US (Washington Insider Magazine) —The American Dream is often synonymous with owning a home, a symbol of prosperity, stability, and the ability to pass on a legacy to future generations. Surprisingly, this dream is not exclusive to citizens and legal residents; many undocumented immigrants aspire to turn it into a reality. But the question lingers: Can an illegal immigrant buy a house? Despite legal and financial hurdles, the answer is yes.
Exploring Homeownership Among Undocumented Immigrants
In 2014, the Migration Policy Institute revealed that over 3.4 million undocumented immigrants in the U.S. owned homes, constituting roughly 31% of the entire undocumented population. These individuals own homes and pay property taxes, contributing significantly to the nation’s revenue. Contrary to some perceptions, data from the Institute on Taxation and Economic Policy estimated that undocumented immigrants contributed approximately $3.6 billion in property taxes alone.
Navigating the Path to Homeownership
To understand how undocumented immigrants can purchase homes, it’s essential to recognize that there’s no law prohibiting non-U.S. residents from owning property in the United States. Foreign investors and businesspersons regularly own real estate in the U.S., much like their American counterparts can possess property abroad. However, the path to homeownership for undocumented immigrants often involves an essential tool: the ITIN mortgage.
An ITIN, or Individual Taxpayer Identification Number, was established as an alternative to the Social Security Number, enabling foreign nationals with U.S. assets to pay taxes on those assets. Undocumented immigrants can obtain an ITIN, which allows them to open bank accounts, pay income taxes, and qualify for mortgages.
Can An Illegal Immigrant Buy A House? If Yes, Then How
- Apply for an ITIN Number: Similar in format to a Social Security Number, an ITIN is used solely for tax purposes. Applicants can download Form W-7. The “Application for IRS Individual Taxpayer Identification Number” from the IRS website. The form, available in English and Spanish, requires personal information. Once completed, it should be sent to the IRS center in Austin, Texas, along with a tax return. In approximately six weeks, applicants will receive their 9-digit ITIN
- Save for a Down Payment and Gather Documentation: With an ITIN, undocumented immigrants can apply for ITIN loans accessible through various U.S. companies and banks. Due to the increased threat associated with these loans, a higher-than-average cash down payment is typically required, often ranging from 15% to 30%. Additionally, borrowers may be required to provide additional documentation, including recent pay stubs, proof of stable employment for two years, and two years of tax returns filed with the same ITIN
- Apply for an ITIN Mortgage: ITIN mortgages, lesser-known lending options, are widely used by undocumented immigrants to purchase homes. These mortgages closely resemble standard mortgages, requiring borrowers to accept a loan with a fixed interest rate and make monthly payments. The lender holds the home as collateral, enabling repossession in case of non-payment.
- Home loan companies offering ITIN mortgages can be found online. Alternatively, local banks or credit unions may provide competitive rates and tailored lending programs for immigrant borrowers. Generally, ITIN mortgages require a 20% down payment and come with a 30-year fixed-rate term. Unlike typical mortgages, early repayment incurs no penalties. However, it’s worth noting that ITIN mortgage interest rates often reach 7% or 8%, almost double the typical 4% rate for a 30-year mortgage
Conclusion: Can An Illegal Immigrant Buy A House?
The dream of homeownership is not confined by legal status in the United States. Undocumented immigrants, despite facing legal and financial obstacles, can indeed buy homes. Through the acquisition of an ITIN and access to ITIN mortgages, these individuals have a path to realizing their American dream. As they work towards property ownership, they invest in their future and contribute to the country’s economy by paying property taxes, proving that homeownership knows no borders. So, to answer the question: Can an illegal immigrant buy a house in the U.S.? Yes, they can, and they are doing so in significant numbers.