What comes to mind when you think of Iowa? Perhaps its picturesque farmlands, bustling cityscapes, or a welcoming Midwest charm that’s hard to resist. Or maybe the first word that comes to mind is opportunity.
For foreign national investors, finding a lender and navigating the process of property acquisition in a new market can feel daunting, but Iowa’s appeal makes the effort worthwhile. With a stable economy and relatively affordable property prices, Iowa offers a variety of investment opportunities. In this guide, we’ll break down the types of properties available, financing options for international buyers, and the essential steps to secure a mortgage as a non-U.S. resident.
We are providing the following discussion to you for informational purposes only. All investments, including real estate, involve risk, and we encourage you to invest carefully. The information in this article is not intended to replace or serve as a substitute for any legal, real estate, tax, or other professional advice or service. You should consult with a professional in the respective legal, tax, accounting, real estate, or other professional area before making any decisions or entering into any contracts relating to a rental property.
Many real estate investors use debt-service-coverage-ratio (DSCR) loans. DSCR loans make it easier to qualify for and buy income-generating properties as a foreigner.
A DSCR loan is based on a property’s income performance, assessing the rental income relative to the monthly mortgage payment. Unlike traditional mortgages that rely on personal income, DSCR loans focus solely on the property as an asset. These loans are a type of non-qualified mortgage (non-QM), offering a flexible solution for foreign nationals seeking investment property financing.
DSCR loans provide solutions that simplify your investment process. The key benefits of these loans include:
With Iowa’s rental market offering steady demand, DSCR loans can help international investors build a profitable portfolio without undue complexity.
Explore Waltz’s loan options now.
Each lender has its own guidelines, but there are some common requirements that most follow. Here are examples of criteria that many lenders use:
Most lenders: U.S. lenders tend to find it easier to verify domestic income due to their familiarity with the U.S. financial system. Income from abroad may be analyzed more heavily, and approval might be delayed or denied. Lenders often ask for extensive documentation, including U.S. bank statements, pay stubs, U.S. tax returns, rental income reports, and other financial documents to prove income stability.
Waltz: We recognize that income documentation varies depending on your country of origin. We consider both U.S. and international financial records, such as bank statements and pay slips, when assessing your eligibility. While we take your personal income into account, the rental income potential of the property is the key factor in our evaluation.
Most lenders: Many lenders require a 30-50% down payment, sometimes even higher, and may also ask you to maintain a certain reserve in your bank account to cover potential vacancies or repairs.
Waltz: We take an individualized approach to down payments. While 30% is typical, some buyers may qualify for as low as 25%. We may waive the reserve requirement on a case-by-case basis, depending on specific factors related to the buyer.
Most lenders: Lenders generally ask for a passport and visa, and for investment property loans, they may require the loan to be made through a U.S.-based LLC, with you as the guarantor. The LLC's operating agreement may also be required.
Waltz: For investment loans, establishing proof of identity (KYC) is standard. All we need is a valid passport, even if it’s from your home country. If you don't have an LLC, we can assist in setting one up through our Investor Toolkit, which provides an LLC and Employer Identification Number (EIN) in just minutes.
Most lenders: Credit scores play a crucial role in the approval process. Lenders may accept scores as low as 640, but for international borrowers, the lack of a U.S. credit history is often a challenge. Even with a solid credit history in your home country, not having a U.S. credit score can hinder approval.
Waltz: We understand that foreign nationals may not have a U.S. credit score, and we don't require one. Instead, we evaluate your creditworthiness using your home country's credit history among other factors
Find out how international investors have benefited from working with Waltz.
Choosing the right property is important for generating returns and ensuring steady rental income. Different property types offer distinct benefits, come with varying demand, and require different levels of maintenance and management. Lenders also have specific preferences for property types, which can impact your financing options. Making the right choice can help reduce risks, align with your financial goals, and bring stability to your investment.
With this in mind, let’s explore some of the property types available in Iowa and their potential benefits:
There’s a lot to love about Iowa real estate investment. Here are a few clear advantages of investing in the Hawkeye State:
As Iowa's capital, Des Moines serves as a dynamic hub for finance, insurance, and tech industries. Home to approximately 210,000 residents, the city strikes a balance between big-city energy and small-town charm. With a robust job market, Des Moines attracts top talent, bolstered by major employers like John Deere, Wells Fargo, and Hy-Vee, a Midwestern grocery chain.
