Foreign National Mortgages: A Guide to Michigan for Real Estate Investors

What are foreign national mortgages?

A foreign national mortgage is a specialized loan for foreign investors. It allows you to purchase rental properties in the U.S without having to live in them. Unlike traditional mortgages, this loan is considered a non-qualified mortgage (non-QM), so it doesn’t follow the rules meant for loans designed for owner-occupants.

Non-QM loans are more flexible. They accept a variety of documentation and qualifications, making it easier for foreign investors to buy rental properties in Michigan and other U.S. states. This option streamlines the process compared to a traditional mortgage, making it favorable for real estate investors.

Types of properties available for purchase

Each property type offers different earning potential, attracts different tenants, and comes with its own set of challenges. Local market conditions also matter—certain areas may have a higher concentration of one property type, which can affect demand and rental income.

By understanding your investment goals and choosing the appropriate property type, you can better position yourself to succeed in Michigan’s market. Here are a few property types to consider depending on your investment strategy:

Single family: These are standalone properties designed for one family, with no shared walls with other houses. They are a popular choice for long-term investment, as they often appreciate in value more quickly than other property types. Single family homes also appeal to tenants with families or those who want to grow their family, as they typically offer more space and privacy.
Condominiums (condos): Condos consist of individual units within a larger building or complex, where each unit is owned separately. Residents must adhere to the rules set by a Homeowners Association (HOA). Some condos offer shared amenities, such as gyms and pools. Condos are often easier to finance than co-ops and are highly sought after in urban areas, where space is limited and amenities are in demand.
Townhomes: Townhomes are multi-level properties that share walls with neighboring units. While they offer similar benefits to condos, townhomes typically provide more privacy, making them appealing to families and long-term renters. These are often more affordable in price in relation to single family properties.
2-4 Unit multi-family properties: These buildings have multiple separate rental units, offering higher cash flow than single-family homes. Renting out several units helps spread financial risk, as vacancies in one unit are offset by income from the others, increasing the likelihood of consistent cash flow.

Eligibility criteria for foreign national mortgages

Each lender has their own set of rules and requirements.¹ However, there are some common standards most lenders follow. Here are a few key factors you'll likely come across:

1. Income verification

Most Lenders: Lenders in the U.S. find it easier to verify income from within the country because they are more familiar with local sources of money. This means U.S.-earned income is usually checked less carefully than income from other countries. However, if your income comes from outside the U.S., some lenders may be more cautious and may not approve your loan right away.

If a lender is willing to work with foreign income, they will ask for detailed proof that you have a steady and reliable income to make sure you can pay back the loan. Some of the documents they might ask for include U.S. bank statements, pay stubs (if you have a salary job), U.S. tax returns, rental income statements (if you already own rental properties), and additional financial records.

Waltz: We specialize in foreign national loans and understand that income documentation can vary depending on where you're from. Instead of only looking solely at U.S.-based documents, we also review documentation from your home country, such as bank statements, pay slips, and other financial records, to help qualify you.

While we consider your personal income, the most important part of our evaluation is the potential income you can earn from the property you want to buy. Our goal is to simplify the process and offer the support you need to get approved.

2. Down payment requirements

Most Lenders: It’s common for most lenders to ask that you pay 30-50% of the loan amount in a down payment. Sometimes, it can even be higher. Additionally, lenders may require you to maintain and show a certain percentage of the loaned amount as a reserve in your bank account.

They do this to account for situations where the property is vacant or needs maintenance and repairs. This standard practice often becomes a deterrence when going for financing options.

Waltz: The required down payment for our loans can vary depending on the buyer. We assess each situation individually, which means some buyers may qualify for a down payment as low as 25%, though 30% is typically the standard. In certain cases, we may also waive the reserve requirements based on specific factors on an individual basis– it’s always recommended to have six months kept in reserves, though.

Learn more about our mortgages for foreign nationals.

3. Valid passport, visa, and other verification documents

Most Lenders: Typically, lenders will ask for your passport and visa. For loans on investment properties, they often require the loan to be made to a U.S.-based LLC, with you as the personal guarantor. In such cases, they may also ask for the LLC's operating agreement.

Waltz: Establishing proof of identity (KYC) is a standard practice for investment loans. To verify your identity, all we require is a valid passport, which can be from your home country. If you don’t yet have an LLC, we can assist you in setting one up. With our Investor Kit, you'll receive an LLC along with an Employer Identification Number (EIN)—and it’s ready in just minutes!

4. Credit score

Most lenders: Credit scores are a key factor when applying for a loan. While some lenders may accept scores as low as 640, the real challenge for international borrowers is the reliance on FICO scores. If you don’t have a U.S. credit history, which is common for many foreign borrowers, lenders can be hesitant to approve your loan. Even if your credit score is solid in your home country, the lack of a U.S. credit history can be a major barrier.

Waltz: We recognize that as a non-U.S. citizen, you may not have a U.S. credit score. That’s why we don’t require one for foreign national applicants. Instead, we evaluate your creditworthiness by reviewing your credit history from your home country.

Learn more about how international real estate investors find success with Waltz.

Advantages of investing in Michigan real estate

There are several advantages to investing in Michigan real estate as a foreign national:

1. Diverse investment opportunities: Michigan’s real estate market offers a variety of options, from bustling urban areas like Detroit and Grand Rapids to scenic waterfront properties along the Great Lakes, catering to a range of investment goals.

