Buying property in the US as a foreigner

Planning a move across the pond? If you’re taking the exciting step of moving to the US from the UK, one of the first things you’ll need to organise is accommodation.

Some UK expats prefer to rent for a while before buying property overseas, while others prefer the security of owning a home from day one.

If you’re thinking of buying property in the US, read on. We’ve put together the ultimate guide for foreigners moving to the United States, covering all the essentials you need to know.

This includes a run-through of the buying process, info on taxes and fees, the latest US property prices and some of the pitfalls to avoid.

If you’re looking for ways to save money on currency exchange when buying property in the US, check out the money services provider Wise. You can send large transfers with Wise for low fees* and great exchange rates - making it ideal if you’re sending a secure international transfer.

Table of contents

Buying property in the US as a foreigner - a step-by-step guide 1. Get your finances in order 2. Apply for an ITN 3. Find a property and arrange viewings 4. Make an offer 5. Hire a solicitor to carry out due diligence checks 6. Sign the purchase agreement and pay the deposit 7. Finalise your mortgage 8. Complete closing/settlement Can you get a mortgage from a US bank as a non-resident? Taxes and fees for owning property in the US What’s the property market like in the US? Can foreigners buy property in the US? Can you buy property in the US and get residency? How much are the property prices in the US? Where is the cheapest place to buy property in the US? How can you find a property in the US? Property agencies and agents in the US Property websites in the US What are some of the pitfalls of buying property in the US? How do you choose the right property in the US? Condition of the property Moving into your US property Insurance Setting up utilities Energy efficiency renovations

Buying property in the US as a foreigner - a step-by-step guide

Before you start your house hunt, it can be useful to know a little about how the process of buying property works in the US.

Here’s a quick overview of the steps involved:¹

1. Get your finances in order

The first crucial step before you arrange any viewings is to arrange your finances. You need to set your budget for the purchase, making sure to factor in all fees, taxes and other costs (more on this later). This is also a good time to pin down exactly what you’re looking for and where.

You might also need to apply for pre-approval for a US home loan. Alternatively, you can make arrangements to finance your purchase in other ways - such as getting a loan from a UK bank, refinancing a property you already own elsewhere to release cash, or using savings.

2. Apply for an ITN

If you don’t already have one, you’ll need to apply to the Internal Revenue Service (IRS) for an Individual Taxpayer Identification Number (ITN). This is a tax number for non-US citizens who don’t have a Social Security Number (SSN).

It isn’t absolutely essential for property purchases, but it is a key requirement for applying for US mortgages or opening a US bank account. Both of these may be crucial for your purchase.

3. Find a property and arrange viewings

With some of the admin out the way, you can now start searching for a property to buy.

You can use online property portals, or tap into the expertise of local realtors to find properties that match your criteria and arrange viewings. An expert can also guide you through the steps involved in the purchase process, which can vary between states.

4. Make an offer

Once you’ve found your dream home, you’ll need to make a competitive offer or bid in writing. You’ll submit it either to the real estate agent or directly to the seller. At this stage, negotiations on price may take place.

5. Hire a solicitor to carry out due diligence checks

If your offer is accepted, the next step is to appoint a real estate attorney to carry out some checks on the property. This includes doing a title search to check the legal ownership of the property, along with whether there are any disputes, claims or other issues which could impact the sale.

You’ll also want to arrange for a property inspection, to check for structural damage or any other issues with the building. In some areas and for some properties, you might also need to have specialist surveys done for things like termites or flood risk.

6. Sign the purchase agreement and pay the deposit

This is the formal and legally binding contract signed by both parties which outlines the terms and conditions of the sale.

You’ll also pay what is known as an ‘earnest money deposit’ as a sign of good faith and commitment to the purchase. This is usually only around 1-3%.

If you’re still in the UK, you’ll need to find a cost-effective way to make an international transfer to cover this - read some tips on how to do this here.

7. Finalise your mortgage

This is the time to contact your mortgage provider to finalise the loan. The provider may need to carry out an appraisal of the property.

8. Complete closing/settlement

This is when the purchase is finalised. Your real estate attorney will be crucial to helping with this, as there’s plenty of paperwork and legal steps to be completed. This includes:

• Setting a closing date
• Signing the title deed
• Signing your home loan documents
• Recording the title deed with the local county recorder’s office, to legally transfer ownership of the property
• Setting up a transfer for the remaining balance, including fees and taxes.

And then all that’s left is for you to pick up the keys to your new home.

💡 Read more: The best UK banks for sending money abroad

Can you get a mortgage from a US bank as a non-resident?

US banks and providers do offer mortgage loans to foreigners, but the conditions, requirements and rates may differ compared to how it works for locals.

For example, you might have to pay a larger down payment as a non-resident, or have to pay higher interest rates or submit more extensive documentation as part of your application.

The requirements for application will vary between banks, but generally you’ll need the following:¹

• Valid photo ID
• ITN or SSN
• Proof of income
• Recent bank statements
• A credit report from the UK (if asked)
• Proof of funds for the down payment and associated costs.

Taxes and fees for owning property in the US

Alongside the property price, you also need to budget for the fees and taxes which may apply to your US property purchase.

Here are the essential costs you need to know about:

• Real estate agent fees - varies, usually paid by the seller
• Recording fee (for registering the title deed) - around $10 to $50²
• Property transfer tax - 0% to 4%²
• Closing costs (including title insurance, legal services, inspections etc.) - 2% to 5%¹
• Annual property taxes (for property ownership) - 0.3% to 2.5%.²

It’s important to remember that many of these costs (and who pays them) will vary by state, so you’ll need to check in the area you’re buying within.

