A Comprehensive Guide to Obtaining US Mortgage for United Kingdom (UK) Citizens

It is a dream of many to live in the United States, the world’s most powerful and third-largest country. If you manage to get to the US, you will need a house. There are several ways to buy property in the United States, the most popular being a mortgage. Yes! Foreigners can secure home loans in the US so long as they meet certain requirements.

In this guide, we will explain how a UK citizen can secure a mortgage to finance their house purchase.

Can a UK Citizen Secure Mortgage in the United States?

The United States government does not impose any restrictions on UK Citizens looking to buy American homes using mortgages. So yes! Citizens of the United Kingdom can obtain US mortgages after fulfiling set conditions.

It is important to highlight that a UK citizen can get a home loan in the US even without an American credit history. US lenders sometimes issue mortgages based on the credit history of foreigners in their home country. Remember, owning an American home doesn’t offer residency rights. However, investing significantly in US real estate increases your chance of securing permanent residency.

How Mortgages Work in the United States

The American mortgage market is highly developed. So, as a foreigner, you are likely to see loan products that differ from those in your country. That’s why it is crucial to understand the mortgage market in the US before obtaining a home loan.

The first thing you need to consider is whether you want a variable or fixed-rate mortgage. Many prefer taking fixed-rate mortgages since their lenders impose the same interest rate throughout the repayment period.

How Does the US Mortgage Differ From the UK?

There are numerous differences between the American mortgage market and the UK’s. Some of them include:

Differences in Interest Rates

In the United States, many lenders offer fixed-rate mortgages, which, as mentioned earlier, attract the same interest rate throughout the loan period, be it 10 or 20 years. Meanwhile, in the United Kingdom, a large percentage of lenders provide variable-rate mortgages. Interest rates in such mortgages change depending on market conditions.

Differences in Loan Terms

Many Americans embrace long-term mortgages. The average term for home loans in the US is 23 years, whereas in the United Kingdom, the average mortgage period is only four years.

Credit Scores

UK-based lenders do not rely on credit agencies to offer them credit scores for borrowers. Instead, these lenders create their own credit scores based on various factors. American lenders, on the other hand, find credit scores created by credit agencies more valuable than theirs, so they partner with those agencies.

Taxing

In the United States, whether you buy your house using a mortgage or cash, you are required to pay capital gains tax when selling the property. Surprisingly, United Kingdom citizens are not subject to such taxes.

Types of Mortgage a UK Citizen can Obtain in the United States

FHA Loans

Obtaining this type of home loan is easy. A UK Citizen only has to prove that they can afford to make a 4% down payment on the house.

Conventional Mortgage

To get this mortgage, a UK citizen must provide a 3-year proof of income, social security number, and proof of residency.

Jumbo Loans

To get a Jumbo loan, you need to provide evidence that you have been living in the US for a minimum of five years and will work there for the next four years.

The Process of Getting an American Mortgage as a UK Citizen

Step 1: Hire a realtor to help you identify the right house.

Step 2: Choose a mortgage that matches your requirements.

Step 3: Obtain pre-approval of the mortgage by submitting the required documents.

Step 4: Inspect the house to ascertain it meets your expectations.

Step 5: Make a deposit and instruct the lender to transfer the remaining balance after you’ve signed the sale agreement.