There are many reasons why H1B visa holders are taking the plunge into buying a house in America and why it makes sense to buy a home in the US as a foreign national on an H1B visa sooner than later.
Buying a home will likely increase your quality of life and sense of belonging in America, especially if you plan to live in the US on an H1B visa for an extended period. The quality of life becomes especially important if you are bringing up children here or planning your first child while working in the US on an H1B visa. In addition, homeownership is one of the pillars of the American dream, and buying a home is often the first step to creating your own family and community here in the US.
The average home value in the US has appreciated by almost 46% in the last five years, from $208,000 in Aug 2016 to $304,000 in Aug 2021, and will further increase to $335,000 (12%) by Jul 2022 (Source: Zillow Home value index).
As per the Labor Condition Application (LCA) data released by the US Department of Labor, as of Q2 2021, the average yearly wage for a foreign worker on an H1B visa was $126,212 (based on 184,141 certified LCA applications for H1-B submitted in this period).
As H1B visa holders are likely to stay in America for several years, buying a house on an H visa can be beneficial from a tax perspective. To encourage homeownership, the IRS has provided several tax breaks for owning a home in the form of deductions. A tax deduction reduces your adjusted gross income, which in turn reduces your tax liability. Here are some of the most common tax deductions you can get for owning a home on an H1B visa:
H1B visa holders can claim deductions for the property taxes they pay on their homes each year, which could save them thousands in tax liability. You can claim this deduction on both federal and state taxes as applicable.
Covid-19 has changed the landscape of how we work, and remote work is becoming very common irrespective of your immigration status. H1B visa holders can claim a deduction for any part of their home that they use exclusively and regularly as an office.
Compared to other countries like Australia or Canada, mortgage rates & home prices have historically been much lower in the US, making it more affordable for H1B visa workers who want to buy a house in America.
Pro Tip: When you are ready to buy a house in the US on an H1B visa, you should ideally work with a real estate agent who has expertise in working with foreign national clients, such as a real estate agent with CIPS designation.
A CIPS (Certified International Property Specialist) real estate agent has undergone specialized training to handle real estate transactions smoothly for foreign-born individuals residing in the US, such as foreign workers on an H1B visa.
One major advantage of owning a home is that mortgage payments are often more stable than rent payments. This is because rent can increase year after year, while a mortgage payment is fixed for the life of the loan. This stability can be especially important for those on a visa, as job security and income may be less certain.
However, it is advisable to work with mortgage lenders in the US who specialize in H1B mortgages. Unfortunately, not all mortgage lenders and their underwriters know the unique circumstances and documentation for H1B visa holders, even if they can originate the mortgage product. This can create unpleasant experiences and unnecessary complications during one of the most important financial transactions of your life.
FHA loans are government-backed mortgages insured by the Federal Housing Administration. FHA home loans require lower minimum credit scores and down payments than many conventional loans, making them especially popular with first-time homebuyers.
H1B visa holders have several mortgage options available to them. One is a standard mortgage that can be obtained through most lenders. Another mortgage option for H1B visa holders is a program specifically designed for foreign nationals. These programs typically have lower interest rates and down payment requirements. There are also a number of government-sponsored mortgage programs that H1B visa holders may be eligible for. These include the Federal Housing Administration loan program and the Veterans Affairs loan program. H1B visa holders should compare all of their mortgage options to find the best one for their needs.
In the worst-case scenario that you have to return to your home country due to visa issues, you can continue to own your house in the US as a non-resident. You can generate rental income to take care of mortgage payments and other home-related expenses.
If you decide to sell your US house, you can easily do so from your home country by working with a real estate agent experienced in foreign national and cross-border transactions. You might even be able to meet part of the residency requirement for tax exemption on the gain on sale of your primary residence in the US if you had to sell your home early due to issues with your H1B visa.
If you are leaving the United States but your kid or a family member is still there, you might choose to allow that individual to stay in your home. You may ask your close relative or friend to pay you rent or pay the mortgage installments and property taxes on your behalf.
Buying a house on an H1B visa is an excellent investment and one that H1B visa holders should consider for their long-term financial goals. H1B visa holders have different mortgage options available to them irrespective of their credit situation in the US. Therefore, you can make the goal of homeownership in the US much faster instead of waiting for 2-3 years to own a house if you can afford it to put a higher down payment amount. In contrast, you can put as low as a 3% down payment with established credit and work history in the US.
Yes, you should buy a house when you are on H1B visa because the house will be an appreciating asset. And it is profitable as well because if you have to leave the US then you can rent out your property to make extra bucks or you can sell it on appraised value to clear your lender dues and make a profit. Go through this guide to know why you should buy a house on an H1b visa.
If you leave the United States or your H1B visa is denied, you are not required to sell your home. You can keep the property and rent it out to generate income. Or you can also sell it, depending on what is best for your situation. If you are worried about managing your property from your country, then property management companies can make it super easy for you.
Yes, you can buy property for Airbnb on an H1B visa. There are no restrictions, and you can use your property to generate additional income. You just need to take care of the tax implications on the income from your property.
Yes, you can buy land in the United States on an H1B visa. You will need to provide proof of funds to cover the purchase price of the land, as well as any associated costs. Please note that you may not be able to get a mortgage to finance the purchase of land, so you will need to pay for it in cash.
Seeing the growth and value appreciation of US real estate, buying a house in the US on your H1B visa is definitely profitable. Check out the aforementioned pros or reasons to buy a house as an H1B visa holder.
Yes, you may buy a home on an H-1B visa if you meet the requirements of the visa. Please note that you will need to provide documentation proving your eligibility to purchase a home in the US, as well as proof of funds to cover the costs of the purchase.
Refer to this guide, H1B Visa: Buying House and Obtaining a Mortgage Home Loan, to know the step-by-step US home buying process for H1B visa holders and how you can get a mortgage with no credit history in the US.
Here are some H1B visa mortgage options.
FHA Loans: The Federal Housing Administration (FHA) offers a mortgage program that allows for low down payments and is available to borrowers with less-than-perfect credit. Borrowers can qualify for an FHA loan with a down payment as low as 3.5% of the purchase price of the home, and they do not need to have perfect credit to qualify.
Conventional Loans: Conventional loans are those that are not backed by the government (like FHA loans). They typically require a higher down payment than FHA loans, but they also usually come with lower interest rates and better terms. Borrowers with good credit may be able to qualify for a conventional loan with a down payment as low as 5% of the purchase price.
For detailed information, check out our H1B home buying and mortgage guide.
Try to stay away from a future situation that may force you to short sell your house when you are not able to pay monthly property taxes + mortgage payment, as it is too high to support from your home job.
If the bill were to become law, an H-1B visa holder from France could buy a house, but one from China could not. A Ph.D. student from Russia at a Texas university would not be allowed to purchase property, but a student from Sweden could. Individuals from the affected countries could start making decisions on where to work or study to avoid Texas. Companies might become alarmed if employees are treated differently under Texas law based on their place of birth.
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