ITIN Mortgage Loans
In this guide, we will cover ITIN Mortgage Loans and how it works. We will cover and discuss what ITIN mortgage loans are, the eligibility requirements, and who benefits from ITIN mortgage loans. When you talk about home mortgage loans, there are many different types. There are government and conventional loans. There are non-QM loans for borrowers who do not meet the traditional agency mortgage guidelines. There are specialty loan programs such as VA loans that only eligible active and/or retired members of the U.S military can qualify. Yet, there are other specialty loan options such as ITIN mortgage loans, which we will be covering in the following sections.
What Are ITIN Mortgage Loans?
When you find yourself in the market for a new home, a mortgage loan is a necessary step in the process. There are many different types of mortgage loans. Today’s topic is that of ITIN mortgage loans. These are specific types of non-qualified mortgage loans (non-QM loans) that are unique in their method of financing.
No Social Security Numbers Required on ITIN Mortgage Loans
ITIN mortgage loans do not require a social security number to be approved. ITIN mortgage loans are a fantastic option for people who are not citizens of the United States or anyone for whatever reason does not have a social security number. An ITIN mortgage loan is the only way for such individuals to take a loan, so it is important to understand ITIN loans.
What Are The Requirements For ITIN Mortgage Loans?
To understand how an ITIN loan classifies, it is first important to recognize why it is categorized as a non-QM loan. A non-QM loan is a type of loan that requires significantly less documentation than a qualified mortgage loan, making it so people that do not qualify for a typical home loan can still achieve the dream of owning their own home.
Is an ITIN Loan a Non-QM Loan?
An ITIN loan does not require a social security number, thus it qualifies under the definition of a non-qualified mortgage loan. To elaborate on the previously mentioned definition, a non-QM loan is a loan that does not follow the lending guidelines put in place by the CFPB. The CFPB or Consumer Financial Protection Bureau is an organization that provides guidelines for the protection of both the borrower and the lender.
What Makes a Home Loan a Non-QM Loan?
The reason someone might require a non-QM loan is that the guidelines put in place by the Consumer Financial Protection Bureau are not achievable to them, and a harsher loan is better than no loan. A perfect example of this is today’s topic, ITIN loans. ITIN loans are for people without social security numbers, therefore, there has to be some way to ensure that individuals are still paying taxes in the country, so it is done by giving them an Individual Taxpayer Identification Number (ITIN).
So without this documentation, the borrower gets a loan with harsher terms. There are many types of non-QM loans outside of ITIN loans so all variables involved in non-QM loans might not apply. Only certain characteristics are carried over so be knowledgeable in the subject matter before applying for an ITIM loan.
Who Can Qualify For ITIN Mortgage Loans
As mentioned before, the people that borrow ITIN loans are those without a social security number. These are non-citizens of the United States that are in the market for buying a home. People in the United States who are not residents of the country still may end up being in the United States for a long period of time.
The usual requirement for the loan is a couple of years of income and tax reports have shown. So the person that might require an ITIN loan is a foreign citizen who has worked in the United States for some time and does not have a social security number.
How Can I Get an ITIN Loan?
Though the process of being approved for an ITIN is quite similar to a typical mortgage loan, it is not quite the same. You first need to be someone that does not qualify for a social security number. If you do not qualify the government will assign you an ITIN number, which stands for an individual tax identification number.
If you have a social security number this type of loan will never apply. Once you have identified yourself as someone who qualifies for an ITIN loan you simply need to find an ITIN lender and get the process started. The only other qualifications include other things that verify your identity including cell phone numbers, addresses, and bank statements that can be used to create a credit profile of the applicant.
Credit Requirements on ITIN Mortgage Loans
You will need to take a look at your credit report. Although the ITIN loan program is more flexible with credit history, (as a person with an ITIN would most commonly have a shorter credit history) it is still important to build your credit. A person could ease into it, perhaps buying a used car or applying for a credit card. It’s important to make all your payments on time. If you start building a credit history and build up a credit score, it greatly improves your chances to get a home loan.
ITIN Mortgage Loans Employment History Guidelines
Another way to improve your chances of getting an ITIN Loan is to ensure that your employment history is solid. A lender will want to see that you have worked consistently and do not have any large employment gaps. If you do have gaps in employment, a lender might want a letter of explanation. You could also consider your rental history and if you have paid your rent on time. Lenders will often look at two years of rental history to see if you have a good payment history. Once all this is provided to the lender, you are officially on your way to getting a home loan!
Comparing ITIN Mortgage Loans To Traditional Conforming Loans
The ITIN loan’s main difference from any other type of loan is the previously mentioned lack of a social security number. But how does this change the loan other than the documentation process? Well, mainly they have significantly more flexibility in terms of credit requirements. This is because non-residents of the United States have significantly less credit history. And since those are the exact same people that use ITIN loans, this style of mortgage is built to accommodate that exact lack of credit history.
Though this does not come without a cost to the borrower, all non-qualified mortgage loans are seen as riskier for the lender. They are seen as riskier because they have less documentation for approval, meaning they have less information on if you will default on the loan or not. Due to this fact, ITIN borrowers will suffer from being required to put down higher amounts.
While United States citizens can obtain mortgages requiring as little as 3.5% down, borrowers for ITIN mortgages typically have to put down at least 20% and have at least three months of reserve payments. This is certainly a drawback but keep in mind that this loan still exists as an option for non-citizens of the United States to be homeowners.