Nadlan Capital Group – USA Real Estate Financing for Foreign Nationals and Residents
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Essential Requirements for Foreign Nationals to Obtain a DSCR Loan in the United
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Essential Requirements for Foreign Nationals to Obtain a DSCR Loan in the United
Essential Requirements for Foreign Nationals to Obtain a DSCR Loan in the United States
If you’re a foreign national looking to invest in U.S. real estate through a DSCR loan (Debt Service Coverage Ratio loan), understanding the prerequisites is essential to streamline the process and avoid costly delays. These types of loans are popular among real estate investors due to their flexibility and reliance on rental income rather than personal income verification. However, there are several important conditions that borrowers must meet. Below, we break down the key requirements and considerations for foreign nationals.
1. Forming a U.S. Company and Bank Account
To qualify for a DSCR loan in the U.S., foreign nationals are typically required to:
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Form a U.S.-based entity, usually an LLC or a corporation.
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Open a U.S. bank account under the name of that entity.
This structure helps lenders mitigate risk and simplifies the legal and financial process of managing the loan.
2. Title Company and Closing Costs
All DSCR loans involve a title company, which handles the legal transfer of property ownership and ensures the title is clear of any issues.
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The cost of the title company is covered by the borrower.
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An appraisal is mandatory to confirm the value of the property, and it typically costs between $500 and $700.
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In some cases, a Collateral Desktop Analysis (CDA) is also required, adding an additional $100–$200 to the cost.
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Other miscellaneous closing costs may apply, but they are generally unrelated to the lender or broker.
3. Escrow Requirements
Many lenders require borrowers to fund an escrow account, which serves as a financial cushion to protect the lender.
Escrow typically includes:
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3–12 months of prepaid interest
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Several months of property taxes and insurance
💡 Note: The lower the interest rate, the more the lender may require in escrow, as they are assuming more risk for a lower return.
4. Liquidity Proof Requirements
Lenders often want reassurance that the borrower has adequate funds available for unforeseen expenses such as property repairs.
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For purchase loans, borrowers usually need to show:
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$10,000 to $15,000 in liquidity for every $100,000 of loan amount.
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This does not scale linearly—for larger loans, the required liquidity only increases slightly.
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For refinance or cash-out loans, liquidity requirements are typically less strict.
These funds only need to be shown until the loan closes, after which they may no longer be required to stay in the account.
5. Collateral and Bank-Specific Variations
Each lender has its own risk tolerance and may require different collateral levels. As a general rule:
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The better the terms (i.e., lower interest rates), the more collateral the lender may demand.
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During the loan process, a broker will provide a detailed breakdown of required liquidity and reserves for each loan offer received.
Final Thoughts
Obtaining a DSCR loan as a foreign national is highly achievable, but it requires thorough preparation. By forming a U.S. entity, maintaining adequate liquidity, and understanding the escrow and appraisal process, you can position yourself for a successful investment.
If you’re considering a DSCR loan and want tailored support, we specialize in helping foreign nationals navigate the U.S. real estate financing landscape with clarity and confidence.
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1 Reply
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Thanks very informative!
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