Known as the “City of Five Seasons,” Cedar Rapids is a thriving hub for manufacturing and commerce. As Iowa’s second-largest city, it presents exciting opportunities for investors, with affordable real estate prices and a growing demand for rental properties making it a hidden gem. Cedar Rapids also attracts tourists with its rich cultural offerings, including the Czech Village, the National Czech & Slovak Museum & Library, the Cedar Rapids Museum of Art, a vibrant craft brewery scene, and several local sports teams. This provides exciting opportunities for short-term rentals.
Home to the University of Iowa, a prestigious public research university, Iowa City buzzes with the energy of over 32,000 students. With a constant demand for housing from students, faculty, and staff, it's no surprise that the city offers ample opportunities for real estate investment. Additionally, with 54% of households in Iowa City being renter-occupied, it’s an ideal market for foreign investors looking to secure properties with a steady pool of potential renters.
Real estate investors who want to capitalize on their gains can find plenty of opportunities in Iowa. But there are a few unique considerations as well. These include:
Refinancing your Iowa investment property involves replacing your current mortgage with a new one. This allows you to tap into your property’s equity to fund new investments. Waltz provides comprehensive solutions to streamline this process for Iowa real estate investors. Our expertise ensures you can confidently optimize your Iowa investment strategies. The refinancing process for foreign nationals typically includes:
Rate-and-term refinancing can be an appealing option for foreign investors in the Iowa market. It allows you to modify the terms of your current mortgage, potentially securing more favorable loan conditions. However, keep in mind that even with a lower interest rate, your overall finance charges could be higher over the life of the loan.
Cash-out refinancing with Waltz lets foreign investors in Iowa tap into their property’s equity, borrowing more than the current mortgage balance.
The extra funds can be used for purposes like home upgrades, debt consolidation, or a down payment on another property, offering more flexibility and investment opportunities. Take advantage of Iowa’s top foreign national mortgage options to broaden your real estate portfolio.
Learn more about refinancing.
Iowa isn’t just a “flyover state.” It’s a land of opportunity for savvy investors looking beyond the coasts. With plenty of charming residential neighborhoods, Iowa’s real estate market has more than enough to keep international buyers intrigued. With the right knowledge about DSCR loans and the mortgage process, foreign nationals can plant their investment roots firmly in the heartland.
Securing a DSCR mortgage as a non-U.S. resident in Iowa can feel overwhelming, but with Waltz, it's a smooth process. Follow these seven straightforward steps:
1. Find a profitable investment
Begin by finding a property with solid rental potential in Iowa. Focus on areas that meet your investment goals.
2. Gather essential documents
Collect essential documents such as a valid passport, proof of income (foreign bank statements or business financials), and property details. Lenders may also request proof of assets or a credit report from your home country.
3. Select a lender experienced with foreign nationals
Look for a lender experienced with the unique needs of foreign investors. They should be knowledgeable about challenges like verifying foreign income and managing the absence of a U.S. credit history. Waltz specializes in foreign national loans and will guide you through every step.
4. Set up an LLC and U.S. bank account
To qualify for a DSCR loan, most lenders will require you to establish an LLC in the U.S. You’ll also need a U.S. bank account for financial transactions. If you don’t have an Employer Identification Number (EIN) yet, both steps might take time. However, with our Investor Toolkit, you can set up your LLC and U.S. bank account instantly, saving you from months of delays.2
5. Submit your loan application
Before applying, consider consulting an account executive to clarify any questions and help you navigate the process. They’ll ensure you’ve gathered all required property details, financial documents, and proof of the property’s income potential. Once everything is in order, your application will be quick and easy to submit!
6. Perform due diligence
This step involves inspecting the property, securing an appraisal, and submitting any additional documents requested by the lender to confirm the property’s condition and value. Be sure to also review your term sheet.
7. Complete the purchase processOnce due diligence is completed and your loan is approved, it’s time to close the deal. Sign the necessary documents (which can sometimes be done virtually if you're abroad), transfer the funds, and you'll own your rental property in Iowa.
Apply for a DSCR loan today!
