Can you use foreign income to get approved for a mortgage?

By Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Edited by Michael Jensen, Mortgage and Finance Guru

Updated October 20, 2020

If you work outside the United States you may be wondering if it is possible to qualify for a mortgage in the U.S. using your foreign income? The same question may also apply if you work for an international company or organization and are paid in a non-U.S. currency.

The short answer to both of these questions is that it is certainly possible to use foreign income to qualify for a mortgage to buy a home in the U.S. As we explain below, the qualification and documentation requirements are actually relatively similar to using other types of income to get approved for the loan.

The most important point to highlight is if you want to include foreign income in your mortgage application, you are required to provide U.S. tax returns for the prior two years that show the income. You must provide tax returns that include the foreign income even if you were not required to pay taxes on all or part of the income.

The foreign earned income exclusion provision in the U.S. tax code usually allows you to exclude a certain amount of foreign income from U.S. taxation, which reduces your domestic tax bill. That said, you are still required to report foreign income on your U.S. tax returns. If your tax returns do not show your foreign income, you cannot use the income to qualify for a mortgage.

Keep in mind that for both foreign and domestic income, lenders use your monthly gross income to determine the mortgage you can afford.

Use ourMORTGAGE QUALIFICATION CALCULATORto determine the loan you can afford based on your monthly gross income and debt expense

In addition to providing your personal tax returns, you also need to submit standard income, employment and financial documents that are required for all mortgages, including the following:

Pay stubs for the past month

Bank, investment and brokerage account statements for the past two months

Current loan, credit card and other debt account statements

It may also be helpful to provide a document comparable to a W-2 for the past two years and a letter from your employer confirming your current job terms including your income, title and how you are compensated. Please note that all foreign income and financial figures must be converted into dollars.

The lender also verifies your employment when you submit your application and performs another verbal employment verification within ten days of your mortgage closing. This process may be more challenging if your employer is in a different time zone, so this is something to pay extra attention to.

In closing, as long as you report foreign income on your tax returns for the past two years, it is relatively straightforward to use this income when you apply for a mortgage. If you meet the lender’s other requirements for your credit score, debt-to-income ratio and employment history, you should get approved regardless of the country you work in or the currency you are paid in.

We recommend that you contact multiple lenders in the table below to confirm their qualification guidelines for applicants with foreign income. After reading this article you may know more than they do. Plus, shopping lenders is the best way to save money on your mortgage.

Sources

"B3-3.1-09, Other Sources of Income, Foreign Income."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, October 2 2019.  Web.