Are Non-Permanent Residents Eligible for DSCR Loans?
Are Non-Permanent Residents Eligible for DSCR Loans?
DSCR loans are Non-QM products designed exclusively for investment properties and are deemed business purpose loans. The qualification relies on the property’s cash flow (DSCR ratio), not the borrower’s personal income.
Are Non-Permanent Residents Eligible for DSCR Loans? Let’s discuss.
General Eligibility Status for Non-U.S. Citizens
Non-QM guidelines typically define three main classes of eligible non-U.S. citizens, with NPRAs falling into the core eligibility group for DSCR and other Alt Doc programs:
1. U.S. Citizens and Permanent Resident Aliens (PRA): These individuals are generally eligible for financing with the same terms as U.S. Citizens.
2. Non-Permanent Resident Aliens (NPRA): NPRAs are defined as non-U.S. citizens who are granted the right to live and work in the U.S. on a temporary basis (Visa Holders). NPRAs are explicitly listed as Eligible Borrowers for DSCR products across multiple program series.
– Eligible Visa Types: Eligible classifications include E, G, H, L, O, P, and TN visas.
3. Foreign Nationals (FN): These are non-U.S. citizens whose primary residence and employment are outside the U.S.. While FNs are generally ineligible for standard owner-occupied programs like Asset Depletion, they are explicitly listed as Eligible Borrowers for DSCR loans only.
Specific DSCR Requirements and Restrictions for NPRAs
Although eligible for DSCR programs, NPRAs face specific limitations concerning leverage and transaction types, unlike U.S. citizens and Permanent Resident Aliens.
A. Maximum LTV Restrictions
NPRAs are generally capped at a lower maximum Loan-to-Value (LTV) ratio on DSCR loans compared to standard borrowers:
- our Non-QM Connect: NPRAs are eligible for the Investor Cash Flow product at a maximum 75% LTV.
- our Non-QM Sharp Series: NPRAs are subject to a Maximum 75% LTV/CLTV restriction on the DSCR program.
- NDM NonQM Express DSCR: NPRAs are eligible for the DSCR product at a maximum of 75% LTV/CLTV.
- our Non-QM Edge Series: NPRAs are eligible for the Edge Investor Classic only, subject to restrictions, and are Not eligible for Investor Edge Elite.
- our Non-QM Horizon DSCR No Ratio: NPRAs are eligible, subject to restrictions, including the requirement of U.S. Credit only.
B. Transaction Type Limitations
NPRAs are typically restricted from high-leverage transactions or transactions where the funds are co-mingled:
- Eligible Transactions: NPRAs are eligible for Purchase and Rate-Term Refinance transactions under the our Non-QM Connect guidelines.
- Ineligible Transactions: Cash-Out Refinances are generally not eligible for Non-Permanent Resident Alien borrowers on the Investor Cash Flow product. This restriction applies to the Edge Series guidelines as well [173, Conversation History (Asset Depletion)].
C. Residency and Documentation Overlays
NPRAs must adhere to documentation overlays that ensure their residency and employment are stable within the U.S.:
- Residency and Employment History: NPRAs must have been living and working in the U.S. for at least 2 years and typically need a minimum of 2 years legal residency.
- SSN and Credit: NPRAs must have a valid Social Security Number(s) and have an established U.S. credit history.
- Visa Continuance: If the borrower’s visa will expire within six (6) months of the loan application (or three months in some guidelines), a letter from the employer documenting the continued employment and continued visa renewal sponsorship is required.
- Eligible Classification Documentation: Documentation of their lawful temporary residency may consist of an Employment Authorization Document (EAD) with an acceptable category code OR a Visa permitting employment.
Ineligibility for Other Non-QM Products
It is important to note that while NPRAs are eligible for DSCR and other Alt Doc programs, they are often ineligible for specific products or documentation types:
- ITIN Loans: NPRAs are distinct from ITIN borrowers, who are generally ineligible for DSCR loans.
- Asset Depletion Loans: DSCR loans are tailored for investment properties, not personal residences. While NPRAs are eligible for owner-occupied Alt Doc programs like Asset Depletion, DSCR remains separate and strictly for non-owner-occupied properties.
- Exclusionary Lists: All parties involved in the transaction must be screened through OFAC’s SND list and exclusionary lists. Borrowers from OFAC sanctioned countries are ineligible.
FAQ's
If a non-U.S. citizen is borrowing with a U.S. citizen, it does not eliminate visa or other residency requirements. However, if one borrower is a U.S. citizen, the Non-Permanent Resident guidelines do not apply according to the Edge Series guidelines.
Acceptable documentation includes copies of the borrower’s valid passport and unexpired visa. An I-797 form (Notice of Action) with valid extension dates is also acceptable.
Yes, NPRAs must have a valid Social Security Number(s) and have an established U.S. credit history.
If the borrower’s visa will expire within six (6) months (or three months in some programs) of the loan application, a letter from the employer documenting continued employment and continued visa renewal sponsorship is acceptable.
The borrower must generally document a minimum of 2 years legal residency and be living and working in the U.S. for at least 2 years.
NPRAs are eligible for Purchase and Rate-Term Refinance transactions.
Cash-Out Refinances are generally not eligible for Non-Permanent Resident Alien borrowers on the Investor Cash Flow product.
NPRAs are commonly restricted to a maximum LTV/CLTV of 75% on the Investor Cash Flow (DSCR) product.
NPRAs are non-U.S. citizens authorized to live and work in the U.S. on a temporary basis. Eligible classifications often include E, G, H, L, O, P, and TN visas.
Yes, NPRAs are explicitly listed as Eligible Borrowers for DSCR products.
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