Buying a home with an ITIN: what is possible, and what it costs

A great many people have been told that without a Social Security Number you cannot buy a house. That is the first thing to correct, because it is not true, and because whoever said it almost always said it with total confidence.

With an ITIN you can get a real mortgage, with the deed in your name. Not a land contract, not a rent-to-own, not a handshake with the owner. A loan, with your name on the title and the same protections any other buyer has. What does change is what you will be asked for to get there. This article says what that is, with numbers, and it also says which questions do not yet have an answer anyone here can publish.

What an ITIN is, and what it is not

An ITIN is a nine-digit number issued by the IRS, the federal tax agency. It looks like a Social Security Number and always begins with a 9. It exists for one narrow reason: some people are required to file federal taxes and are not eligible for a Social Security Number, and the IRS needed a way to identify them in its records.

That is the whole of it. The IRS says so plainly: an ITIN is for federal tax reporting only. It does not authorize work, it does not change your immigration status, and it does not make you eligible for Social Security or federal benefits.

The other half is worth saying too, because it is what people want to ask and rarely ask out loud. Israel Muñoz is a licensed mortgage loan originator, not an immigration attorney, and he will not offer you an opinion about your immigration situation. If that is the question underneath the question, an immigration attorney is the right person, and that conversation belongs before a lender rather than after one.

Your ITIN can expire, and that part is in your hands

This is the one that catches people in the middle of a purchase.

The IRS expires ITINs that go unused on a federal tax return for three consecutive years, and the expiration lands on December 31 of that third year. If yours has expired, renewal runs through the same Form W-7 it was issued on, with the renewal box checked, and it takes time.

If you expect to buy within the next twelve months, check two things today: that your ITIN is current, and that your last two years of tax returns are filed. A file sitting in January waiting on an IRS renewal is a file that loses the house.

The three real conditions

Of everything that gets said about ITIN loans, these are the three things Priority Home Mortgage has confirmed, and they are what decide whether you can buy this year.

The down payment: 15 to 20 percent

This is the hard condition, and it goes first on purpose. On a $250,000 house in the Grand Rapids area, 15 to 20 percent is $37,500 to $50,000.

That is more than an FHA loan asks of a buyer with a Social Security Number, which is 3.5 percent. There is no honest way to soften the difference. What you can do is plan around it, and planning is far easier when you know the number on day one instead of finding out in month three.

The credit score: there is no minimum

There is no minimum credit score on these loans, and a borrower with no score at all can qualify.

That sentence contradicts what a bank told a lot of readers. If someone told you that you cannot be scored and therefore cannot buy, the first half may well have been true and the second half was not. When there is no credit history, there are other ways to show that you pay what you owe, and that is the subject of another article here, building credit from nothing.

Family gift funds: allowed

Money gifted by a family member can go toward the down payment. In practice that is how most families buying this way reach $37,500 or $50,000.

Precision matters here, because the difference decides whether a plan works: gifts are allowed, and what proportion of the down payment may be gifted is not publicly settled. Plenty of programs permit gifts while still requiring some of the money to come from the borrower’s own account. Which applies here is something Israel confirms for your file, and he would rather confirm it than assume it.

One no is not the no

Priority Home Mortgage can underwrite an ITIN loan itself, and it can also send the same file to outside lenders whose guidelines read situations differently.

That matters more than it sounds like it should. When a lender says no, what happened is that one underwriter read one file against one rulebook. It is not a verdict on you, and it is not recorded anywhere as a mark against you. If you have already been turned down somewhere and have the reason in writing, bring it, because knowing what they said saves an entire step.

What this page will not tell you

There are reasonable questions about ITIN loans that do not yet have an answer this site can publish. Naming them is more useful than filling them in.

• What share of the down payment may be gifted. Gifts are allowed. The proportion is a question for your file.
• What stands in for a credit score when there is none. “No minimum score” and “here is exactly which alternative references we need, how many, and over how many months” are different sentences. The second is what a reader would want to start collecting today, which is why it is not invented here.
• How the rate compares to a conventional loan. Answering that honestly does not take a rate sheet, it takes an order of magnitude, and Israel gives that on the call.
• Whether an ITIN buyer can use MSHDA down-payment assistance. MSHDA publishes its credit-score, income, and homebuyer-education rules, and says nothing publicly about Social Security Numbers versus ITINs. Guessing in either direction would be inventing, and the answer moves the math a long way.

A lender who answers all four instantly and with total confidence is probably guessing. An ITIN reader has usually lived through that once already.

What to do this week

None of this needs an appointment or costs anything.

1. Check that your ITIN is current, and if it is not, start the renewal on Form W-7.
2. Gather your last two tax returns. If years are missing, that is the first job and the one that takes longest.
3. Write down the down payment number for the price range you have in mind. Both 15 percent and 20 percent, so the target is a figure rather than an idea.
4. Talk to a lender that actually places these files. Twenty minutes, no application, no credit pull, and you leave knowing whether there is a path, what it would cost, and what would have to happen first.

Israel Muñoz is a Mexican native and works in Spanish through the whole process, not only the first call. His number is on every page of this site, and it is his cell.