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ITIN loans: How to get a mortgage as a non-U.S. citizen

Yahoo Personal Finance· Getty Images
E. Napoletano
·Contributor
5 min read

Millions of people live and work in the U.S., paying taxes and receiving monthly paychecks. Yet non-citizens and foreign nationals aren’t eligible to apply for Social Security numbers, making applying for credit products like mortgages tricky.

Fortunately, these individuals have another path to homeownership: Individual Taxpayer Identification Number (ITIN) loans. ITIN mortgage loans help those without Social Security numbers buy homes and build wealth using special taxpayer numbers issued by the IRS.

Read more: How to buy a house

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ITIN stands for “Individual Taxpayer Identification Number.” An ITIN is an identification number issued by the IRS to individuals who do not have and are not eligible to receive a Social Security number. These numbers allow non-citizens — typically resident and non-resident aliens, their spouses, and their dependents — who work and live in the U.S. to stay in compliance with U.S. tax laws in the same way as citizens.

Having an ITIN instead of a Social Security number has a few limitations. While these numbers help holders file their taxes, an ITIN doesn’t make someone eligible for Social Security benefits or grant authorization to work in the U.S.

So, how many people actually use ITINs to file their taxes? According to 2019 data from the IRS, more than 2.5 million tax returns were filed with at least one taxpayer using an ITIN. These individuals paid roughly $5.8 billion in taxes.

Thanks to a special provision in the USA Patriot Act of 2001, banks can use ITINs as valid identification. This move gives immigrants access to financial products previously reserved for those with Social Security numbers.

An ITIN mortgage loan is a unique type of home loan program designed for those with ITIN numbers. Not all mortgage lenders offer ITIN loans, but those that do enable thousands of people to obtain mortgages and fulfill their dreams of homeownership.

Compared to mortgage types available to those with Social Security numbers, ITIN home loans can have interest rates between 0.5% and 2% higher than traditional mortgages and more stringent qualification requirements. Those taking out an ITIN loan will also generally require a higher down payment than many loans designed for first-time home buyers — between 10% and 20% of the purchase price is common. In contrast, FHA loans require just 3.5%, and many lenders allow 3% down on conventional loans.

It’s important to note that ITIN mortgages aren’t homeownership shortcuts for non-U.S. citizens. Those using an ITIN number to take out a home loan will still have to go through mortgage underwriting and provide proof of income and employment, tax returns, and other necessary documentation.

Learn more: Types of mortgage loans

While you won’t find ITIN home loans at many mortgage companies with big brand names, you can find them at smaller financial institutions. Credit unions, community development financial institutions (CDFIs), and small, independent banks tend to issue the majority of ITIN mortgages. Thanks to some regulatory leeway, these lenders can often be more flexible on buyer qualification criteria, rates, and terms — much like credit unions can for their members.

However, there are a few bigger-name mortgage lenders with ITIN loans, including Guild Mortgage and Flagstar Bank.

If you’re one of millions with an ITIN number, applying for a mortgage is similar to the process used by those with a Social Security number.

  • Find a mortgage lender. Be sure to compare each mortgage lender’s ITIN mortgage loan qualification criteria, including documentation and down payment requirements.

  • Gather your documentation. Your lender will need copies of recent tax returns and bank statements along with proof of identity, employment, income, and assets to process your application.

  • Organize your proof of credit. If you don’t already have a traditional credit score, don’t worry. Lenders can use utility bills, rent payments, and proof of other credit lines that may not be reported to a credit bureau.

  • Prepare your down payment. Lenders will want proof that you have money for your down payment in the bank.

Yes, borrowers with resident alien status can get FHA loans with an ITIN number and will likely find better mortgage rates and terms with FHA loans than with ITIN loans.

ITIN lending gives individuals with IRS-issued Individual Taxpayer Identification Numbers (ITINs) access to financial products like those with Social Security numbers. Those with ITINs are non-U.S. citizens — like resident and non-resident aliens and their dependents — who live and work in the country, using their ITINs to pay and file taxes just like U.S. citizens.

Absolutely. Those with ITINs often have credit scores just like those with Social Security numbers. If you have an ITIN, you can apply for credit cards or loans with certain companies, establish your credit profile, and build a credit score that reflects your payment history. In fact, you don’t need an ITIN or Social Security number to establish a credit history. Credit bureaus can build your credit file and history based on other identifying information like your name, recent addresses, and date of birth.

This article was edited by Laura Grace Tarpley