Mortgage on a F-1 student visa

[Catria]

Please feel free to move this to "The Bank" if it is appropriate.

 

Suppose for a moment that I was to attend Michigan. I would save some money while in school, and, with it, make a down payment for a house in Detroit (most likely a house in the $10-20k range). This plan will result in me taking out a mortgage. And, after graduation, I would get to rent out the house, or use it as a retirement home for my parents.

 

Other variations on this plan would exist at other schools, depending on the real estate landscape nearby (I think the most I would be able to afford on a stipend would be in the $50-60k range), although plans of that kind WILL result in much longer commutes, if successful.

 

My question is: can one take out a mortgage while under a student visa?

Edited February 10, 2015 by Catria

[guttata]

You do realize that you'll never be able to pay back that mortgage because by buying a $10-20k house in Detroit you're gonna get shot in the head?

[Catria]

Pulling a similar plan off at Minnesota would likely mean that the value of the house would then be in the $40-60k range...

[TakeruK]

Yes, it is possible -- I know Canadian F-1 students who have mortgages in the US. It probably depends a lot on your personal situation whether a bank would be willing to loan you a mortgage. 
 

Also, I don't know how feasible this is for non-Canadian and non-American students because one of the conditions they check for when granting F-1 and J-1 visas is ties to your home country and no plans to settle in the US, so a mortgage might be tricky for that. I'm no expert and have no idea how they would treat this though. However, as a Canadian, you don't have to do a visa interview so it's likely this will not come up.

[spunky]

my husband and i own a home in Santa Barbara, CA Canadians as well. the rules are quite different than how things were before the great crisis of 2008 in terms of  foreign nationals owning property. two things: obtaining a mortgage (as TakeruK correctly said) is (a) NOT easy. your down payment will be significantly higher than what's expected from a U.S. national. and (b ) it really depends on whether or not you hold the right passport (where "right" implies the banks may not be as willing to lend you any money depending on where are you from). 

Edited February 11, 2015 by spunky

[Catria]

Now that I know that the down payment is higher for international borrowers than for domestic borrowers I can confidently say, if I'm rejected at Michigan, there would be no point for me to even consider taking out a mortgage in graduate school, since I would attend a school in a city where the down payment required would be too high for a mortgage to be worthwhile, since even a $40-50k house in the Twin Cities area would require a down payment that is too large for me to scrape together by defense time.

[Catria]

UPD: I won't be able to carry out this cheap real estate plan personally, since I have been rejected... perhaps some other OOS, or international even, PhD admit at Michigan will carry out this plan after all.

[Usmivka]

20% down is the standard for non-traditional mortgages--ie, all grad students, since  it is not possible to start grad school and make the de facto requirements of being salaried or with 5 years of work history on current job/continuing job. I'm not sure international status makes things any worse than that, other than visa complications. So (even though it doesn't apply to you) if you were to say, aim for a $50k house, that would mean $10k downpayment, plus any mortgage origination and other bank fees, plus your first year or two of property taxes in advance to be held in trust and paid by the bank.

[Catria]

20% down is the standard for non-traditional mortgages--ie, all grad students, since  it is not possible to start grad school and make the de facto requirements of being salaried or with 5 years of work history on current job/continuing job. I'm not sure international status makes things any worse than that, other than visa complications. So (even though it doesn't apply to you) if you were to say, aim for a $50k house, that would mean $10k downpayment, plus any mortgage origination and other bank fees, plus your first year or two of property taxes in advance to be held in trust and paid by the bank.

 

I understand that the first year or two of property taxes in advance is highly city-dependent, but I realized that, if I was to attend WUSTL, Notre Dame or Carnegie Mellon (in St. Louis, South Bend or Pittsburgh respectively), I would still be able to carry out my original plan as it was budgeted in a Michigan context.

 

Have any idea how much do mortgage origination cost or other bank fees associated with a mortgage?

Edited February 15, 2015 by Catria

[Usmivka]

I understand that the first year or two of property taxes in advance is highly city-dependent, but I realized that, if I was to attend WUSTL, Notre Dame or Carnegie Mellon (in St. Louis, South Bend or Pittsburgh respectively), I would still be able to carry out my original plan as it was budgeted in a Michigan context.

 

Have any idea how much do mortgage origination cost or other bank fees associated with a mortgage?

Either a plat fee or a percentage, and also city and state dependent because of the costs to register the deed with the city and state. For my purchase it was about 1% of the mortgage value. It also depends if you decide to buy "points" to reduce your interest rate (I wouldn't, but there are lots of editorial articles out there). You should shop around, try a big bank, a community bank, and a credit union. Apparently people rarely price compare with mortgages, which seems silly to me since the difference could be thousands of dollars.