Many people believe that having a Social Security Number (SSN) is absolutely necessary for a mortgage. However there is an alternative called an Individual Taxpayer Identification Number (ITIN) loan.
ITIN loans are designed for borrowers who do not have an SSN and want to purchase a home.
Our aim is to offer you a clearer understanding of ITIN loans and how they can help you achieve your homeownership goals without an SSN.
What is an ITIN loan and who are they for?
An ITIN loan is a mortgage option designed for individuals who do not have a Social Security Number (SSN) but possess an Individual Taxpayer Identification Number (ITIN) issued by the IRS.
These loans cater to non-U.S. citizens, residents, and non-residents without an SSN, and their spouses, who may have limited documentation or no credit history.
ITIN loans provide an alternative path to homeownership for those who might face challenges in obtaining conventional mortgage loans.
The basics: How to obtain an ITIN
An Individual Taxpayer Identification Number (ITIN) is a special tax processing number through the Internal Revenue Service (IRS).
ITIN is for those who are required to have a U.S. tax identification but don’t, and/or are not eligible for an SSN.
Keep in mind that an ITIN doesn’t authorize someone to work in the U.S. or provide them eligibility for Social Security benefits or the Earned Income Tax Credit.
To apply for an ITIN, follow these steps:
- Complete the IRS Form W-7, “Application for IRS Individual Taxpayer Identification Number” and mail it to the address found on the IRS website. If you don’t feel comfortable mailing, you can apply at an IRS-authorized Certifying Acceptance Agent (CAA) or at a designated IRS Taxpayer Assistance Center Some tax preparation services, like H&R Block, also offer ITIN application assistance.
- Provide proof of identification, such as a current and signed passport. Other acceptable documents include a national identification card, driver’s license, or birth certificate.
- Ensure that you provide all the required supporting documentation and correct information to avoid delays in processing your application. Incomplete or incorrect applications may take longer to process.
Once an application is processed and approved, the IRS will issue your ITIN, which can be used for federal tax reporting purposes.
ITIN loan eligibility and requirements
Once you’ve secured your ITIN there are other requirements you must meet to be eligible for the loan.
Proof of employment history
Two years of continuous employment—either with the same employer or in the same line of work—is the usual requirement for most lenders.
Self-employed borrowers may also qualify, provided they can show at least two years of self-employment history and submit relevant bank statements or tax returns.
Credit score requirements
Credit score requirements for ITIN loans can vary among lenders. A minimum score of 600 or 660 for some lenders, while others may be more flexible, especially for borrowers with limited or no credit history.
Minimum loan size
Some lenders may impose a minimum loan size for ITIN loans, such as $125,000 or $150,000 (depending on the lender).
The ITIN loan process
- Find a lender: To obtain an ITIN loan, you will need to work with a trustworthy lending institution that offers these types of mortgage loans.
- Pre-approval: Once you find a lender you like, get pre-approved for the loan by providing your ITIN, financial information, employment history, credit score, and to the lender.
- Loan application: After pre-approval is confirmed, complete a formal mortgage loan application, which includes providing any further documents and information to the lender.
- Loan processing and underwriting: Once your application is submitted, a loan officer and an underwriter will review it. The loan officer’s role is to work directly with clients and help them through the process. The underwriter’s role is to verify loan applications, evaluate risks, and make loan eligibility decisions.
- Property appraisal: During the loan process, a property appraisal will be ordered to determine its value. This appraisal helps the lender make sure the loan amount is appropriate for the property’s value.
- Loan approval: If the underwriter approves your loan application, you will receive a conditional loan approval, which may require additional documentation or conditions to be met before finalization can occur.
- Closing: Once all conditions are met, and the loan is approved, the closing process begins. This involves signing the final loan documents, transferring funds, and finalizing the purchase of your new home.
Advantages and disadvantages of ITIN loans
ITIN loans provide an alternative path to homeownership for individuals without a Social Security Number (SSN). However, like any financial product, they come with their own set of advantages and disadvantages.
Advantages:
- Accessibility: ITIN loans allow borrowers without a SSN to obtain a mortgage
- Credit-building: ITIN loans can help borrowers build their credit history, which can be beneficial for future loan applications.
- No green card needed: ITIN loans do not require borrowers to prove legal residency to qualify.
Disadvantages:
- Limited availability: ITIN loans are not as widely available as traditional mortgage loans, and borrowers may need to do some research to find a suitable lender.
- Higher interest rates: Due to the perceived higher risk associated with ITIN borrowers, these loans may come with higher interest rates compared to conventional mortgage loans.
- Larger down payment: ITIN loans often require a higher down payment, ranging from 15% to 30% of the purchase price but that amount will vary.
Required documents for ITIN mortgage loan application
When applying for an ITIN mortgage loan, borrowers must provide a variety of documents to verify their identity, income, and financial stability. Some commonly required documents for ITIN mortgage loan applications include:
- National identification card: Another form of identification that may be accepted by lenders
- One year of most recent federal tax returns filed with ITIN: Lenders typically require at least one year of tax returns filed using the borrower’s ITIN to verify income and tax filing history
- Two years of filed business tax returns (for self-employed borrowers): Self-employed applicants must provide documentation of their business income and tax filing history
- Birth certificate: This document may be required as additional proof of identity (Civil birth certificate may be required for dependents under 18 years of age)
- Driver’s license: Another form of identification that may be accepted by lenders
Note: Specific document requirements may vary among lenders. Consult with your preferred mortgage provider to understand their specific criteria before applying for an ITIN loan.
The Federal Savings Bank can open the door to homeownership
By understanding the basics of ITIN loans, eligibility requirements, and the application process, you can make informed decisions and navigate the vast mortgage landscape with confidence.
If you’re considering an ITIN loan, The Federal Savings Bank is here to help. We’re dedicated to your dreams.
Don’t hesitate to contact us for assistance with ITIN loans and the mortgage process.
Apply now and let The Federal Savings Bank guide you on your journey to homeownership.
Subject to credit approval. Terms and conditions may apply. Property insurance is required on all loans secured by property.
This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to you individual situation.
