Foreign National Mortgages: A Guide to Real Estate Investing in Maryland

Purchase Your Maryland Investment Property with Waltz

Waltz empowers foreign nationals to unlock the potential of Maryland’s real estate market. We provide specialized financial solutions designed to meet the unique needs of international investors. Our mortgage products feature competitive interest rates, flexible terms, and access to equity for future investment opportunities. Whether you’re seeking to diversify your global portfolio or capitalize on Maryland's thriving real estate landscape, Waltz offers custom Maryland investment plans for foreign national mortgages. Get started now.

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.

What are Foreign National Mortgages?

Securing financing for a U.S. property as a non-resident can be complex. Foreign national mortgages provide a tailored solution for international investors seeking to own Maryland real estate.

At Waltz, we specialize in simplifying the U.S. real estate financing process for foreign nationals. We have a deep understanding of the market and the mortgage expertise you need to confidently invest in Maryland real estate. Let us guide you through the intricacies of U.S. real estate financing and unlock the potential of your Maryland investment.

Benefits of Investing in Maryland Real Estate for Foreign Nationals

Maryland presents a compelling opportunity for foreign nationals seeking to invest in U.S. real estate. The Old Line State boasts a robust economy, driven by a diverse mix of industries including technology, healthcare, and government. This economic vitality translates to a strong rental market, making investment properties in Maryland highly attractive.

Maryland also offers a desirable lifestyle with its proximity to major cities like Washington, D.C. and Baltimore. Plus, there are beautiful coastal areas and plenty of historic charm throughout the state.

Here are a few more reasons why you should consider Maryland investment properties:

Maryland is one of only 14 states in America to achieve a AAA bond rating, indicating a strong and stable economy with the lowest possible risk of default on financial obligations. This is a significant advantage for real estate investors, as it means their investments in Maryland are secure and well-supported by the state’s economic health.
Maryland's real estate market has consistently demonstrated growth and appreciation over the years, making it an appealing option for investors seeking long-term value and stability.
With a low unemployment rate of 2.8% (compared to the national average of 4.3%) and a high median household income of $108,200 (above the national average of $74,580), Maryland offers potential landlords a reliable tenant base capable of affording higher rents. Additionally, the state's popularity with military and political families, along with frequent elections and military personnel changes, provides ample rental income opportunities.

Specific Considerations for Mortgages in Maryland

Maryland offers a lot of compelling reasons to buy property there. But, as with any state, there are some challenges that can come with owning property there.

Maryland’s coastal areas are at risk of climate change, from coastal erosion to heightened risk of storms. Maryland is working hard to reverse the effects of climate change and has established the most aggressive emissions reduction goals in the nation. However, you may still need additional insurance coverage if you buy in an affected area.

Additionally, Maryland homes are more expensive than the average American property. Buying a residential property in Maryland costs an average of $452,900, compared to the U.S. average of $363,438. This means that you’ll pay more for a home in Maryland, which can cut into your profits.

Which Maryland Cities Offer Strong Investment Potential?

Maryland offers beautiful cities, stunning coastlines, and generally excellent investment opportunities. Here are some of the state’s top real estate markets:

Baltimore: As Maryland’s largest city, Baltimore boasts a rich history and endless cultural experiences. Its economy is also expanding rapidly, with an economic output of $50 billion in 2022, making it one of the fastest-growing cities in the state.
Bethesda: Bethesda is an excellent place to buy property, known for its upscale neighborhoods, close proximity to Washington, D.C., and robust job market. The area is home to major companies like Marriott International and Lockheed Martin, adding to its appeal as a prime real estate location.
Columbia: This planned community is known for excellent schools and a high quality of life.‍
Rockville: Rockville is a thriving suburb with strong technology businesses, a diverse housing market and a convenient location.

Types of Mortgages Available for Foreign Nationals in Maryland

Foreign nationals can access a variety of mortgage products in Maryland, each with its own benefits:

