Foreign National Mortgages: A Guide to Real Estate Investing in North Carolina

Optimize Your Real Estate Investment in North Carolina with Waltz

Interested in investing in North Carolina real estate? Waltz makes it easy for foreign nationals to buy investment property in North Carolina! Waltz provides 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 North Carolina's thriving real estate landscape, Waltz offers custom-tailored foreign national mortgages to align with your investment goals. Contact us now to get started.

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 North Carolina 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 North Carolina market and the mortgage expertise you need to confidently invest in the thriving Tar Heel State. Let us guide you through the intricacies of U.S. real estate financing and unlock the potential of your North Carolina investment real estate.

Benefits For Foreigners to Invest in North Carolina Real Estate

There are many advantages in store for foreign nationals who decide to invest in North Carolina real estate. 

One of the biggest benefits of North Carolina real estate investment is the state's growing economy. North Carolina’s real gross domestic product (GDP) was $625.68 billion in 2023, the highest it’s been since 2000. This upward trend is represented by key industries, including aerospace and defense, manufacturing, information technology, and energy. 

North Carolina investment real estate is also advantageous due to its affordability compared to other popular states. This is because the median home value in the state is $335,760, which is lower than the national average of $412,300. This makes investment properties in North Carolina attractive to investors who want to maximize their returns.

Not to mention, North Carolina offers a favorable regulatory climate for investors. This is highlighted by the fact that the Economic Development Partnership of North Carolina provides a variety of incentives for corporations and businesses alike.

Here are a few more reasons why North Carolina is a smart place to buy investment property:

  • North Carolina is attracting an increasing number of new residents daily. In 2023, the state experienced the third-highest population growth in America, following Texas and Florida. This is a good sign for real estate investors, because it points to a strong economy and a lucrative renter base. 
  • North Carolina boasts the nation’s lowest corporate tax rate at 2.5%, attracting businesses and their employees from across the country, which helps keep rental properties in demand.
  • North Carolina investment real estate is currently affordable, but land values are expected to rise in the near future. This creates a compelling opportunity for foreign investors to secure properties at favorable prices now and benefit from appreciation in the coming years.

Specific Considerations for Mortgages in North Carolina

North Carolina, with its diverse geography and growing economy, presents unique factors to consider when investing in real estate.

  • Natural Disasters: While hurricanes can impact coastal regions, North Carolina is also prone to other natural disasters such as floods, tornadoes, and wildfires, particularly in the western part of the state. These risks can influence property insurance costs and potential damage. Currently, the property insurance cost for $300,000 worth of coverage is $2,513
  • Market Variations: Real estate markets in North Carolina vary significantly depending on location. Coastal areas, particularly those popular with tourists, often have higher property values and rental rates. The Research Triangle, home to major universities and technology companies, also experiences strong real estate demand.
  • Regulatory Environment: North Carolina has specific regulations related to real estate transactions, including mortgage lending, property taxes, and zoning laws. Understanding these regulations is crucial for investors to navigate the market effectively.

Which North Carolina Cities Offer Strong Investment Potential?

North Carolina, with its diverse landscape, thriving economy, and strong quality of life, presents numerous opportunities for real estate investors. Here are some of the state's top investment markets:

  • Raleigh: As the state capital, Raleigh offers a booming tech industry, a vibrant downtown scene, and a growing population. Of all the big cities in America, Raleigh was the third fastest-growing big city in 2023, behind Atlanta, GA and Fort Worth, TX. 
  • Charlotte: North Carolina's largest city, Charlotte, is a financial hub with a diverse economy, a thriving job market, and a growing reputation as a cultural center. Just under half of all households in Charlotte are occupied by renters, suggesting a positive trend for real estate investors seeking rental income. 
  • Asheville: This mountain city is known for its arts and culture scene, stunning natural beauty, and a growing tourism industry. 
  • Greensboro: With a strong manufacturing base and a growing technology sector, Greensboro offers a stable economy and affordable housing options.
  • Durham: Home to Duke University and a thriving research triangle, Durham combines a vibrant college town atmosphere with a growing tech industry. With nearly 17,000 students attending Duke in Fall 2023, the city offers an attractive opportunity for foreign investors looking to generate rental income.

Types of Mortgages Available for Foreigners Investing

Foreign nationals can access a variety of mortgage products in North Carolina, 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 North Carolina

Refinancing your North Carolina 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 North Carolina investment properties. 

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

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Rate-and-term refinance

This option can be quite interesting for foreigners looking to invest in the North Carolina market 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.

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Cash-out refinance

At Waltz, we proudly offer this option to North Carolina 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 North Carolina 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 North Carolina has to offer.

Tax Considerations for Foreign Nationals with North Carolina 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 North Carolina real estate is essential for foreign investors. Key tax considerations include:

  • Property Taxes: North Carolina imposes property taxes on real estate ownership, contributing to your overall property expenses. Though the average statewide tax rate is 0.82%, property tax rates vary by county and municipality.
  • Income Tax: North Carolina has a flat state income tax of 4.5%, which applies to rental income generated from your North Carolina property.
  • Federal Income Tax: Rental income from your North Carolina property is also subject to federal income tax.
  • Foreign Investment in Real Property Tax Act (FIRPTA): If you sell your North Carolina 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: North Carolina imposes a transfer tax on the sale of real estate, which is typically shared between the buyer and seller.

Waltz: Your Partner in North Carolina Real Estate Investment

You’ve got dreams of investing in North Carolina real estate, and Waltz can help you make it happen. Our expertise in foreign national mortgages and deep understanding of the North Carolina market provides a solid foundation for your investment journey.

Our Mortgage comes with an Investor Kit that simplifies the process in just a few clicks.

  • LLC Formation: Protect your assets and simplify property management with a custom-tailored North Carolina 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.

Plus, after purchasing your Investor Kit, Waltz offers loans with up to 70% Loan-to-Value (LTV).3 You'll also have the opportunity to open a U.S.-based bank account through Waltz to manage your property's finances.

Let Waltz be your guide to realizing your North Carolina real estate investment aspirations. Contact us today to get started!

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