What about ITIN loan terms?

They’re consistent with conventional mortgages. You might choose a 5-year adjustable-rate mortgage (ARM) for a lower introductory rate and, thus, lower initial monthly payments. Or a 7-year ARM for similar benefits. You can get an ITIN loan as a 30-year fixed-rate mortgage, offering predictability with a slow, steady path in building home equity. You can also use an ITIN loan to refinance an existing mortgage loan.

Borrowers can use an ITIN loan to buy an owner-occupied home or a second home, for property types including single-family residences, condos, and one- to four-unit properties.

While not always the case, ITIN loans can come with larger down payment requirements and slightly higher interest rates than traditional mortgages.

Who can benefit from an ITIN loan?

With millions of ITIN holders in the U.S., this ever-growing group of people is diverse. It can include foreign nationals living and working in the U.S. and DACA recipients. ITINs benefit the dependents and spouses of both U.S. citizens and non-citizens who are in the U.S. on visas.

Essentially, any non-resident or foreign national who doesn’t qualify for a Social Security number is probably a good candidate for an ITIN loan.

What are the requirements of ITIN loans?

You’ll need an ITIN number. To do that, you can mail a Form W-7 with your federal tax return. You can also apply in person through an IRS-authorized Certifying Acceptance Agent, or an IRS Taxpayer Assistance Center. It can take between four and twelve weeks to get an ITIN.

Additional requirements vary by situation. Your mortgage professional may want to see identification such as a driver’s license. It’s common for applicants to provide proof of employment, tax returns, and other financial documentation, including bank records.

Credit score requirements vary by situation. People with credit scores in the high 600s often stand a better chance of qualification, though those with lower scores might also qualify. Sometimes, borrowers without credit scores who can prove creditworthiness may be eligible for ITIN loans.

Down payment requirements for ITIN loans are often around 20% or 25% of the purchase price of the home.

What should I know about ITINs?

They’re common. Since the program’s initiation in 1996, the IRS has issued over 25 million ITINs. With considerable privacy protection; the Internal Revenue Code prohibits the IRS from sharing your information with other federal agencies. Applying for an ITIN will almost certainly not jeopardize your residency situation.

They’re useful. In some ways, an ITIN can work like a Social Security number. You can, for example, use an ITIN to request a credit report from the three major credit bureaus: Experian, TransUnion, and Equifax. Beyond homeownership, an ITIN can help provide a path to becoming a business owner.

They can expire. If you haven’t used your ITIN once in the past three years, you’ll likely need to apply for renewal.

They don’t change immigration status. ITINs don’t provide work authorization and can’t be used to prove legal presence in the U.S.

The Pros and Cons of ITIN Loans

The Pros

• Accessibility. Most mortgage applications require a Social Security number. This can block access for lots of people who don’t meet this requirement but can afford a mortgage loan. An ITIN loan can provide a homeownership option that might not otherwise exist for non-residents.
• Credit building. People without Social Security numbers rarely have access to financial products, from credit cards to home loans, and more. And, therefore, these folks can have limited credit histories. ITIN loans offer the opportunity to build credit histories and improve credit scores.
• Flexible credit requirements. Compared to traditional mortgages, ITIN loans can come with less strict credit score requirements. If other financial factors are strong, people with low credit scores and limited credit histories can qualify.
• Tax benefits. With ITIN loans, borrowers can deduct mortgage interest (on a primary residence or a second home) from their taxable income. Deductions for real estate taxes can also lead to additional savings.
• Fewer obstacles. Outside of ITIN loans, people without Social Security numbers face considerable roadblocks on the path to homeownership. Many times, buying a home is impossible. But the possibility of homeownership rises significantly with ITIN loans.

The Cons

• Time. If you don’t have an ITIN, you could be up to three months away from applying for an ITIN mortgage with your new number. However, the IRS could process your request in as few as four weeks.
• Higher down payment. While the need to put between 20% and 25% down is not uncommon with some loan types, ITIN requirements are higher than others. With an FHA loan, for example, a borrower may have to put as little as 3.5% down. A VA loan might have no down payment requirement.
• Higher interest rate. As with all loan types, several factors determine interest rates for ITIN loans. It is common for ITIN loans to have interest rates that are between 0.5% and 2% higher than comparable traditional mortgages.