US Mortgage for Canadians

[acidrain 325]

I was surprised to learn the requirement for all US conventional mortgages the applicant must have: lived in the US for the past 2 years, worked in the US for the past 2 years and have 2 years of credit history.

 

Does anyone have experience applying for a foreign loan? I contacted TD but they only have lending rights on the east coast. US mortgage brokers are sticky on employment history (my spouse only started his job a few months ago) and their borrowing costs are 1-2% higher.

 

I reached out to RBC bank and filled out an application to be pre-approved but was told it took 5-7 business days to complete. I don't want to add more hits to our credit report so wanted to reach out if anyone can share their experience. Does anyone know if any other Canadian banks offer US mortgages to Canadians for their primary residence? Do you just keep shopping around until someone gives you a loan?

 

What is particularly intriguing is that it doesn't matter if a person is a US citizen but rather what they've been doing for the last 2 years. It doesn't matter we could provide all the same information from Canada. At first I was skeptical about this rule but after talking to more than a dozen people it is illegal for a US bank to offer a conventional mortgage to new residents.

 

We have a large down payment, excellent credit, good employment history, history of owning a home.

Edited September 12, 2017 by acidrain

[Cathi 5,782]

This is not true. My husband and I bought a home in the US in 2014 after he had been here 18 months and only had one year of credit history.

[Lemonslice 4,947]

1 hour ago, acidrain said:

I was surprised to learn the requirement for all US conventional mortgages the applicant must have: lived in the US for the past 2 years, worked in the US for the past 2 years and have 2 years of credit history.

 

Does anyone have experience applying for a foreign loan? I contacted TD but they only have lending rights on the east coast. US mortgage brokers are sticky on employment history (my spouse only started his job a few months ago) and their borrowing costs are 1-2% higher.

 

I reached out to RBC bank and filled out an application to be pre-approved but was told it took 5-7 business days to complete. I don't want to add more hits to our credit report so wanted to reach out if anyone can share their experience. Does anyone know if any other Canadian banks offer US mortgages to Canadians for their primary residence? Do you just keep shopping around until someone gives you a loan?

 

What is particularly intriguing is that it doesn't matter if a person is a US citizen but rather what they've been doing for the last 2 years. It doesn't matter we could provide all the same information from Canada. At first I was skeptical about this rule but after talking to more than a dozen people it is illegal for a US bank to offer a conventional mortgage to new residents.

 

We have a large down payment, excellent credit, good employment history, history of owning a home.

Which law is that?  Is your spouse living in the US yet (bit confused about the "foreign loan" part of your title)?  

 

I'm not a fan of TD nor RBC - local bank/broker might be a better option (that's how I proceeded).

[acidrain 325]

Yes, my USC spouse is residing in the US and has been for several months now.

 

This residency/work rule has been verified by TD, RBC, HSBC, US Bank and 2 very reputable US mortgage brokers on top of our real estate agent. I find it impossible to believe all these different places are wrong if they are consistent in their message.

 

As a result of not being able to meet the residency requirement (2 years) for a federal mortgage, we've been told we would have to apply for a foreign loan. A foreign loan (aka International loan) requires anywhere from 20-30% down, higher interest rate, tighter qualifications.

 

The collective message I am receiving is because of the housing crash there are new lending regulations that prevent giving mortgages to new residents. Even if they are USC's. I am uncertain when these were put in place and if this applies solely to the Nevada area. I was told by TD the reason they only have east coast mortgages is because they don't have lending rights in every state.

 

Through my discussions so far with RBC they seem like our only good option that has reasonable rates. Hopefully they will be able to get us through the process. With a foreign loan it also takes a minimum of 45 days to close which took us by surprise. There are so many financial regulations the underwriters have to go through. I was told to take a variable rate mortgage for a short time, build up credit and after 2 years any US lender will be give us a traditional mortgage. The whole thing has been a real hassle.

[Lemonslice 4,947]

It might have to do with your local/state market. 

 

In your situation, wouldn't it be easier to take the mortgage in your name only, or where you living abroad yourself? How much credit history do you have in the USA?

[acidrain 325]

I guess that's the issue in question is the fact neither one of us have any credit history in the US. It was explained to me almost all mortgages are given by Fannie Mae and Freddie Mac lenders. Each underwriter has to do a risk analysis which is where the 2 year residency, 2 year credit history and 2 year work history comes in. It's another issue I was completely naive in. I thought because we are from Canada whatever my spouse has been doing the past 2 years in Canada counts. Apparently it doesn't with US lenders.

 

I'm hoping a Canadian bank with US lending rights will be able to come through. The underwriting process for our particular case is extensive and was told that is why everything takes longer. There is this huge manual they have to go through to make sure they are following new guidelines. It doesn't matter a T4 is pretty much the same as a W2. It doesn't matter I can download our excellent credit history on Credit Karma Canada. It doesn't matter the fact we've owned multiple properties in Canada. It doesn't matter what my spouses Canadian employment history is, only how long he's worked in the US.

 

I must say the experience to move the US has been quite frankly unbelievable. My spouse never lived in the US as an adult which is why he has no history of anything. Our experience trying to get him a social security number was nothing short of a nightmare. I had to call the Canadian embassy and get the Washington State Senators office involved. The assigned office simply would not give my spouse a SSN even despite submitting evidence of every year he lived in Canada (since birth) from a Government agency. Imagine coming up with 168 separate documents proving without a doubt where he lived. The Senators office was in disbelief (after I broke their fax machine sending them all our evidence) and once the complaint got to head office in Baltimore they were equally in disbelief. Eventually we got an apology but at one point I wondered if he'd even get it. Our accountant said for some people who are in the same predicament it can take years to sort out.

 

With the property being a principal residence it is a bit of an usual situation. Canadians banks do not do loans on US primary residences. Some of their US branches do. If anyone has any experience with this please share.

[Lemonslice 4,947]

Yes, it's hard to transfer credit history - I misunderstood that you had good credit in the USA. T4s would be useless, unless you're currently still employed in Canada. 

 

Your history as owners still matters, in the sense that you should now have the savings to put an interesting cash down. 

 

Amex global transfer was useful when I moved since they put my 14 years history in Canada.  

 

Best of luck.

[NikLR 13,231]

The issue is not YOUR  status, it is because the USC spouse doesnt have credit either.  Why not wait and establish good credit, and contribute to your down payment?  I get that owning a house is important but maybe it's not the right time. 

[acidrain 325]

We got some very good news after our mortgage broker went above and beyond to find a solution. There is a program for Canadians for a US conventional mortgage but we had to go through an extremely extensive process. We had to submit not only US information such as pay stubs, tax returns, proof of citizenship, etc. But we also had to submit CDN documents showing employment history, credit history and all of our taxes here too. To close on this mortgage takes up to 60 days because of all the work that goes into it.

 

We pre-qualified for a mortgage but was told we will be given a variable rate. Fortunately we will qualify for a fixed rate in about a years time and will be able to renegotiate the loan. One of the only areas of contention was my spouse's employment gap from the time we left Canada to when he relocated to the US. We were able to provide proof of the reasons for the gap so the underwriter was satisfied with that.

 

It was no surprise as a person with no status, I am not able to be put on the loan. Mortgages are heavily regulated and one of the terms is that a person must prove they are legal residents. Once I am able to get a green card I should be able to get added.

 

I wanted to share our story in case anyone else goes through a similar experience.