When people think of America, they often think of New York. Believe it or not, there’s more to the state than Times Square, skyscrapers, and delicious pizza. In fact, there’s a whole state beyond New York City with lots of opportunities. It’s no wonder foreign investors choose to invest in New York real estate. However, obtaining a mortgage in New York as a foreign national can be more complex than for a U.S. citizen. This guide provides a clear understanding of mortgage options for foreign nationals in New York, helping you navigate the requirements, benefits, and considerations for investing in the state.
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.
International real estate investors can use debt-service-coverage-ratio (DSCR) loans to buy rental properties in the U.S. with less restriction.
DSCR loans that make it easier for foreign investors to buy U.S. rental properties. The benefit of these loans is that 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 income-generating potential rather than the investor's personal finances, these eliminate the traditional hurdles often faced by international buyers across the globe.
As a foreign national, DSCR loans can simplify the property purchase process significantly. Here are the top three benefits:
When applying for a real estate investment loan as a foreign national, it's important to recognize that lenders may have varying requirements. Some lenders may offer more flexibility for international investors than others, so understanding these differences can help you make a well-informed choice.
Most lenders: U.S.-based income is usually checked less closely than foreign income. Lenders usually ask for proof of U.S. income or detailed documentation from your home country, such as W-2 forms, business income, bank statements (possibly including a U.S. bank account), and other supporting documents.
Waltz: U.S. income is not required for international investors. We have various ways to verify income earned in your home country. This, plus an emphasis on rental property income generation, makes the process simpler for foreign nationals.
Most lenders: Foreign nationals often face higher down payment requirements, typically between 30% and 50%. Due to these high requirements, many investors opt to pay cash instead of taking out a loan. Some lenders may also ask for reserve funds to cover potential property vacancies or other issues.
Waltz: We usually require a 30% down payment, and in some cases, as low as 25%. Depending on your financial situation and the property, reserve funds may vary.
Most lenders: Lenders will ask for proof of identification and your current address. If you're applying for an investment property loan, they may require that the loan be under an American LLC, with you as the personal guarantor.
Waltz: We use your passport to verify your identity, even if you’re from outside the U.S. We focus specifically on investment property loans, so we also require that the mortgage be taken out in the name of an LLC. The difference with Waltz is that we provide an Investor Kit, which includes an LLC with an EIN and a U.S. bank account2, making the entire process easier for you.
Most lenders: Without a U.S. credit score, it can be challenging for foreign investors to secure a mortgage. Many lenders require a minimum U.S. credit score, typically around 640.
Waltz: Many international investors choose to pay cash due to the challenges of obtaining a loan without a U.S. credit score. However, at Waltz, we don’t require a U.S. credit score for foreign nationals. Instead, we look at other factors, such as your international credit history or assets, to help secure your loan.
Find out how international investors have benefited from working with Waltz.
Selecting the right property type is key to a successful real estate investment. Each type offers unique returns, demand, and maintenance needs, so understanding the local market is essential. Here are some property types to consider when investing in New York:
New York State offers a variety of real estate opportunities, catering to different investment goals across urban, suburban, and rural markets. Here are several factors that investors might consider when looking at real estate in the state:
Looking to invest in New York real estate? These cities should be on your radar:
New York City remains a coveted destination for real estate investors. With consistently high rental demand and steady property appreciation, the Big Apple has something for everyone, including cozy studio apartments with stunning views, high-rise luxury condos, and thriving commercial spaces. Manhattan, in particular, has witnessed substantial real estate value growth, often exceeding 100% over the past two decades. This is further helped by the fact that 69% of households rent their homes, meaning there is a tonne of opportunity for investors.
To highlight the potential, here is a look at some of investment opportunities for a few of NYC boroughs:
The Bronx: It is the northernmost borough— well known for its vibrant culture, artistic scene, and large green spaces. The Bronx offers more affordable rents compared to other areas like Manhattan and Brooklyn, thereby attracting young professionals and families looking for value without sacrificing city access.
Brooklyn: Known for its trendy lifestyle as well as a thriving arts scene, Brooklyn appeals to young professionals and creatives. It has become a hub for tech companies and startups. This has resulted in increased demand for both residential and commercial real estate. This rapid appreciation in property values and a stable rental market make it a solid investment option.
Manhattan: This is often referred to as the heartbeat of NYC, located in New York County. With high property values and consistent demand due to a number of startups and corporate offices, Manhattan remains a premium investment destination. Its world-class amenities, business districts, and vibrant lifestyle in new areas such as Hudson Yards attract both local and international investors. Despite high entry costs, appreciation potential and rental returns remain substantial.
Queens: This is the largest borough and the most ethnically diverse county in the United States, home to a range of communities such as Latinx, Asians, African Americans and more! With ongoing infrastructure improvements, proximity to major airports, and a growing interest from young professionals and families, it presents a strong rental market and an affordable entry point for investors.
