Thinking about investing in Michigan?
Beyond its natural beauty, Michigan offers foreign investors access to a growing economy, affordable property prices, and strong rental market. While navigating financing and state-specific opportunities may seem challenging, this guide will simplify the process. From Detroit’s rising popularity to suburban growth, Michigan appeals to many foreign national investors. As you read on, you’ll learn how to get a mortgage as a non-U.S. citizen and what Michigan has to offer as a potential investment market.
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.
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.
A DSCR loan offers investors in Michigan the opportunity to purchase rental properties without the need to live in the U.S. Unlike conventional loans, these loans are not solely dependent on the borrower’s personal income. Instead, they are primarily based on the rental income the property generates.This means that as long as the property’s cash flow can cover the loan payments, investors may be able to secure financing.
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:
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.
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:
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.
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.
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 Toolkit, you'll receive an LLC along with an Employer Identification Number (EIN)—and it’s ready in just minutes!
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.
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:
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.
Detroit, Michigan’s largest city, is experiencing a remarkable resurgence. It’s fueled by new business investments and urban redevelopment. Between 2022 and 2023, Detroit saw its first population growth in decades, driven by an employment boom and crime reduction measures that have resulted in the city’s safest trends in nearly 60 years. While Detroit is rapidly growing, you can still find affordable real estate here, making it an attractive investment opportunity for foreign nationals.
Grand Rapids is a vibrant mid-sized city with a strong economy built on healthcare, manufacturing, and the arts. With its high quality of life and steady population growth, it’s no surprise the rental market here is thriving—occupancy rates are at an impressive 95%. For foreign investors, that means steady demand and strong rental income potential.
Home to the University of Michigan, Ann Arbor offers a lucrative opportunity for real estate investors, particularly in the student housing market. With nearly 35,000 undergraduates and consistent demand for off-campus housing, renting to students can provide steady cash flow and high occupancy rates. While Ann Arbor’s housing prices are higher than in many other Michigan cities, its strong economy, desirable neighborhoods, and status as the country’s #1 small college town, make it an area worth considering. The combination of rental demand from students, graduates, and professionals ensures reliable returns, while the city’s economic stability and appeal support long-term property value retention.
Nestled along Lake Michigan, Traverse City is known for its beaches, wineries, breweries, and dining scene. This thriving tourism hub offers strong income potential for short-term rental investors, with annual earnings reaching up to $50,000. Despite its lakefront appeal, real estate remains relatively affordable, and the area continues to grow, with a 7.4% population increase between 2010 and 2020, far outpacing Michigan’s 2.0%. Expanded direct flight options at the local airport further fuel tourism, solidifying Traverse City's status as a potential investment location.
There are plenty of good reasons why Greater Lansing has been named the “fastest-growing Midwest metro.” As Michigan’s capital city, Lansing offers affordable housing options and a steady demand for rental properties driven by government employees, university students, tech workers, and healthcare professionals. Its central location and economic growth make it an appealing choice for real estate investment.
Real estate investors in Michigan need to consider Michigan's unique geography and economy before taking the plunge and purchasing property there. Here’s what to consider:
Refinancing your Michigan investment property involves replacing your existing mortgage with a new one. For foreign nationals, this process typically includes the following steps:
Rate-and-term refinancing gives you the option to modify the terms of your existing mortgage, which could lead to a better deal on your investment property loan. However, it's important to keep in mind that even if you secure a lower interest rate, your total finance charges over the life of the loan might end up being higher. This is something to consider carefully when deciding if refinancing is the right move for you.
Cash-out refinancing helps you tap into your property's equity. This option provides cash at closing, broadening your investment opportunities. These additional funds can be used for property upgrades, debt consolidation, or a down payment on another property.
Learn more about refinancing.
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.
