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Investor and self-employed

An ITIN loan is for a buyer who files taxes under an ITIN instead of a Social Security number

An ITIN loan is a mortgage for a borrower who files federal taxes under an Individual Taxpayer Identification Number rather than a Social Security number. The lender that makes it does not sell it to Fannie Mae or Freddie Mac, and it can buy a home you will live in, a second home or a rental, in San Luis Obispo County or elsewhere on the Central Coast. It can cost more than a conventional loan. And because it is a loan on your own home, the lender still has to verify that you can repay it, from the returns filed under your ITIN, your pay records or your bank statements. This page says what it asks, what it costs and when a Social Security number would change the answer.

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The program in one box

What it is
A mortgage for a borrower who files federal taxes under an Individual Taxpayer Identification Number rather than a Social Security number. The lender that makes it does not sell it to Fannie Mae or Freddie Mac, and writes its own rules for it.
Who it suits
A taxpayer with a current ITIN, returns filed under it and a record of income, who wants to buy a home, including the one they will live in.
How it is qualified
On documented income, because this is a loan on your own home and federal rules require the lender to verify that you can repay it. Returns filed under the ITIN, pay records or a run of bank statements, depending on how you earn.
Credit
A credit history. Where the bureau file is thin, federal rules let a lender look at rent and utility payment history instead, though no lender is required to. We arrange ITIN loans with lenders that do.
Identification
A lender may ask for a government-issued photo ID and the IRS notice that assigned your ITIN, because the IRS says an ITIN does not serve as identification outside the federal tax system.
The property
A home you will live in is the ordinary case. Whether a lender will also write an ITIN loan on a second home or a rental is a lender-by-lender question.
What it costs
It can cost more than a conventional loan, on terms each lender sets. On the home you live in, written as a non-QM loan, federal rules do not allow a prepayment penalty.
Where it is not the answer
A borrower who has a Social Security number and meets the agencies' residency rules: FHA or a conventional loan may then cost less than this loan. And some ITIN files reach a conventional loan under Fannie Mae's rules on residency and documentation.

What this program is good at

  • It is a real mortgage on a home you will live in. FHA requires a valid Social Security number from each borrower, with narrow exceptions, and this loan is written for a borrower without one.
  • The returns you have filed under your ITIN are how a lender reads your income, alongside pay records or bank statements, so the years of filing carry the file rather than needing to be explained away.
  • Credit history counts, and where the bureau file is thin, federal rules let a lender read a history of rent and utility payments, though none is required to.
  • The lender that makes the loan keeps it and writes its own rules, so one lender's no is that lender's rules and not the answer.
  • It is not meant to be the loan you keep forever. Once you have a Social Security number and qualify for an agency loan, refinancing into one may be possible, and federal rules keep a prepayment penalty off a non-QM loan on the home you live in.

Who qualifies

What a lender weighs before this program is on the table. A lender can add rules of its own, and those rules can differ from one lender to the next.

Your ITIN and your returns

The IRS issues an Individual Taxpayer Identification Number to someone who needs a taxpayer number for federal tax purposes but is not eligible for a Social Security number, and a person can apply for one regardless of immigration status. A lender wants to see that the number is current and that returns have been filed under it. An ITIN can expire, and the IRS renews it; if yours has lapsed, renewing it comes before anything else. Bring the IRS notice that assigned the number and the returns you have filed.

Income, documented

This is a loan on a home you will live in, so federal rules require the lender to verify that you can repay it, and no ITIN lender can skip that. What changes is how. Wages are shown with pay records and the returns filed under your ITIN. Self-employment is shown with those returns, or with a run of bank statements at a lender that reads deposits when the returns understate what you take home.

Credit

A lender reads your credit history the way it reads any other. The federal rule does not set a minimum score; each lender does. Where the file is thin, the same rule lets a lender look at rent and utility payment history instead, though no lender is required to.

What you bring to closing

More is asked of you up front than an agency loan would ask, and the money has to be traceable: statements that show where it has been and where it came from. Whether money from family can be used, and with what paperwork, is each lender's rule. What is left after closing matters here as it does on any lender-held loan, so tell us what you will have left, not only what you will spend.

Where it is not the answer

If you have a Social Security number, or can get one, an ITIN loan may be the wrong loan: with a Social Security number and a residency status the agency rules accept, FHA or a conventional loan may cost you less than this one. Some ITIN files reach a conventional loan as they stand, under Fannie Mae's rules on residency and documentation. The IRS also says you cannot hold both numbers; once you have a Social Security number you stop using the ITIN. If you have only an ITIN today and expect a Social Security number later, this loan can still be the way in, and refinancing into an agency loan once you qualify may be possible.

How it works with us

What happens once you get in touch

The steps in order, so you can see what is coming. Nothing here is underwritten until a lender underwrites it.

  1. Tell us how you file and how you are paid

    Whether your returns are filed under an ITIN, whether the number is current, and whether you earn wages or run a business. That is enough to start the conversation, before any credit is pulled.