Staten Island: Situated in Richmond County, Staten Island offers a quieter, suburban feel, all while maintaining easy access to Manhattan via the Staten Island Ferry. It is important to highlight that it is known for its green spaces such as High- Rock Park, family-friendly neighborhoods, and relatively affordable property prices. This means that it appeals to those seeking a balanced lifestyle and makes a strategic choice for rental properties and single-family homes.
Home to Niagara Falls, a growing tech scene, and a dozen colleges, there’s a lot going on in Buffalo, New York. The city has recently undergone a significant transformation through a $1 billion renovation project. This has driven job growth in the area, as over the past year, private sector jobs in the region grew by 5,100 (1.0%), reaching 541,500 in September of this year. As a result, there has been increased interest in the demand for rental properties as new residents move to the area for employment.
These signs show that you can appeal to visitors with short-term rentals, tech employees with modern urban housing, and college students with communal-style spaces in Buffalo. Furthermore, no matter what you buy, you can purchase in the area with the comfort of knowing that home values have appreciated 7.3% over the past year.
Known for its stable economy and affordable housing, Rochester offers solid real estate investment opportunities. Rochester is the third-largest metropolitan area in New York with over one million residents. The city is also home to many well-known American companies, including Kodak, Paychex, and Wegmans Food Markets, making it an attractive destination for individuals at all career stages. This creates a steady demand for rental housing, making Rochester a solid investment choice for residential properties.
As the state capital, Albany boasts a mix of government, healthcare, and education jobs, creating a steady demand for housing. The current home value is $303,138, which is up 6.7% over the last year. Incredibly, homes in Albany close in just 8 days, indicating a competitive market that is a perfect fit for foreigners who want to get in on the action.
Looking for a bargain? With revitalization efforts underway, Syracuse is becoming an increasingly attractive market for both commercial and residential investors looking for growth potential and affordable home prices. Syracuse real estate has an average value of $195,746, which is up 12.4% since 2023. Much like Albany, Syracuse also has a short closing time frame, making it a great option for investors who want to strike quickly and start making rental income soon.
New York State offers opportunities and challenges for real estate investors. Here are a few key factors to consider:
Refinancing an investment property involves replacing your existing mortgage with a new one. The refinancing process includes:
Rate-and-term refinancing allows you to adjust your mortgage terms, such as the interest rate, loan duration, or type of loan, to better suit your financial goals. This can help lower monthly payments, reduce interest costs, or switch from an adjustable-rate to a fixed-rate mortgage, depending on market conditions and your preferences.
Keep in mind that refinancing your loan to a lower interest rate may still result in higher total finance charges over the life of the loan.
A cash-out refinance allows you to replace your existing mortgage with a new loan for a higher amount than what you currently owe, taking the difference in cash. For real estate investors, this can be a powerful tool to access capital for further investments, property improvements, or other financial needs. If your property has significant equity, you can receive cash at closing, which can be reinvested to grow your portfolio or cover other expenses, all while keeping your existing mortgage intact.
Learn more about refinancing.
Steps to get a DSCR investment property mortgage
Getting an investment property mortgage doesn’t have to be difficult. With Waltz, these are the steps to follow to secure a DSCR loan:
1. Identify a profitable investment
Start by selecting a property with strong rental income potential. Focus on areas that align with your financial goals and investment strategy.
2. Prepare necessary documents
Gather documents such as a valid passport from your home country, proof of income (like bank statements), and rental property details. Lenders may also request asset verification or a credit report from your home country.
3. Choose a lender familiar with foreign nationals
Look for a lender experienced in working with foreign investors. They should understand challenges like verifying foreign income and managing the absence of a U.S. credit history. Waltz specializes in foreign national loans and can assist you throughout the process.
4. Establish an LLC and U.S. bank account
Most lenders will require you to set up an LLC in the U.S. and open a U.S. bank account for transactions. This can take some time, especially if you don’t have an Employer Identification Number (EIN). However, with our Investor Kit, you can quickly establish both, saving you from delays.
5. Submit your loan application
Before submitting your loan application, it's helpful to consult with an account executive who can clarify any questions and guide you through the process. They will help ensure you have all necessary property details and financial documents. Once everything is in order, submitting your application should be quick and simple.
6. Conduct due diligence
This phase includes property inspections, appraisals, and any additional documentation the lender may need to verify the property’s condition and value. Be sure to carefully review your term sheet during this stage.
7. Complete the purchase process
Once due diligence is completed and your loan is approved, you can move forward with the purchase. Sign the required paperwork—this can often be done remotely if you're outside the U.S. Then, transfer the funds to close the deal, and you’ll officially own a rental property!
