ITIN Loan Requirements
ITIN Loans provide a valuable pathway to homeownership for recent immigrants, expatriates, and anyone else who might not yet have a social security number. We take a look at what these loans are, how they work, and typical ITIN loan requirements. We also explain how to go about applying for one.
HOME RUN: OPEN THE DOOR WITH AN ITIN LOAN
WHAT DO I NEED TO APPLY FOR AN ITIN LOAN?
WHAT’S GREAT ABOUT AN ITIN LOAN?
COME HOME TO A RED RIVER MORTGAGE LOAN
HOME RUN: OPEN THE DOOR WITH AN ITIN LOAN
Homeownership is a quintessential part of the American dream. Most reputable lenders in the U.S. require that you provide a social security number as proof of identity when applying for any kind of loan, including mortgages. That can prove a significant obstacle to homeownership for many individuals who cannot provide a social security number (SSN).
Recent immigrants, a spouse or dependent of a U.S. citizen, resident aliens, regular seasonal visitors, and others may spend months or even years in the U.S. without being assigned a social security number. For these individuals and families, not being able to apply for a mortgage can delay being able to buy a home and get a foot on the property ladder for several years.
Many financial institutions now recognize the seriousness of this difficulty for a large segment of the population and offer special loans that allow applicants to provide proof of identity using an Individual Tax Identification Number (ITIN).
WHAT IS AN ITIN?
An ITIN is issued by the Internal Revenue Service (IRS) to anyone who needs to pay taxes and file a tax return in the U.S. The IRS issues an ITIN in order to track your tax compliance regardless of your immigration status. Your ITIN number can be used as an alternate form of identification, including when you apply for a mortgage.
How Do I Get an ITIN?
You can apply for an ITIN either separately or when you file a federal income tax return. You can do this by completing IRS Form W-7 and submitting it to the IRS. Or you can apply in person through an IRS Taxpayer Assistance Center or an IRS-certified acceptance agent.
In addition to a completed IRS Form W-7, if you are applying for an ITIN without having a social security number, you need to provide documents that provide both proof of identity and proof of your foreign status, such as a passport, or alternatively a combination of:
- Foreign national identity card, birth certificate, voter card, military ID, or driver’s license
- US driver's license, state identification card, or military ID
- Visa or U.S. Citizenship and Immigration Services (USCIS) photo identification
- Medical records or school records (for dependents only)
You’ll normally receive notification of your approved ITIN number within seven weeks of submitting your application.
WHAT DO I NEED TO APPLY FOR AN ITIN LOAN?
ITIN loans are available from selected banks and credit unions, including Red River Credit Union (RRCU). Application requirements are broadly similar to that of a regular mortgage loan but with some extra documentation requirements in addition to your ITIN number. Typically, you should plan to provide:
Additional Proof of Identity
While your ITIN number can be substituted for a social security number, most lenders will also require additional documentation to prove your identity. Commonly accepted documents include:
- Drivers license or state-issued ID
- Passport or VISA
- Military ID or school ID
- USCIS-issued ID
Proof of Employment
Lenders will also naturally be concerned that you demonstrate proof of stable employment—usually a minimum of two years of consistent employment. Typically you should provide pay stubs or a W-2. However, if you are a self-employed person, you can also provide bank statements as proof of consistent earnings.
Tax Returns
Your tax returns provide additional information about your earnings, including any income from investments, as well as your current financial liabilities. A demonstrated willingness to pay tax is also important if you are not a citizen or permanent resident.
Additional Documentation
A lender may ask to see further documentation including your bank or credit card statements or proof of savings and investments—almost anything that can provide evidence of your ability to make your monthly loan repayments consistently.
In addition to this documentation, you’ll need to provide further evidence of your ability to manage and pay back significant debt.
Credit Score
You will need to have a verifiable credit history and score to apply for an ITIN loan, and score requirements are typically somewhat higher than for a conventional mortgage. You’ll usually need to have a credit score above 640 to qualify for most ITIN loans. If you do not have sufficient U.S. credit history you may have to complete an International Credit Report form.
Debt
Reputable lenders will also look carefully at your liabilities before approving a mortgage. While your credit score will provide a lot of information to them, they will also look at your debt utilization levels and your debt-to-income ratio (DTI).
As with most primary home loans, a lender would like to see monthly debt payments that total below 35% of your income, and you will likely struggle to qualify for any loan that will put your DTI above 50%.
Down Payment
You will need to submit proof of your ability to provide the required down payment for the loan you are applying for. Depending on your credit score, ITIN loans can require a down payment of between 15% to 25%.
Proof of funds can include bank, savings, and investment statements as well as gift letters from any family members who might be contributing funds to your down payment.
HOW DO I APPLY FOR AN ITIN?
