Hi everyone, I’m new here and need some advice. My wife and I are close to closing on our home, and I’m currently a non-resident borrower, while my wife is a US citizen. Initially, our lender approved us for an FHA loan due to my pending adjustment of status and work permit. Surprisingly, they briefly changed it to a conventional loan in our second disclosure before switching it back to FHA. We are planning to put down 20%, so an FHA loan doesn’t seem advantageous due to the required mortgage insurance. Can anyone provide insights on why this might be happening and what our options might be? Thanks in advance.
It sounds like your lender is assessing risk associated with your immigration status. Typically, lenders prefer FHA for non-residents due to the program’s flexibility in underwriting standards. You should discuss with your lender why they switched back to FHA and express your preference for a conventional loan.
@Nuri
Thanks for the input. I was under the impression that being on an FHA loan despite a substantial down payment isn’t financially wise due to additional costs like the upfront mortgage insurance premium. I will ask them directly about the specific reasons for their decision.
@Oaklan
Exactly, you have the right idea. The FHA loan involves more costs long-term. Make sure they provide a clear explanation, and if it’s not satisfactory, consider consulting with another lender to compare what they can offer based on your current status.
@Nuri
I will do that. I’ll also check their response against FHA and conventional loan guidelines to ensure they are not misinterpreting the rules. Thanks again for the advice!
Are you sure your adjustment of status has been correctly reported to the lender? Sometimes, miscommunication about immigration status can lead lenders to opt for more secure loan options like FHA.
Taryn said:
Are you sure your adjustment of status has been correctly reported to the lender? Sometimes, miscommunication about immigration status can lead lenders to opt for more secure loan options like FHA.
Yes, I’ve provided all the necessary documentation to prove my status. I think it’s more about their internal policies or an overly cautious approach to underwriting.
Check whether there’s a specific lender overlay that requires non-resident borrowers to use FHA loans. Lenders sometimes have more stringent requirements than the general guidelines suggest.
What’s your credit score? Sometimes creditworthiness can influence the type of loan you’re eligible for, although with a 20% down payment, your options should generally be broader.
Marley said:
What’s your credit score? Sometimes creditworthiness can influence the type of loan you’re eligible for, although with a 20% down payment, your options should generally be broader.
Both my FICO and TransUnion scores are in the 740-770 range, which I believe is quite strong.
If FHA is indeed the only option due to your status, then it might be necessary to accept this pathway despite the higher costs. However, once your status stabilizes, refinancing into a conventional loan could be a viable strategy to reduce your overall expenses.