DSCR Loan: Debt service coverage ratio (DSCR) loans make it easier for foreign investors to buy US rental properties. Unlike traditional mortgages that heavily rely on a borrower's personal income and credit, DSCR loans focus on the property's ability to generate income. By focusing on the property's income-generating potential rather than the investor's personal finances, DSCR loans eliminate the traditional hurdles often faced by international buyers. Waltz specializes in DSCR loans for foreign investors. Contact us to get started.
Non-Resident Conventional Loan: These loans offer competitive rates but typically require a higher down payment (often 30% or more) and may not require a U.S. credit history.
ITIN Loan (for certain non-residents): This program allows qualified borrowers to use an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. It often has down payment requirements around 30% and may have specific requirements for employment and income verification.
Jumbo Loan (for high-value properties): Jumbo loans are for mortgages that exceed $766,000, and sometimes over $1 million. These programs are more exclusive and cater to foreign investors with substantial assets and strong financial profiles.
Hard Money Loan: This is a short-term option from private lenders. It can be useful for quick closings but comes with higher interest rates and stricter terms.
Fixed-Rate Mortgages: These are the most common type of mortgage, offering a fixed interest rate for the entire loan term (typically 15 or 30 years). This provides stability and predictability in monthly payments.
Adjustable-Rate Mortgages (ARMs): ARMs offer lower initial interest rates, but the rate can adjust periodically based on a specific index. They can be a good option for borrowers who plan to sell or refinance the property before the interest rate adjusts significantly.
Interest Only Mortgages: With an interest-only mortgage, you only pay the interest on the loan for a specified period. The principal balance remains unchanged. This can result in lower monthly payments, but you're not building equity in the property during this time and the entire principal balance is due at the end of the interest-only period.
‍Balloon Mortgages: A balloon mortgage is a short-term loan with a large final payment due at the end of the term. The monthly payments during the loan term are typically lower than a traditional mortgage, but the balloon payment can be substantial.

Process of Refinancing for Foreign Nationals in Maryland

Refinancing your Maryland investment property means carefully replacing your current mortgage with a new one. This entails taking out a mortgage to use the equity in their residences to fund new investments.

Waltz offers comprehensive and effective solutions to ease this process for Maryland real estate investors. Our knowledge ensures that you may securely and successfully optimize your Maryland real estate investing strategies.

The refinancing process for foreign nationals generally involves:

Determining your property's current market value
Exploring different loan terms and interest rates to find the best deal
Preparing financial documents, including income verification and property ownership proof
Completing the application process
Once approved, finalizing the refinancing transaction

Exploring Refinancing Options for Foreign National Mortgages in Maryland

Rate-and-term refinance

This option can be quite interesting for foreigners looking to invest in Maryland properties because it allows you to adjust the terms of your current mortgage— with the potential that it can result in a better deal on your house loan. Please note that even if you refinance an existing loan at a lower interest rate, your total finance charges may be higher over the life of your loan.

Cash-out refinance

At Waltz, we proudly offer this option to Maryland foreign investors as it allows you to access your property's equity— allowing you to borrow more than the current mortgage balance (based on the original equity).

For those interested in Maryland real estate investments, the additional funds can be utilized for various personal objectives, such as home upgrades, debt consolidation, or a down payment on another property. This provides you with cash at closing for a range of needs, broadening your investment opportunities while leveraging the best foreign national mortgages Maryland has to offer.

Tax Considerations for Foreign Nationals with Maryland Real Estate Investments

Seeking advice from a tax expert is always a smart move. Please note, this does not constitute legal or tax advice. Understanding the tax implications of owning Maryland real estate is essential for foreign investors. Key tax considerations include:

Property Taxes: Maryland imposes property taxes on real estate ownership, contributing to your overall property expenses. Property tax rates vary by county and municipality.
Income Tax: Maryland has a state income tax system that varies between 2% and 5.75% based on income. In Maryland, income tax applies to rental income generated from your rental property.
Federal Income Tax: Rental income from your Maryland property is also subject to federal income tax.
Foreign Investment in Real Property Tax Act (FIRPTA): If you sell your Maryland property, you may be subject to FIRPTA withholding, which requires a portion of the sale proceeds to be withheld for potential U.S. capital gains taxes.
Transfer Tax: Maryland imposes a transfer tax of 0.5% on the sale of real estate, which is typically shared between the buyer and seller.‍
County Recordation Tax: In addition to the transfer tax, all Maryland counties—except Frederick County—impose a recordation tax on real estate deed transfers.

Waltz: Your Partner in Maryland Real Estate Investment

Waltz is committed to assisting foreign nationals in building a successful real estate portfolio in Maryland. Our expertise in foreign national mortgages and deep understanding of the Maryland market provide a solid foundation for your investment journey.

We offer comprehensive support beyond financing, including:

LLC Formation: Protect your assets and simplify property management with a custom-tailored Maryland LLC.
EIN Acquisition: Obtain an Employer Identification Number (EIN) to open a U.S. bank account for property-related finances.²
Operating Agreement: Streamline ownership and management with a professionally crafted operating agreement.

With our Investor Kit, you can access loans with up to 70% LTV and conveniently open a U.S. bank account through Waltz.³