Are there ways to get Preapproval for a US Mortgage as a Canadian Citizen?

Question

Hello everyone, I am just starting out in Real Estate and I am looking for some advice on how to get started. I would like to know how to get pre approved for a mortgage to purchase a US Property, preferably in Florida. I am a Canadian Citizen who is 20 years old and I have no FICO score or any real connections to the USA. Since I have been a student for the last 16 years and just recently graduated, I don't yet have a full time career in place meaning my income is subpar as I work towards receiving my Ontario Real Estate License. I do however have a decent sum of money in savings for a down payment as well as would be able to get a parent as a cosigner on the loan to help with income if needed. Once again I am just getting started so any advice helps. Thank you in advance.

Stacy Raskin · Answer

There are foreign national DSCR programs where no U.S. credit score is needed for investment property financing. Generally 25% minimum will be needed as a down payment and 6 month reserves of mortgage, property taxes and insurance and a minimum $100K loan amount.

More on DSCR loans:

DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth. Here's a bit more in detail about how rates are calculated for DSCR loans:1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs. I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

Erik Estrada · Answer

Hi Christian,

If you are looking to buy a rental property in the U.S., I would look into a DSCR loan. Lenders won't require U.S. credit history however may require a foreign national credit report, and 2 trade lines opened and active for the past 2 years. You may also be required to show 12 months reserves + the downpayment and closing costs. You also must have a US LLC or Corporation. These guidelines would be lender specific, but generally most DSCR loans will require this.

Jason Wray · Answer

Christian

You would use a DSCR/Foreign National loan program to get the approval.

Marc Greger · Answer

I´d like to ask what kind of investment strategy are you targeting? How about opening a US LLC and do your investing with that LLC. Feel free to reach out and discuss further I can also help with private money lending

Michal Liviatan Carpenter · Answer

Hi @Christian Sorrell

I am based in Toronto and financing Canadians investing in the US in the last 4 years. Same as everyone above wrote, you will qualify for a DSCR product. First step is figuring if the investment will go under personal name or a US entity, second is to open a US bank account, then you are set. I can assist with each step… Also to get you pre approved in minutes. Feel free to DM me.

Colin McMahon · Answer

Hi Christian,If you're looking to buy a rental property in the U.S., a DSCR (Debt Service Coverage Ratio) loan could be a great option as they are not based on your income.

These loans focus on the property's rental income to cover the mortgage payments, making them ideal for investors without well-documented or substantial income.

Typically, lenders will look for a DSCR of at least 1.0 to 1.2, but some lenders will lend at a DSCR of less than 1 but your terms might be less flexible.

For a DSCR loan as a foreign national, you'll need a downpayment of about 25-30%, plus some liquidity to cover closing costs and reserves of about 6 months of mortgage payments.

I'd be happy to lend my expertise. Please reach out if you need more information! I'll send you a DM to connect.

Anderson S. · Answer

Hi Christian, You'd potentially be eligible for a foreign national loan however, we would just need to gather a bit more information from you, and about the deal you're working on. However, you're on the right track. A hard money loan would likely be an excellent fit for your needs.

Brandon Croucier · Answer

We would need to gather a bit more information, but for the most part you would be in the clear. A DSCR, or hard money product would be the right fit for you.

Roy Cleeves · Answer

Hi Christian:  TD Canada Trust has the affiliate of TD Bank in Florida.  I think it would be worthwhile for you to chat with your local TD branch about the ability to get a USA mortgage via TD Bank in the USA.  They may be able to do that since your parents could go onto the loan and they would have a credit score to use and income and you have the downpayment.  This is all theory in my mind. :)

Best Wishes

Are there ways to get Preapproval for a US Mortgage as a Canadian Citizen?

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