The Foreign Buyer's Guide to Buying Florida Real Estate

Is It Possible for Foreigners to Purchase a House in Florida?

Indeed, foreign individuals can acquire property in Florida without facing any citizenship limitations. Non-US residents have the freedom to purchase various types of properties in the state, including residential, commercial, vacation homes, and even land.

This uncomplicated procedure empowers individuals to become proud property holders and enjoy the advantages of real estate ownership.

Explore this guide to gain insights into the prerequisites, step-by-step procedure, and potential tax considerations when acquiring a residence in Florida as an international buyer.

Foreign Real Estate Transactions in Florida - A Closer Look

According to data provided by the National Association of Realtors (NAR), foreign individuals invested approximately $9 billion in existing home sales within Florida between April 2021 and March 2022 (reaching its peak at $23 billion in 2017).

Interestingly, a significant 57% of these foreign buyers were either recent immigrants or held visas, residing within the vibrant state of Florida. The remaining approximate 40% consisted of non-resident purchasers.

During the period from April 2021 to March 2022, foreigners acquired an impressive 8,600 existing home units in Florida, totaling a substantial value of $9 billion.

This value reflects an encouraging 8.45% increase in dollar volume when compared to the preceding year's figures, which stood at $7.4 billion during the same timeframe.

This notable rise in foreign real estate transactions can be attributed to the gradual reopening of the global landscape following the challenges posed by the COVID-19 pandemic.

As the market continues to rebound and regain momentum, experts predict a sustained growth trajectory for years to come within the flourishing real estate sector of Florida.

Guidelines for Foreigners Purchasing Property in Florida

Foreign nationals have the opportunity to purchase property in Florida with a level of flexibility similar to that of US citizens, enjoying equal rights to homeownership.

However, it's important to consider these specific aspects:

• Foreign buyers are required to secure a taxpayer identification number (TIN) from the Internal Revenue Service (IRS) before proceeding with property acquisition in Florida.

• Non-US citizens aiming to acquire property in Florida must arrange financing through a US-based bank or alternative financial institution.

  Supplementary documentation, such as income verification, employment history, and credit records, may be necessary.

  Fortunately, a specialized mortgage program catering to foreigners allows them to secure a mortgage without prior US credit history.

• Foreign purchasers might be expected to provide a slightly elevated down payment, typically ranging from 20% to 25% of the property's value.

• Tax responsibilities for foreign buyers mirror those applicable to US citizens.

• Foreigners are at liberty to purchase either a primary residence or an investment property in the picturesque state of Florida, encountering no additional restrictions or complexities.

Required Documentation for Foreigners Purchasing Property in Florida

When selecting your mortgage lender, you may be asked to provide some or all of the following documents as part of the process to buy property in Florida.

Documents foreigners need to buy property in Florida:

• A valid foreign passport.

• A US visa or a driver’s license.

• For global investors, some lenders might require b1/b2 (visitor visa).

• Visa waiver countries don’t need that, and some lenders don’t need a visa at all.

• Social security number or ITIN.

• Bank statements and, if relevant, financial documents from your foreign bank.

• Evidence of reserves.

• Check stubs.

• Tax return.

• Credit Score(if applicable).

Even if you lack a US credit history, it's still possible to secure a mortgage for your Florida property acquisition.

How to Purchase a House in Florida as a Foreigner – Step-by-Step

Here's a comprehensive, step-by-step guide outlining the process of buying a home in Florida for international individuals seeking property ownership in the state.

Step 1 – Choose Your Ideal Location in Florida

In Florida, there are no limitations on foreign nationals purchasing property, whether they are resident foreign nationals or non-US citizens seeking property ownership.

When selecting a location to buy a house, resident foreign nationals should take into account elements like commute convenience, community characteristics, school options (if applicable), and proximity to amenities.

For non-resident foreign investors, thorough research is advised to identify the most suitable cities and regions within Florida for both living and real estate investment.

Step 2 – Discover a Seasoned Real Estate Agent Specializing in Foreign Property Transactions in Florida

The initial phase involves identifying a seasoned real estate agent who specializes in facilitating property transactions for international buyers within the state of Florida.

Engaging an adept agent becomes pivotal in navigating potential challenges and avoiding missteps when dealing with non-US resident foreign investors or foreign-born US residents on specific visas (such as H1B, L1, F1, etc.).

Prioritize realtors possessing the MakeFloridaYourHome exclusive certification of CIPS (Certified International Property Specialist), signifying their tailored training in orchestrating international transactions with heightened attention to risk management.

CIPS-certified experts bring to the table a wealth of proficiency in assisting foreign-born individuals currently residing in Florida and overseas buyers aiming to invest in Florida's real estate market, encompassing those holding various types of visas.

These specialized agents often boast proficiency in multiple languages and are equipped to provide guidance on Florida's distinct state regulations, while also addressing any cultural or language-specific requirements.

It's noteworthy that the CIPS designation stands as the solitary globally recognized accreditation by the National Association of REALTORS® within the United States.

