requires you to provide an asset as a guarantee — like your car or home. It protects the lender by allowing it to repossess and sell your asset to recoup its losses if you default on the loan. With an unsecured loan, the lender believes that you can repay the loan without providing an asset.
Can I get a student loan as a nonresident?
Whether it’s MIT, UCLA or Harvard, the opportunity to study in the US can open many doors. But not all foreign students can afford tuition, room and board, books and supplies that college requires. For these students, applying for a student loan is often the best bet. International student loans often cover the total cost of school.
Do I still need a credit history as an international student?
As an international student, you likely haven’t built up a credit history in the US. Lenders do not require you to have excellent credit, but you are required to have a US cosigner. Your cosigner will legally sign loan papers in order to help you to obtain a loan.
Because cosigners are jointly and legally responsible for repaying the loan, they must have:
- Proof of US citizenship or lawful permanent residency
- Good credit
- An income history
- Proof they’ve lived in the US for two years or more
How can I pursue financing a new home?
Owning a home is one of the cornerstones of the American dream. Providing shelter for your family and a place to call your own is a step toward integrating into American culture and your new community. But many noncitizens believe there’s no way to obtain a home loan. As a nonresident of the US, financing a home loan or mortgage is difficult, but not impossible.
The ease of getting a home loan depends on your residency status. Generally, you can apply for a home loan if you are a:
- Permanent resident with a valid green card (Form I-551)
- Nonpermanent resident with a valid work visa
What do I need to apply for a mortgage?
By assembling the following documentation, you’re assuring potential lenders that you can make future mortgage payments:
- A valid work visa — E1, E2, H1B, H2A, H2B, H3, L1 or G1–G4 visas
- A valid Social Security number
- Employment authorization documentation
- Proof of employment history
- A credit history
- Proof of income
How to compare loans
All loans are not created equal. You’ll need to do your research and compare your options before making a final decision.
Consider these factors:
- Loan terms. If possible, choose the shortest loan term available. You’ll increase your monthly payments, but you’ll pay a lower amount in overall interest.
- Monthly payments. Monthly payments with variable interest rates or balloon payments typically have lower monthly payments, but these loans come with other catches. Evaluate what you can afford each month before signing any contract.
- APR. Don’t ignore the APR, which reflects the interest rate, broker fees and other charges. For mortgages, lenders are required to tell you the APR, allowing you to find the best rate to save money in the long run.
- Interest rate. One of the most important factors to consider is the interest rate. It’s not always easy to compare them, but a loan with a low interest rate may be a bad value if its fees are too high. Likewise, a loan with a high rate and low fees could be an exceptional value.
- Balloon payments. A balloon payment is a large payment due at the end of a balloon loan. It means you’ll need to pay any remaining money owed at the end of your loan term. If you are a considering a loan with a balloon payment, you will need to have money on hand when it comes due.
A balloon loan is a loan — often a mortgage — that does not fully amortize before the end of its term. This means that while your payments are lower over the life of the loan, you will owe a large payment to pay off the balance at its end. This payment is often more than twice the loan’s average payment, sometimes thousands of dollars. You’ll need to think about whether you will have the cash on hand to pay the balloon payment when it’s due.
What happens after I receive my loan?
After you’ve completed and submitted the paperwork, you’ll have to wait to receive your money. Most lenders take 48 hours to authorize a loan, but it could take longer.
It’s now up to you to stay on top of your repayments. Here’s a few ways to do it.
- Create a budget. A budget can help you both save for monthly payments and remind you not to overspend.
- Enroll for automatic payments. With autopay, recurring payments are deducted from your bank account and electronically sent to your lender. It’s the easiest way for you to pay off your loan — without late fees.
- Avoid skipping even one payment. If you think you won’t be able to make your monthly repayment, contact your lender as soon as possible. Your lender may be willing to explore ways to help.
Whether you’ve decided to make it your new home or a place to further your studies, the United States has a lot to offer nonresidents — including loans to finance your new home, car, tuition or extra cash to ease your transition.
Getting a loan as a nonresident involves paperwork, documentation and time. But once you’ve followed the process and received your loan, it will be worth it. Stay on top of your monthly payments, and you’ll save both money and your credit history.
What if I don’t know a US citizen that can cosign my student loan?
As a nonresident of the US, a cosigner is required to apply for a student loan. Consider asking your friends or family who are US citizens or lawful permanent residents to be a cosigner.
What is the maximum loan amount I can borrow as a nonresident of the US?
The maximum loan amount available for a nonresident is $10,000,000 for a mortgage on one property.
Are interest rates higher for foreign nationals?
It depends on the lender. Most lenders don’t have higher interest rates, but others can increase rates by 0.5% to 1%. Interest rates on mortgages for nonresidents are often higher than the average US interest rates.