  2. We check the number and the credit

    With your permission we pull credit and look for a lender on our panel whose rules fit the file, including whether rent and utility history can stand in for a thin file.

  3. Your loan officer reviews the file

    After the call, your loan officer can write a pre-qualification letter if the file supports one.

  4. Appraisal, underwriting and funding

    Once a seller accepts, the appraisal and the lender's underwriting run alongside each other. Federal rules require the ability-to-repay review on a loan for your own home.

What people ask about this program

If yours is not here, call us. The useful answer depends on your file.

Can I get a mortgage in California with an ITIN and no Social Security number?

It is possible. An ITIN loan is a mortgage written for a borrower who files federal taxes under an Individual Taxpayer Identification Number rather than a Social Security number, and it can buy a home you will live in, a second home or a rental, in San Luis Obispo County or elsewhere on the Central Coast. It is made by a lender that writes its own rules rather than following an agency's, and it can cost more than a conventional loan. Your income still has to be documented, because federal rules require a lender to verify that a borrower can repay a loan on their own home.

Why can't I use FHA or a conventional loan with an ITIN?

FHA's handbook requires each borrower to show a valid Social Security number, with narrow exceptions, so FHA is closed to a borrower who has only an ITIN. Fannie Mae's guide does say a borrower may have a Social Security number or an ITIN, with its own rules on lawful residency and documentation on top, so whether a conventional lender will take your file turns on those rules rather than on the ITIN alone. An ITIN loan is the one a lender writes and keeps when that route is closed.

How is my income documented for an ITIN loan?

Through the tax returns you have filed under your ITIN, pay records from your employer, or a run of bank statements if you are self-employed and your returns understate what you take home. A loan on a home you live in falls under the federal ability-to-repay rule, so the lender must verify your income one of those ways. What an ITIN lender changes is how the income is shown, never whether it is.

Do I need a credit score for an ITIN loan?

A credit history helps. The federal ability-to-repay rule does not set a minimum score and leaves that to each lender, and where a borrower has little traditional credit it lets a lender look at nontraditional references such as rent and utility payment history instead. No lender is required to, so which lenders take alternative credit is a question to settle before anyone pulls your credit.

Will I be stuck with an ITIN loan forever?

Not necessarily. An ITIN loan is written for your file as it stands today, and once you have a Social Security number and qualify for an agency loan, refinancing into FHA or a conventional loan may be possible. The IRS says that once you have a Social Security number you stop using the ITIN. When the loan is written as a non-QM loan on the home you live in, federal rules do not allow a prepayment penalty on it, and the note is the place to check either way.

Investor and self-employed

Non-QM loan

For a borrower who can repay but whose income, credit history or property does not fit agency rules. Costs more than an agency loan.

  • Bank statements, assets, a recent credit event, a foreign national's file, an unusual property: each is a reason agency rules say no, and a non-QM lender applies its own guidelines instead. We arrange non-QM loans for each of these reasons.
  • The lender still verifies that you can repay. That protects you as much as it binds them, and it is what makes a non-QM loan a mortgage rather than a bet.
  • On a non-QM loan for a home you live in, the federal rule bars a prepayment penalty, so leaving it for an agency loan later carries no penalty.
More about Non-QM

Investor and self-employed

Bank statement loan

Income read from your bank deposits instead of your tax returns, for the self-employed whose returns understate what they take home.

  • Your deposits are what the lender reads, rather than the figure left on the return after every legitimate write-off has been taken.
  • It is a loan on the home you live in, with the same federal ability-to-repay protection as any other consumer mortgage.
  • Federal rules do not permit a prepayment penalty on a loan like this written outside the qualified-mortgage definition, so if a cleaner return later qualifies you for a conventional loan, you could refinance without a penalty for leaving, though the refinance has closing costs of its own.
More about Bank statement

Not government-insured

Conventional loan

A loan for solid credit and income, with private mortgage insurance that does not have to be permanent.

  • Private mortgage insurance does not have to be permanent. On a one-unit home you live in, the Homeowners Protection Act of 1998, subject to its conditions and exceptions, gives you the right to ask for borrower-paid mortgage insurance to come off once the loan is paid down far enough against the home's original value, and requires it to end automatically at a later point on the loan's amortization schedule.
  • It works for a primary residence or an investment property of one to four units, and for a one-unit second home. FHA and VA are built for a home you live in; FHA allows a second home only in narrow hardship cases.
  • There is no federal credit floor on a conventional loan, and Fannie Mae's Desktop Underwriter sets no minimum score of its own: it weighs the credit with its own risk factors and returns what the file needs.
More about Conventional

Where this program fits:Buying a homeRefinancingThe county's loan limitsThe Central CoastServices

Published by

California Mortgage Solutions Inc. · Company NMLS #325189

This page is general information about a loan program, not an offer of credit or a commitment to lend. What a lender will do with your file depends on the file.

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