For most homeowners or prospective buyers, purchasing property typically involves mortgage financing. Compared to Hong Kong, mortgage evaluation in the United States is generally more flexible when it comes to age and income, which effectively makes it easier for buyers to qualify.
More Flexible Loan Options in the U.S.
In the U.S., in addition to banks, many licensed mortgage companies also accept loan applications from overseas buyers. The application procedures and interest rates are quite similar to those of banks, and both are fully legal and regulated.
Before purchasing a property, investors only need to apply for an Individual Taxpayer Identification Number (ITIN) from the U.S. Internal Revenue Service (IRS). During the application, investors must present their passport, U.S. visa, and two forms of photo ID.
Once the ITIN is obtained, the investor can approach a local bank or mortgage company and submit documents such as income or asset statements and bank records to prove their ability to pay the down payment.
Alternative Proof of Income
In contrast to Hong Kong—where those with low income, self-employment, or retirement status may find it difficult to provide sufficient income documentation for loans—such concerns are less of an issue in the U.S.
That’s because U.S. lenders often assess the applicant’s entire real estate investment portfolio. If the applicant already owns rental properties in the U.S., simply providing proof of rental income may suffice.
More Rental Properties = Higher Loan Amounts
In other words, the more rental properties an applicant owns, the higher the loan amount they can apply for—maximizing the benefit of leverage. Once approved, banks issue a pre-approval letter that outlines the buyer’s maximum budget and loan amount.
While the mortgage application process in the U.S. is relatively simple, busy investors from Hong Kong may not have the time to manage everything on their own. Fortunately, some overseas property agencies in Hong Kong offer full-service support throughout the mortgage process.
By working with a trustworthy and experienced agency, investors can receive tailored assistance.
Rate Hikes Present a Strategic Opportunity
At the end of July, the U.S. Federal Reserve announced another interest rate hike. As previously mentioned, this actually presents a favorable opportunity for Hong Kong investors.
After this hike, PGIM Fixed Income noted that the potential for further increases is limited, and expects the U.S. economy to remain strong. Some major banks even predict that the Federal Reserve may start cutting rates in early 2024.
When that happens, investors who already own U.S. properties can consider applying for another mortgage, using the new loan to invest in a second property—and effectively double their assets.
Foreign Nationals Can Freely Buy Property
One of the key advantages of investing in U.S. real estate is that non-U.S. citizens and non-green card holders are free to purchase property and enjoy the same legal protections as American citizens. Similarly, mortgage applications are not restricted by nationality.
Even for those with relatively low income, it’s possible to use one’s U.S. property portfolio as proof of income. This opens a unique path for international investors to leverage their assets and work toward doubling their wealth.
For those looking to seize this opportunity, it’s best to act early and secure your first U.S. property to lay the groundwork for your 2024 investment strategy.
Written by: Bonnie Wu, Founder of Capstone 72
Edited by: Yip Lai Man