MakeFloridaYourHome facilitates the connection with a proficient CIPS real estate agent, armed with comprehensive international know-how pertinent to your chosen property location within the beautiful state of Florida, while ensuring all visa-related aspects are meticulously considered.

Step 3 – Working With Your Florida Real Estate Agent

Having equipped yourself with the means to locate a skilled real estate agent well-versed in international property transactions, let’s explore the intricacies of partnering with a real estate professional within the enchanting state of Florida.

This process may vary from your customary practices in your home country.

• Individuals from abroad looking to acquire property should be prepared to enter into a buyer representation agreement in conjunction with their chosen real estate agent.

• It is of utmost importance to thoroughly review and comprehend the terms and conditions outlined within the buyer representation agreement before affixing your signature.

• Within Florida, the financial responsibility for the fees or commissions of both the buyer’s and seller’s real estate agents lies with the property seller.

• It is noteworthy that no real estate agent commissions or fees are levied when enlisting the services of your chosen real estate agent, which may even include a MakeFloridaYourHome certified CIPS realtor, throughout the process of acquiring a residence within the USA as a foreign individual.

• Buyers can gain astute insights and invaluable assistance from their real estate agent, all without incurring any supplementary expenses!

Step 4 – Understand Your Real Estate Tax Situation in Florida

The allure of the United States as a realm of opportunity is widely acknowledged.

The government aims to uphold this perception by ensuring that non-resident investors in Florida's real estate encounter no supplementary taxes—a distinction from certain other nations where non-resident foreign buyers may be subject to additional levies when acquiring property.

For resident foreign nationals who intend to establish the purchased property as their primary abode, no additional tax liabilities arise apart from the standard property tax.

Should you be a non-resident buyer seeking to invest in a property within Florida for the purpose of generating income, you will be obligated to pay taxes on the net income derived from the property, yet not on any appreciation in its value.

Similar to any US citizen, non-resident foreign investors are required to fulfill their property tax obligations for their Florida property.

Foreign buyers assume further tax responsibilities if they generate income through rental activities involving a US property or when realizing a profit from the sale of a US property.

In the majority of scenarios, a non-resident foreign buyer needs to obtain an Individual Taxpayer Identification Number (ITIN) to proceed with a property purchase within the United States, especially if a Social Security Number (SSN) is unavailable.

The ITIN application process adheres to the guidelines set forth by the IRS, and a real estate agent seasoned in international transactions can provide valuable assistance throughout this procedure.

Step 5 – Start on Your Property Search

Commencing this phase involves communicating your specific property preferences to your chosen real estate agent.

• Should you have already identified a residence and are eager to make a purchase, your agent will adeptly manage all the intricate closing particulars associated with this transaction.

• If you are yet to find a suitable property, your real estate professional will introduce you to a variety of options accessible online. For resident foreign national buyers, arrangements will be made for visits to these homes during scheduled open houses.

• Alternatively, if you are an international buyer seeking to procure property within the US, your real estate agent will present you with viable choices by showcasing images and videos of homes that align with your criteria.

  Furthermore, if your travel plans to the US are still pending, your agent can coordinate virtual tours to facilitate your exploration.

• Your realtor will be a valuable source of information, addressing queries concerning schools, transportation facilities, recreational pursuits, and more.

• Furthermore, your realtor will provide insights into the items that will remain with the properties under consideration. For instance, it is customary for kitchen cabinets and appliances to be included when purchasing a house in the United States.

• It is essential to note that in the United States, land ownership typically accompanies home ownership, allowing you to own both the house and the land it occupies.

Step 6 – Submit an Offer for the Property of Your Choice

When you have pinpointed a property that captures your interest, your real estate professional will furnish you with details about recently sold properties within the vicinity that are comparable.

Armed with this information, your realtor will provide counsel on the appropriate price range for your offer to the seller.

Drawing on their adept negotiation skills, your specialized real estate agent will guide you through the process of determining the most suitable offer, given that the majority of property list prices are open to negotiation.

Following the submission of your offer, the seller will have three options at their disposal. They can choose to accept your proposal, decline it outright, or propose a counteroffer featuring an alternative price.

In the event that your offer is embraced, a heartfelt congratulations are in order – you have now progressed one step closer to realizing your aspiration of becoming a homeowner in the captivating state of Florida!

Step 7 – Secure Home Financing through a US Mortgage Tailored for International Buyers in Florida

Contrary to preconceptions, acquiring US mortgage financing as a foreign national sans a US credit history is indeed feasible.

Certain US lenders extend mortgages designed for newcomers and non-resident purchasers, even in the absence of a US credit history, all while maintaining a competitive interest rate.

These lending institutions specialize in catering to foreign national mortgage needs, accommodating non-immigrant visa holders such as H1-B, L-1, among others.

Thanks to the availability of home financing alternatives offering competitive rates for international buyers, individuals who have recently immigrated need not endure a waiting period of 2-3 years to establish US credit before embarking on their homeownership journey within the splendid realm of Florida.

