Virginia is nicknamed “Old Dominion" because it was the first of the original 13 colonies to be settled by the British. You don’t have to be a history lover to enjoy the benefits of Virginia real estate, though. On a more practical note, Virginia has become a prime destination for international real estate investors. Its growing economy, diverse property options, and accessible mortgage solutions make it appealing to foreign buyers. This guide will provide essential information on foreign nationals seeking mortgages and how to navigate Virginia real estate successfully. Let’s 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.
Debt-service-coverage-ratio (DSCR) loans are an option for foreign nationals looking to invest in Virginia real estate. Many American and international real estate investors use DSCR loans because they are tailored to buying income-generating properties.
Unlike traditional loans, which depend on the borrower’s income, DSCR loans focus on the property's cash flow to qualify the loan. These loans offer more flexibility in terms of documentation and qualifications, making it easier for foreign investors to buy property. They provide a simpler alternative to traditional mortgages, streamlining the process for international investors.
For international buyers interested in Virginia real estate investment, DSCR loans can be an effective financing solution focusing on the property's potential income. You can successfully invest in Virginia real estate market by navigating the eligibility criteria and exploring financing options like DSCR loans. Here are the main benefits:
When seeking a real estate investment loan in Virginia as a foreign national, it’s important to note that each lender has its own underwriting standards. Some lenders are more accommodating to international investors than others.
There are several key aspects of the requirements set by most lenders that you should be familiar with. Below, we outline the various criteria for foreign nationals with most lenders compared to Waltz, a lender that caters to foreign investors:
Most lenders: Generally, income earned in the United States tends to be favored when compared to income from overseas because it’s easier for lenders to track. Lenders typically require documentation of income generated in the U.S. or a comprehensive financial history from your home country. Acceptable documents may include salary (W2) statements, business revenue records, bank statements (potentially requiring a U.S. bank), or other income verification materials.
Waltz: At Waltz, we are accustomed to evaluating your income from both the U.S. and abroad. This allows us to request the necessary documents and ask the right questions upfront, streamlining the process. Our mortgage options primarily emphasize the income potential from the rental property you wish to purchase, rather than focusing solely on your personal financial situation. Oftentimes, this works in your favor as a foreign investor.
Most lenders: Due to the added requirements for foreign nationals seeking investment property loans, about half of all international investors choose to pay in cash to bypass borrowing altogether. However, for those who do seek financing, lenders generally ask for a higher down payment. This usually ranges from 30% to 50%.
Additionally, there may be reserve requirements. Examples include maintaining a certain amount of funds in your account to cover potential rental property vacancies or additional expenses.
Waltz: We usually ask for a down payment of 30%, but in certain cases, it can be as low as 25%. Depending on your financial situation and specific property details, you may not need to meet any reserve requirements.
Most lenders: Lenders will require proof of identification along with your address. Depending on your residency status, you may be eligible for specific primary or secondary home loans. For investment property loans, it’s common for lenders to require that the loan be issued to an American LLC, with you acting as a personal guarantor.
Waltz: All it takes for us to confirm your identity is a valid passport– it doesn’t need to be from the U.S. either! Since we focus on investment property loans, we also require that mortgages be taken out in the name of an LLC. With our Investor Toolkit, you get an LLC and a U.S. bank account2, which could take months if done on your own. This helps foreign nationals streamline the process and avoid time-consuming extra steps.
Most lenders: Most lenders impose a minimum credit score requirement. Some accept scores as low as 640, though this can vary. The catch is that this refers to your FICO score– if you lack a U.S. credit score, many lenders may find it challenging to approve a mortgage for you as a foreign investor.
Waltz: Investors are not obligated to possess a U.S. credit score. Instead, we may conduct alternative credit reports using international credit histories or asset-based assessments. No U.S. credit, no problem!
By understanding these requirements, you can better position yourself to secure a mortgage as a foreign national investing in Virginia. Always remember to compare different lenders to find the option that best suits your needs.
Find out how international investors have benefited from working with Waltz.
Virginia offers a variety of real estate options for foreign nationals, ranging from single family to multi-family rental properties. Here's an overview of the most common types of properties available:
With these options, international buyers can tailor their Virginia real estate investment to meet their goals: personal use, rental income, or a long-term investment.