2. Growing economic hubs: Michigan’s economy is growing. It has seen growth driven by the automotive industry, advanced manufacturing, and a rising tech sector. Companies like Autosystems America Inc., Cosma Body Assembly Michigan, and Magna New Mobility USA are expanding their operations, creating jobs and boosting state revenue while attracting and retaining residents.

3. Affordable property prices: Michigan stands out for its affordable real estate market, with median home prices well below the national average. As of the third quarter of 2024, the typical home price in Michigan sits at just over $240,000—68% of the typical U.S. property price. This affordability creates a unique opportunity for investors seeking strong cash flow potential. Lower property costs allow for higher returns on rental income, as rent prices often remain competitive relative to purchase prices. For those focused on long-term rental strategies, Michigan’s market makes it cheaper to acquire multiple properties and build a diverse, income-generating portfolio.

4. Thriving tourism market: Michigan’s natural beauty, from its iconic Great Lakes to outdoor recreation opportunities, drives a steady demand for vacation rentals, particularly in popular areas like Traverse City and the Upper Peninsula.

5. Growing rental demand: Michigan's rental market is increasingly competitive, driven by a growing job market and population growth in key cities like Detroit, Grand Rapids, and Ann Arbor. The state’s expanding industries (which include automotive, manufacturing, and technology) are attracting workers, while its affordability appeals to those relocating from pricier regions. This surge in demand, combined with an expanding economy, creates favorable conditions for investors.

DSCR loans for foreign nationals investing in Michigan

For foreign nationals looking to invest in Michigan real estate, a debt-service-coverage-ratio (DSCR) loan provides a distinct advantage. This financing solution helps overcome many of the challenges typically encountered by international buyers who may struggle to meet the strict criteria of traditional mortgages.

Key benefits of DSCR loans

DSCR loans offer customized solutions to simplify the investment process for foreign investors. Here are the key benefits of this financing option when working with Waltz:

No U.S. credit history required for non-U.S. citizens: Unlike traditional loans that rely on U.S. credit scores (FICO), DSCR loans focus on the property’s ability to generate sufficient rental income to cover its mortgage. This means foreign investors without a U.S. credit history can still qualify by showcasing the property's cash flow, not only personal credit. Waltz evaluates your financial history from your home country instead, removing a common barrier for international buyers.
Faster qualification: The qualification process for DSCR loans is often faster than traditional loans. At Waltz, we leverage our expertise in working with international investors to streamline the application process. By knowing exactly which documents to request and the right questions to ask, we can fast-track approvals, sometimes in as little as 14 days. That way, you can move forward with your investment quickly.
Scalability: One of the biggest advantages of DSCR loans is scalability. There is no limit to how many loans you can secure, as long as the properties you purchase generate positive cash flow and meet the lender’s requirements. This makes it easier for foreign investors to build and expand their real estate portfolios over time, as long as each property meets the income requirements for the loan.
Loan Flexibility: DSCR loans offer a high level of flexibility in terms of loan structure. Depending on your investment goals, you can choose from options like adjustable interest rates, interest-only periods, and flexible prepayment penalties. Whether you're planning a long-term rental strategy or investing in short-term vacation properties, the loan terms can be tailored to fit your needs and maximize your returns.

Whether you're interested in short-term vacation rentals or long-term investment properties, Michigan provides a wide variety of opportunities to match your investment goals. Waltz is here to help you navigate the process with expert guidance and efficient solutions that meet your needs.

Rate-and-term refinance

Cash-out refinance

Steps for a non-U.S. resident to get a mortgage

Getting a mortgage for a U.S. investment property doesn’t have to be scary. At Waltz, the process is straightforward and fully transparent. Here’s what you can expect along the way:

1. Find a profitable investment

To get a DSCR loan, your investment property needs to be profitable. Work with your real estate agent to locate a property with strong rental income potential. Always be sure to evaluate how it fits your strategy and investment goals before putting in an offer.

2. Gather essential documents

Gather the necessary documentation. This includes a valid passport (from your home country), proof of income such as bank statements, and property details that will show that it will be a profitable investment. Lenders may also request proof of assets or a credit report from your home country if applicable.

3. Select a lender experienced with foreign nationals

It’s important to work with a lender who understands the unique needs of foreign investors. Look for one experienced in handling the challenges of verifying foreign income and working without a U.S. credit history. Waltz specializes in DSCR loans for foreign nationals and can walk you through every step of the process.

4. Set up an LLC and U.S. bank account

Most lenders require foreign investors to set up a U.S.-based LLC to qualify for a DSCR loan. You’ll also need a U.S. bank account for financial transactions. While this step can take time, Waltz’s Investor Kit allows you to quickly establish both your LLC and bank account², saving you from unnecessary delays.

5. Submit your loan application

Before submitting your application, it’s helpful to speak with an account executive who can answer your questions and ensure you’re on the right track. They’ll guide you through the documentation process and help streamline your application to ensure you have all the necessary property details, financial information, and proof of income. Once ready, submitting your application will be efficient and easy.

6. Perform due diligence

This step involves inspecting the property, obtaining an appraisal, and addressing any additional document requests from the lender to confirm the property’s condition and value. You’ll also review your term sheet, ensuring the loan terms align with your investment goals.
Learn how to read a term sheet for DSCR loans.

7. Complete the purchase process

Once your loan is approved and due diligence is complete, it’s time to close the deal. Sign the necessary paperwork to complete the sale—if you're outside the U.S., Waltz may even be able to arrange a virtual signing. Finally, transfer the funds and you’ll officially own your rental property in Michigan!