Financial Knowledge

Buying a house in the United States depends not only on the type of visa but also on the ability to repay the loan!

March 31, 2020

Application to the housing loan mainly depends on the ability to repay the loan, not the identity? No, the bank still depends on your visa type.

First of all, they should be able to live in the United States legally, so those who stay illegally after their visas expire cannot obtain bank loans.

Secondly, without a work permit in the United States, you can’t get a loan, such as a tourist visa. Because the important indicator of a bank’s ability to review loans is its income level, if you can’t work in the United States, you can’t get legal income. If you don’t have income, you won’t get through the loan, and because it’s difficult to check overseas income, you can’t consider the same bank.

Finally, some banks also have restrictions on the types of work permit visas. For example, after graduation, a student visa will first obtain a temporary work permit (1-2 years) from opt, and then apply for a work permit (H1B). However, most banks are unable to obtain loans from opt applicants, because the current H1B lottery system makes them feel that opt has great risks, One day the applicant lost the right to work and live in the United States without winning the H1B.

The first step for most banks to review a lender’s eligibility is to ask for your identity (type of visa) and whether it is still valid. On the issue of the ability of loan again. In addition, some banks also have different restrictions on different visas. American citizens, permanent residents (i.e. green cards) and work visas such as H1, basically all banks can do and have no additional requirements. But for student visas, there must be opt, not only all banks can do it, but also additional requirements for loan amount, credit score and credit history.

How can I know how much the bank can loan me at most?

The bank generally considers the following factors to assess your loan ability and risk:

First, credit records, the most intuitive embodiment of which is credit score. A low credit score may affect your loan amount or interest rate. If there are late payments, collection or bankruptcy on the credit records, it will not only lead to a low credit score, but also directly lead the bank not to pass your loan application;

Second, the monthly debt income ratio (we call it DTI). The maximum DTI allowed by a bank is 43% – 50% (the regulations of each bank are different). If your monthly income is 10000, your maximum monthly debt is 4300-5000 yuan. These debts include the monthly loan supply, local tax, housing insurance, car loan, student loan and the minimum monthly payment of credit card;

The third is the loan amount to house value ratio (LTV). The house needs to have enough equity. The bank will hire a third-party appraiser to evaluate your house. If the house is under evaluated, the loan amount may need to be reduced.

Example: if there is a house now, the total price is 800000, 500000 has been paid, and the annual salary is 120000. How much money can I lend to buy a company at this time?

If cash out is required, the newly applied loan amount shall be used to pay off the old loan amount and the loan fee first, and the rest can be used for other purposes. Assuming that the credit score is very good, the house is worth 800000. As a cash out loan, at most 75% of the house value is 600000. Unless you have other relatively large debts, 600000 loans with an annual income of 120000 won’t pass the DTI review, but you still have 300000 loans left, so half of 600000 yuan needs to pay off the current loans, and the rest can be used for purchase.

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