H1B visa holders are mostly foreigners who have decided to make the US their new home. However, the question often arises: can H1B visa holders buy a house?
H1B Visa holders can buy a house. It’s an investment that the government gladly permits.
According to Statista, the total number of houses properties bought by foreigners in the U.S. amounted to $78 billion in 2019. In the rest of this article, we will provide you with beneficial information regarding how H1B visa holders can buy a house in the US; read on!
Is it Advisable to Buy a House While on H1B Visa?
It is advisable to buy a house irrespective of your visa type as long as you have procured the payment requirements. If you intend to buy a home in the U.S. while on an H1B visa, you should note that such a decision is usually made on a long-term basis and would depend on your location.
Buying a house will also reduce tax amounts because the government sees your purchase as an investment. It implies that your home or property would then be taxed at the time of sale. However, the IRS won’t charge the tax deducted at the time of purchase or during usage.
Top Reasons To Buy a House While on H1B Visa
It is vital to make the right decisions when you are making enough money. Some of these decisions can affect you and your family’s future for better or worse. The right thing to do to avoid adverse decisions from ricocheting and rebounding back to you is to ask the right questions. So! If you’re reading this article, you’re in good luck, and you are guaranteed the best answers to your questions. Here are some reasons why it is highly advisable for H1B visa holders to purchase a home while in the U.S:
Mortgage Payments are Fixed Compared to Rent Payments
A foreign individual living in the U.S. will experience the high cost of living associated with residing there. The busier your place of residence, the more expensive the cost of living will be; hence, there needs to be a form of stability or stasis in the amount you pay as rent monthly.
Living in a rented apartment while in the U.S. is not advisable due to human factors. Humans are very unpredictable, and this applies not only to you but also to your landlord. He/she is the landowner and has the official right to either increase or decrease your rent. Also, since you’ll need to take care of your other expenses, the increase in your rent cost will affect your feeding, power, and different budgets.
However, if you chose to go for a mortgaged house, you’ll be open to a more static and enjoyable monthly payment within the specified loan period.
Same Mortgage Terms are Offered to H1B Visa Holders and US Citizens
Although it might seem complicated for an H1B visa holder to receive mortgages in the U.S., you’ll be surprised about how welcome the idea is. If you’re an H1B visa holder in the U.S., you are permitted to apply for different types of mortgages such as the FHA Loans, Jumbo mortgages, and conventional mortgages
It might be hard for foreign individuals to acquire a loan via mortgage due to their lack of good credit history, but it is a worthwhile time investment with the pros outweighing the cons.
Owning a Home is Cheaper Than Renting
Compared to renting a home for a specified period – with you being subject to outstanding debts, sudden increments, and unconventional charges resulting from damages; you or your neighbors could either cause these damages, but you all will be charged all the same.
According to the work permit’s website, most H1B visa holders decide to rent their first homes after some months or years of staying in their company quarters. Staying on your company’s premises is excellent if you are new to the country and would like to make new acquaintances, but what happens after that?
Your next step after staying in your company’s housing units is to get suitable accommodation for yourself. Sometimes, the company provides instances where H1B visa employees can get mortgage loans at convenient rates without their weekly/monthly/yearly income being affected. If your company can offer mortgage loans, then try getting one – the easier, the better. If not, try as much as you can to secure the right home not too far from your current workplace Getting a home could save you up to $6000 annually, which you could also use for other essential things.
Interest Removed From Mortgage Can Reduce Your Tax Liability
Another strong reason you should consider buying a house rather than rent one is the reduced taxes associated with your mortgage. Itemizing every deduction on your tax return will enable you to get a mortgage interest deduction on your first mortgage of $750,000.
Buying a House Helps Build Equity in a Valuable Asset
By paying your monthly mortgage, you build equity in your home, which is a valuable asset. What we mean by building equity means “appreciation.” With time and as the equity builds, your investing and buying power also increases. You also have an added advantage when purchasing a beautiful and functional home in a city where real estate values keep increasing.
The IRS has also stated that home buyers may qualify for exclusion on up to $250,000 of every gain when their home is sold. The amount might also increase to about $500,000 if you are married.
After thoroughly reading these advantages, you are now enlightened on the benefits and reasons for foreigners making a tough decision to buy homes in the U.S. It might be expensive, but it is certainly worth your while.
How Much Down Payment for a House do H1B Visa Holders Need to Make?
When receiving a new home mortgage, you will undoubtedly be required to make a down payment of a specific amount. Currently, H1B visa holders can buy a house when they make an initial down payment of 5%. However, your down payment choice shouldn’t fall below the specified 5% but could go above 15%.
Most lenders would require H1B visa holders to pay up to 15% or 20% down payment for conventional loans. However, with mortgage loans, you can get a down payment of less than 20%, but you would have to obtain a Private Mortgage Insurance (PMI).
Can H1B Visa Holders Rent Out a Portion of Their Primary Residence?
According to Immigration Voice’s website, H1B visa holders can make extra cash by leasing a portion of their home for rent. However, they cannot file tax returns as a full-fledged rental business. The only way for the visa holder to do this is to own several properties and then hand them over to a real estate company for managing. Doing so will help him/her properly manage assets and get interest benefits off their investments when taxed.
If you’re thinking about how many homes you can purchase while oI an H1B visa, the answer is: as many as you want! You don’t have limitations on the number of homes you want to have as long as they all are registered under your name, and all tax returns are appropriately filed.
Mortgage Options for H1B Visa Holders
The safest way for an H1B visa holder to get a mortgage is to meet with any U.S. bank that he or she holds an account with. While this is true, some other banks may not deem it fit to provide foreign citizens with services to their products depending on the bank itself. However, most global banks and mortgage lenders with more prominent structures and more experience will.
If you do not want to visit banks for any of these purposes, you could also apply for FHA loans, specifically for H1B Visa holders. The Federal Housing Administration strictly supports the FHA loans. To get an FHA loan, you’ll need to get an EAD or Employment Authorization Document. The down payment for housing with the FHA loan is 3.8%, but you must also have a credit score of 580 to qualify for this rate.
In life, getting money isn’t just enough – understanding how to get more and keep it is vital. As an H1B visa holder, you will be earning a lot of money depending on the company you are working for. Some companies even offer housing to their staff for up to about two or three years of being under their payroll. You should ask yourself an important question about your accommodation if you decide to stop working for the specified company.
Investing in real estate is one of the most influential and wisest decisions you would ever make – primarily when investing in a country like the US with impressive growth potential in real estate.
Also, I’m sure you have other bills to pay! Living in a rented apartment sucks up your cash without your even designing it to your taste, but owning your home makes you feel free. Make a wise decision today, and you definitely won’t regret it.
