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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 it tricky to apply for credit products like mortgages.
Fortunately, these individuals have another path to building wealth through homeownership: Individual Taxpayer Identification Number (ITIN) loans.
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 2022 data from the Taxpayer Advocate Service at the IRS, more than 3.8 million tax returns were filed with at least one taxpayer using an ITIN. These individuals paid roughly $16 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.
Dig deeper: How to get a home loan in the U.S. as an undocumented immigrant
An ITIN mortgage loan is a unique 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
To qualify for an ITIN loan, you’ll first need to have a valid ITIN number issued by the IRS. Different people qualify for these special numbers, including resident and non-resident aliens, their dependents, or spouses of U.S. residents or citizens who are required to pay income tax. It’s important to note that having an ITIN number does empower these individuals to pay taxes and participate in the U.S. economy through products like mortgages, but these numbers don’t convey citizenship or work authorization.
At the lender level, qualifications can vary. According to the Consumer Financial Protection Bureau, borrowers need to meet standards set by the individual lender. In Yahoo’s review of several ITIN lenders, credit score requirements ranged from no required credit to a 620-660 range, and downpayment requirements of 15% to 25%.
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, a few bigger-name mortgage lenders offer ITIN loans, including Guild Mortgage and Flagstar Bank. To qualify, here’s what each lender looks for.
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Types of loans: Primary/secondary residence, refinance (rate-and-term or cash-out refinance)
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Loan amounts: Up to $1.25 million
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Credit score requirements: As low as 660
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Down payment requirements: A minimum of 15%
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Types of loans: Home purchase or refinance
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Loan amounts: Not disclosed
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Credit score requirements: As low as 620
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Down payment requirements: Not disclosed
If you’re one of millions with an ITIN, applying for a mortgage is similar to the process for those with a Social Security number.
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Find a mortgage lender. Be sure to compare each mortgage lender’s ITIN mortgage loan qualification criteria, including documentation and down payment requirements.
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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.
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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.
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Prepare your down payment. Lenders will want proof that you have money for your down payment in your bank account.
It’s definitely possible to get a mortgage with an ITIN, but not all lenders offer these unique home loans. It’s important to understand that ITIN mortgages come with unique caveats, including higher interest rates and down payment requirements (think: 15% to 25%). In exchange, however, you’ll likely find a more empathetic qualification process that may not require W-2s and takes your entire financial picture into consideration.
Some programs also allow gift funds to be used to meet down payment requirements. It definitely pays to shop around and compare lenders, rates, and requirements before committing to a loan.
You can certainly use your ITIN to buy a home, but you’ll first have to find a lender that offers ITIN mortgages. Having an ITIN doesn’t automatically qualify you for a mortgage, just as having a Social Security number doesn’t automatically qualify you for credit. However, having an ITIN lets lenders process your mortgage application and consider you for approval — so long as you meet their other requirements, such as income, down payment, and credit.
The down payment requirement for ITIN mortgages tends to be considerably higher than many traditional loan programs — between 15% and 25%. When compared to popular government-backed loan options like FHA loans with a low 3.5% down payment requirement, the difference can feel steep. The higher down payment helps lenders offering ITIN mortgages offset risk since there’s no government backing.