Texas has consistently ranked as one of the fastest-growing states in the United States. With a booming economy, an ever-expanding job market, and a reputation for affordable property prices, Texas offers opportunity for real estate investment across multiple markets. In this guide, we'll dive into what makes Texas a popular location for investment and how you can take advantage of DSCR loans to purchase rental property as a foreign national.
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.
Debt-service-coverage-ratio (DSCR) loans offer a streamlined financing solution for real estate investors seeking a more flexible approach to property financing.
What is a DSCR loan?
DSCR loans are designed specifically for rental properties. What sets them apart is that they prioritize a property's rental income over the borrower's personal finances. Simply put, if the property generates cash flow, lenders are more likely to approve the loan. This makes DSCR loans particularly advantageous for international investors who may struggle to secure traditional mortgages.
When considering loan options for purchasing a rental property, it's essential to recognize the key benefits of DSCR loans. Here are the top three advantages:
When applying for a real estate investment loan in the U.S. as a foreign national, it’s crucial to understand the various requirements that lenders may have. The U.S. real estate market can be complex for international investors, as different lenders have varying criteria and processes.
Knowing what to expect can help you navigate the process more effectively and choose the best lending option for your needs. Here’s a breakdown of how most lenders compare to Waltz, and how Waltz sets itself apart as a more accessible and flexible option for foreign nationals:
Most lenders: Most U.S. lenders prefer income earned within the country because it’s easier to verify. Foreign income, however, often requires additional documentation, such as translated bank statements and proof of salary. Even with all the necessary paperwork, approval can be challenging and may take longer due to the complexity of verifying foreign income.
Waltz: At Waltz, we recognize that income sources can vary. Whether your earnings come from the U.S. or abroad, we accept a range of proof, including foreign bank statements, pay slips, and rental income reports. Additionally, we take a comprehensive approach by considering the rental potential of your property to ensure a thorough review.
Most lenders: Foreign investors typically face higher down payments, ranging from 30% to 50% of the property's value. Some lenders also require extra cash reserves. These measures are designed to reduce the perceived risk of lending to international buyers.
Waltz: Waltz offers more flexible terms, with qualified borrowers securing loans with as little as 25% down. Reserve requirements and loan terms vary by individual, making the process more accessible for many investors.
Most lenders: A valid passport and visa are typically required, along with a U.S. ID in some cases. Many lenders also require investors to establish a U.S.-based LLC, which involves filing legal business documents.
Waltz: A passport from your home country is all you need for identification. To obtain a DSCR loan, you will also need an LLC. Our Investor Toolkit simplifies the process, helping you set up an LLC and obtain an Employer Identification Number (EIN).
within days—without the need for a separate platform.
Most lenders: Most lenders rely on U.S. credit scores, making it challenging for foreign investors without a U.S. credit history—even if they have strong credit in their home country.
Waltz: Instead of relying on a U.S. credit score, we take a broader approach. We consider your credit history from your home country, along with other financial factors, to offer a fair and complete evaluation of your eligibility.
Find out how international investors have benefited from working with Waltz.
There are various property types that are eligible for DSCR loans, each with its own advantages and drawbacks. Here's a quick breakdown:
Texas presents a wealth of opportunities for real estate investors. Its combination of strong economic growth, a growing population, and investor-friendly policies makes it a standout market in the U.S.
Texas offers diverse investment opportunities with a booming economy, strong job markets, and thriving industries. Here are some of the top cities in Texas where international buyers invest :
Austin is renowned for its thriving tech industry, which has brought an influx of skilled workers to the city, driving demand for residential rental properties. The city’s tech boom, along with its vibrant cultural scene—featuring live music, arts, and an eclectic food culture—makes it an attractive destination for young professionals and families alike. With a steady flow of new residents looking for housing, Austin offers a variety of opportunities for real estate investors focused on the residential market.
Dallas is a fast-growing city with a strong economy driven by industries like tech, finance, and healthcare. Its central location and excellent infrastructure make it a key player in both regional and national markets. With a high quality of life and steady housing demand, Dallas continues to attract residents and businesses. Compared to Austin, Dallas offers more affordable housing, with median home prices generally lower, making it a more cost-effective option for those seeking to invest or live in Texas.
Part of the larger Dallas-Fort Worth metroplex, Fort Worth combines a strong local economy with consistent growth in sectors like healthcare, manufacturing, and energy. Known for its rich cultural heritage, including the iconic Stockyards, Fort Worth offers a unique blend of Western charm and modern amenities.
Houston is one of the largest cities in the U.S. It’s known for its strong economy driven by industries like energy, healthcare, and manufacturing. The city’s lack of zoning laws gives developers more flexibility, making it an attractive market for real estate investment. With a steady stream of renters and consistent demand for housing, Houston offers potential for those seeking investment opportunities.
With a rapidly growing population and affordable housing options, San Antonio is a prime market for real estate investment. The city’s military presence, along with strong tourism and healthcare sectors, creates a stable demand for rental properties.
There’s a lot to love about investing in Texas real estate, but there are a few key pitfalls to be aware of, too. Property taxes, insurance costs, and other factors can affect how much return you’ll earn from your investment. The following are things to consider before moving forward with a Texas property:
Refinancing an investment property in Texas typically involves replacing your current mortgage with a new one to secure better terms or access additional capital. The general steps include:
This option can be quite interesting for foreigners looking to invest in the Texas 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.
At Waltz, we proudly offer the option to do a cash-out refinance to Texas 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 Texas 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 Texas has to offer.
Waltz is committed to assisting foreign nationals in achieving their Texas real estate investment goals.
Real estate investment opportunities are abundant, with a variety of markets ranging from expanding rental areas to properties in desirable locations. At Waltz, we simplify the process of securing a DSCR loan. Here's an overview of how it works:
1. Find a profitable investment
Look for locations that align with your investment strategy, then find a cash flowing rental property.
2. Gather essential documents
Prepare important documents such as a valid passport, proof of income (like foreign bank statements or business financials), and property information. Lenders may also request proof of assets or a credit report from your home country.
3. Select a lender experienced with foreign nationals
Work with a lender who understands challenges such as verifying foreign income and managing the absence of a U.S. credit history. Waltz specializes in DSCR loans for international clients and is here to assist you throughout the process.
4. Set up an LLC and U.S. bank account
To qualify for a DSCR loan, most lenders will require you to set up 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, this process can take time. However, with our Investor Kit, you can quickly set up an LLC and U.S. bank account2—saving you from lengthy delays.
5. Submit your loan application
Before submitting your loan application, it's helpful to speak with an account executive who can answer any questions and guide you through the process. They’ll help streamline the application, ensuring you have all the necessary property details, financial documents, and proof of the property’s income potential. Once you've gathered everything, submitting your application should be quick and straightforward!
6. Perform due diligence
This step includes inspecting the property, getting an appraisal, and fulfilling any additional document requests from the lender to verify the property’s condition and value. You’ll also want to review your term sheet!
7. Complete the purchase process
After completing due diligence and securing loan approval, you're ready to close the deal. Review and sign the required documents—remote signing is often available for international buyers. Once the funds are transferred, the property is officially yours!