The application process for an ITIN is also very similar to that for a conventional loan, but with a few extra steps because of the different documentation requirements. In general, ITIN loans can take longer to process, so it’s important to start early.
1. Identify a Lender
It’s worth taking the time to identify a lender with a track record of extending ITIN loans in your area. Choose a reputable financing partner such as a credit union. As a local institution, RRCU not only provides ITIN loans in our community but has decades of experience helping families four states area as well.
You should also pay attention to the type of properties for which your lender will extend ITIN funding. Some mortgage lenders focus only on second homes or investment properties for offshore investors. At RRCU, we provide ITIN funding exclusively for qualified members, and soon-to-be members, seeking a primary residence.
Funders will also often have restrictions on the type of housing they will provide mortgages for. These are typically smaller single or multi-family units:
- Single-family detached homes
- Condominiums, townhouses, or row houses
- 2-4 unit multi-family units
2. Check Your Credit Score
Your credit score is particularly important when applying for an ITIN loan. Take the time to check yours. If your score is marginal or lower, then it’s important to take the time to correct any errors on your report and pay down higher interest debt before proceeding with an application.
3. Gather Your Documents
Take the time to gather the necessary documents discussed above, including:
- Your ITIN and other proof of identity
- Proof of your residency status
- Income statements
- Details of any liabilities
- Evidence of assets including investments, savings, and gifts
4. Get Pre-Approved
Approaching a lender for pre-approval before starting to look for a home means any potential issues with your final loan application can be resolved ahead of time. Your lender can take a look at your documentation, including your ITIN, and make sure it meets their qualification standards.
You’ll also know ahead of time how much money you can afford to borrow. Sellers appreciate buyers who make serious offers on properties they know beforehand that they can afford.
5. Find Your Home and Make an Offer
With a pre-qualified loan in hand, a budget, and knowledge of ITIN-eligible housing, it’s time to hit the streets in search of your home. Once you find a place that fits, make an offer and wait for it to be accepted.
6. Complete Your Application
With a purchase agreement in hand, it’s time to wrap up your application. Here’s where making sure your ITIN documentation is in order will pay off with a faster loan approval. In a competitive housing market, this could be critical in snapping up the property you want.
7. Fees and Appraisal
Depending on the details of your purchase, you’ll need to wait while your lender does an appraisal to make sure the value of your property matches that of your loan. You’ll likely be charged a fee for this. You may also face loan origination and title search fees.
8. Final Loan Offer
Provided everything is in order, you’ll be offered a loan at a given interest rate. You’ll also have the opportunity to buy down your rate if you wish. Once you agree, you’ll also have to pay closing costs—typically around 3-6% of your loan value. These are sometimes rolled into your monthly payments and settled over the life of your loan.
9. Unlock Your Future
With your funding in place, it’s time to sign off on your purchase, pay your part of the property closing costs, and take possession of the house keys. Congratulations—you’re now a homeowner!
WHAT’S GREAT ABOUT AN ITIN LOAN?
ITIN loans take a little more work than conventional loans, but the rewards are worth it. For immigrants looking to put down roots or long-term permanent residents who want a home of their own, an ITIN loan can open doors that might otherwise be closed.
Specific benefits of ITIN loans include:
- Homeownership: A pathway to financing for individuals without a SSN
- Flexibility: Allows seasonal visitors and others without full residency to buy U.S. property
- Credit building: Newcomers can build their U.S. credit as they repay an ITIN loan
- Reduced risk: By offering access to affordable financing from reputable lenders, ITIN loans help immigrants avoid hard money loans or unsustainable debt
At the same time, ITIN loans come with some potential disadvantages:
- More paperwork, including an ITIN application and extra proof of identity and residency
- Possible higher credit requirements than comparable conventional loans
- Potentially higher down payments than comparable conventional loans
- Longer timelines—Some lenders might take longer to process ITIN loans
COME HOME TO AN RRCU MORTGAGE LOAN
At RRCU, we’ve been helping newcomers and locals put down roots in our communities for decades with affordable financing, easy approvals, and great knowledge of the local housing market. We work closely with our members to understand their dreams of home ownership and the financial challenges that stand between them and a place of their own.
Our new ITIN mortgages allow our members to gain access to the home financing they need by allowing them to use an INIT to meet our loan documentation requirements. It’s just a small thing, but it can make a big difference in the life of an individual or family looking for a place of their own to call home.
RRCU’s ITIN loans are available for purchasing or refinancing of primary residences only and require the following (among other qualifications):
- A minimum credit score of 640
- A down payment
- A completed online application
Contact us today to discuss our specific loan financing needs or click below to learn more about how a RRCU ITIN loan could open up a path to homeownership for you.