Likewise, non-resident purchasers are not compelled to execute an all-cash transaction when acquiring a residence, affording them the opportunity to allocate their funds toward more advantageous and potentially higher-yielding assets.

If you are making a cash payment, you can typically expect to complete the ownership transfer and take possession of the property around 30 days from the point of signing the sales contract.

For those utilizing financing and securing a mortgage, the ownership process generally concludes within approximately 60 days from the date of signing the sales contract.

In the event that these timelines do not align with your specific requirements, your real estate agent has the capacity to negotiate alternative dates on your behalf.

5 Mortgage Options for International Buyers Purchasing Property in the USA

Financing a property purchase in the US as a foreigner can be a nuanced endeavor, but various mortgage options are available to accommodate your specific circumstances.

Here are five notable mortgage options tailored to the needs of international buyers:

Mortgages for Foreigners with No US Credit

Foreign National Mortgage

A foreign national mortgage is thoughtfully designed to facilitate property acquisition for newcomers in the US.

Conventional mortgage loans can pose challenges for foreign nationals due to factors like an absence of US credit history and limited income documentation.

As a result, foreign national mortgage loans typically necessitate a higher down payment (ranging from 20% to 25%) and may carry slightly elevated interest rates.

Nonetheless, these mortgages present an appealing avenue for foreign nationals aspiring to invest in US real estate.

DSCR Loan (Designed for Investment Properties)

A DSCR (Debt Service Coverage Ratio) loan geared towards foreign buyers is a specialized financing choice, particularly beneficial for non-residents and foreign nationals looking to secure funds for investment properties within the US.

This loan assesses the projected income of the property vis-à-vis its debt obligations, factoring in the borrower's capacity to cover monthly loan payments. DSCR loans cater to international investors aiming to expand their investment property portfolios.

While conventional DSCR loans usually require a specific credit score, certain lenders extend DSCR loans to foreign buyers lacking a US credit history.

However, it's worth noting that these loans may entail higher down payments and interest rates compared to standard DSCR loans.

MakeFloridaYourHome is equipped to facilitate your connection with appropriate DSCR lenders that specialize in serving the needs of foreign buyers and non-US residents.

ITIN Loans

ITIN loans stand as a mortgage financing solution tailored for individuals who possess an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number.

These loans extend support to undocumented immigrants striving to attain homeownership within the United States.

ITIN loans present specific eligibility criteria, affording the opportunity for individuals lacking a Social Security number to embark on their journey as homeowners.

Mortgages for Non-US Residents with Established Credit

FHA Loan

An FHA loan, backed by the Federal Housing Administration (FHA), endeavors to enhance accessibility to homeownership. It grants more flexible credit requirements and reduced down payment options in comparison to conventional loans.

Foreign individuals boasting an established credit history in the United States can qualify for an FHA loan by meeting the stipulated minimum credit score prerequisite, which generally commences at 580.

Conventional Mortgage

A conventional mortgage adheres to the parameters outlined by government-sponsored entities such as Fannie Mae and Freddie Mac.

Qualifying for a conventional mortgage as a foreigner often entails meeting specific lender criteria, encompassing a robust credit history and satisfying the credit score benchmarks, commonly set around 620 or higher.

FHA and conventional mortgages emerge as optimal selections due to their favorable interest rates and down payment requisites.

These options are within reach for non-US residents equipped with an established US credit history.

If your US credit score is commendable, MakeFloridaYourHome is poised to establish a connection with lenders catering to foreign individuals.

These lenders are proficient in facilitating the FHA or conventional loan processes for non-US citizens, simplifying your home financing endeavors.

Visa Requirements for Foreigners Purchasing Property in the US

Green Card Holders

Individuals holding green cards enjoy privileges akin to those of US citizens when seeking mortgage options.

They are eligible for FHA loans, Fannie Mae loans, or Freddie Mac loans.

The possibility of a down payment as low as 3% exists, contingent upon a minimum of two years' tax and work history.

Temporary Non-Resident Aliens

Temporary non-resident aliens possessing valid work visas can explore FHA loans.

Requirements may involve furnishing an Employment Authorization Document and a Social Security Number.

Demonstration of the capacity to reside and work in the US for a minimum of three years could be necessary.

Refugees and Asylees

Refugees and individuals granted asylum in the US have the privilege of applying for home loans under the same conditions as US citizens, given that foreigners are legally allowed to purchase property in the USA.

Documentation such as a valid Form I-94 bearing an "Employment Authorized" stamp or an Employment Authorization Document will be required.

Global Investors

Global investors might necessitate a B1/B2 visa, depending on the specific lender engaged. If you hail from a visa waiver country, procuring a visa isn't mandatory to secure a US mortgage.

Navigating the visa landscape is crucial when embarking on the journey of acquiring property in the US, and MakeFloridaYourHome is adept at guiding foreign buyers through the intricate requirements to ensure a smooth mortgage application process.