Virginia has several markets, including busy cities, suburban areas, and coastal communities, giving investors many choices. Here are some of the main advantages of investing in Virginia real estate:
These advantages make Virginia a top destination for international investors seeking stable returns and growth opportunities in the U.S. real estate market.
Each Virginia city provides unique opportunities, allowing foreign nationals to choose the best fit based on their goals and preferences. Here are some of the top locations for foreign nationals to consider:
Arlington, VA, is a top real estate investment location due to its proximity to Washington, D.C. The presence of major employers like Amazon HQ2 and the Pentagon drives consistent demand, while infrastructure developments like Metro expansions boost accessibility. This combination leads to strong appreciation potential and a robust pool of renters.
Richmond, Virginia, is a prime location for real estate investment due to its growing economy and affordable housing market. With a median home price of around $350,000, the city offers strong demand and steady price appreciation. Richmond's vibrant job market attracts diverse buyers, particularly in finance and healthcare. The city's historic charm and modern amenities combined with low pricing relative to other cities on this list, make it an intriguing investment location.
Virginia Beach, the most populous city in Virginia, with 459,470 residents as of the 2020 census, is a major urban hub and a top destination for real estate investors. Its thriving tourism industry, supported by beautiful beaches and a vibrant cultural scene, creates a strong demand for vacation rentals, offering steady income for property owners. Investors benefit from both the tourism boom and the city's diverse economy, making Virginia Beach real estate a wise investment for long-term growth.
Alexandria, known for its historic neighborhoods and proximity to Washington, D.C., is a popular destination for investors looking to capitalize on its high rental demand. With many similar arguments as Arlington, this city provides an easy commute on public transit and also has many restaurants and other amenities that attract renters.
Home to the University of Virginia, Charlottesville offers great investment opportunities in rental properties catering to students and faculty.
Each of these cities provides unique opportunities for Virginia real estate investment, allowing foreign nationals to choose the best fit based on their goals and preferences.
Real estate in Virginia offers significant opportunities to international investors. However, there are additional factors to consider before buying in Virginia markets. Here are some important things to keep in mind:
Refinancing your investment property in Virginia allows you to replace your existing mortgage with a new one, potentially securing better terms or unlocking additional equity. For foreign nationals, this process typically involves a few key steps to ensure a smooth transition, including evaluating the current value of your property and gathering the necessary documentation to meet the lender’s requirements. Here’s an overview of the refinancing process:
With rate-and-term refinancing, you have the opportunity to adjust your mortgage terms, which may help you secure a more favorable deal. While refinancing at a lower interest rate can lower your monthly payments, it's important to remember that it could result in higher overall finance charges over the life of the loan, depending on the new loan terms and duration.
Cash-out refinancing allows you to tap into your property’s equity. If you're investing in Virginia real estate, the extra funds can be used for various purposes, such as making property improvements, consolidating debt, or funding a down payment on another property. This option provides you with cash at closing, expanding your potential for further investment opportunities.
Learn more about refinancing.
Steps to get a DSCR investment property mortgage
If you want a straightforward, streamlined process, Waltz can help you get a DSCR mortgage. Here’s how international investors can effectively navigate the mortgage application process in Virginia with Waltz:
1. Identify a profitable property: Start by looking for a property with high rental income potential in a desirable location. Perform comprehensive research on local rental trends to verify that the property has a solid rental history and the possibility for future appreciation.
2. Compile necessary documents: Get ready to provide essential paperwork, including proof of income, financial statements, and identification documents like your passport or visa.
3. Select a lender that works with foreign nationals: Not every U.S. bank or lender provides mortgages to foreign nationals, so it’s important to find one that specializes in this area. Hint: Waltz works with international investors all the time!
4. Establish an LLC and open a U.S. bank account: Our Investor Kit will help you set up both an LLC and a U.S. bank account2, enabling you to begin your investment journey without unnecessary delays.
5. Submit your mortgage application: After gathering all necessary documentation and confirming the property’s cash flow potential, proceed to submit your application. We will carefully review everything to ensure it aligns with the requirements for a DSCR loan.3
6. Conduct due diligence: We support you throughout the due diligence phase. We’ll assist in coordinating a professional appraisal to verify the property's market value and ensure it meets or exceeds the purchase price.
7. Finalize the purchase: Once your application is approved, you’ll enter the closing process, which involves signing the final documents and transferring ownership of the property. After this step, you’ll officially own real estate in Virginia!