What’s the property market like in the US?

The US property market has had a difficult few years, with high property prices and high mortgage rates creating something of an affordability crisis for homebuyers.

The good news is that there have been some recent improvements. Property prices unfortunately remain high, up 2.9% compared to the previous year. But mortgage rates are falling, with recent rates the lowest they’ve been for more than 2 years.³

Can foreigners buy property in the US?

Yes, foreigners can buy property in the US. However, it’s important to remember that there can be significant differences between states when it comes to real estate laws, taxes and other conditions.

So, you’ll need to check the requirements in the area you’re looking to buy in.

Can you buy property in the US and get residency?

Buying a property in the US does not give you automatic or direct rights to permanent residency.

To live in the US, you’ll need an appropriate visa or residence status which must be applied for separately to the house purchase process.

To apply for residency there as a UK citizen, you’ll usually need to go down the route of employment, starting a business, studying or having family ties in the US.

How much are the property prices in the US?

Now we come to the all important question - how much money do you need to afford your dream home in the US?

Across the whole country, the average property price in the US is $361,282 (approx. £286,200 in GBP).³ In the UK, the average property price is almost the same, coming in at £288,533 as of July 2024.⁴

Although of course, it depends on the type of home and the exact area you’re buying in.

To narrow it down a little further, here’s a guide to what you can expect to pay per square metre in some of the US’s major cities:⁵

City	Average apartment price per sq.m - city centre	Average apartment price per sq.m - outside city
New York, NY	$18,356	$12,897
Boston, MA	$11,536	$6,724
Washington, D.C	$9,804	$6,521
Los Angeles, CA	$7,499	$6,854
Seattle, WA	$7,197	$5,294
Miami, FL	$6,616	$4,023
Austin, TX	$4,737	$2,953
Portland, OR	$3,648	$3,320
Chicago, IL	$3,552	$3,153
Atlanta, GA	$3,241	$2,531
Phoenix, AZ	$3,181	$2,913

Remember though that property prices will also vary depending on the type of property.

Another thing to note when figuring out the price for property in the US is that international transfers could get expensive, especially if the provider adds a margin to the exchange rate to convert your pounds. Consider checking out Wise to securely handle your large transfers with mid-market exchange rates and low, transparent fees*.

Where is the cheapest place to buy property in the US?

Of the major US cities in our list above, Atlanta and Phoenix are among the cheapest. But you can also snap up homes even more cheaply in places like Houston, Texas and Tucson, Arizona.

Other places which regularly top the list of most affordable house prices in the US include:⁶

• Toledo, OH
• Scranton, PA
• Rochester, NY
• Detroit, MI
• St. Louis, MO.

If you’re on a tight budget, you may be best looking outside of city centres and popular urban areas.

How can you find a property in the US?

The two main routes to find property to buy in the US are local real estate agencies and online property websites.

Property agencies and agents in the US

It isn’t mandatory to use a real estate agent (realtor) to find a property to buy overseas. But it can be very helpful if you’re moving to the US from the UK and are unfamiliar with the local property market.

When choosing a realtor, make sure to check out their credentials. All real estate agents should be licensed in the state they operate in. A good place to start is professional organisations such as the National Association of Realtors (NAR).

Property websites in the US

You can also search for property in the US online, from the comfort of your current home in the UK.

Here are some popular US real estate websites to check out:

• Zillow
• Realtor
• Trulia
• Redfin
• Homes.com
• RE/MAX

What are some of the pitfalls of buying property in the US?

The US is considered to be a safe place to buy property, as long as you take sensible precautions to protect yourself from scams and fraudsters.

But there are some pitfalls and risks to look out for, including the following:

• Not doing your due diligence. Before committing to a purchase, it’s crucial to carefully check the title deed and local registry for the property, as well as arranging a detailed property inspection. This can flag up any potential issues, whether it’s legal disputes, property defects or anything else which could negatively impact your purchase or ownership of the property.
• Failing to factor fees and costs into your overall budget. There are quite a few fees and taxes involved in buying property in the US, and they can vary considerably between states. You need to get to grips with them early on so there are no expensive surprises later. You’ll also need to find out exactly who pays each fee, whether it’s the buyer, seller or both - as this too can vary between states.
• Not getting mortgage pre-approval. It’s strongly recommended to apply for pre-approval from several different home loan providers before starting your search. This will tell you exactly how much they’re willing to lend, which will impact what you can afford to buy. You might think you’re a good prospect on paper, but you just don’t know until you apply. Skip this step and you could be left without the finances to afford a purchase you’ve legally committed to.

How do you choose the right property in the US?

The right property for you will all depend on your search criteria - specifically, where and what you want to buy, and how much you can afford to spend.

If you’re not already living there, it’s worth making a trip to the specific town or city in the US you’re interested in. You’ll want to check out the local area and view properties, making sure to pay attention to local transport links and amenities.

Condition of the property

It’s a good idea to do as much research as possible before committing to purchase a property. A crucial step is checking the title deeds for any outstanding claims, disputes or conditions.

You’ll also want to commission a property inspection, which will flag up any major issues and give you a better idea of what you’re buying.

Moving into your US property

Before you can get the keys to your new home, you’ll have a final few tasks to check off your list.

These include taking out insurance, setting up your utilities and carrying out any energy efficiency renovations.

Insurance

It’s strongly recommended to take out a home insurance policy starting from your completion date. It may even be a mandatory condition from your home loan provider.

Setting up utilities

If you know when your completion date will be, it makes sense to get some essentials set up in advance of moving in.

A prime example is utilities, such as heating, power and water. Get these sorted as early as you can, and the moving process should be a little smoother.

Energy efficiency renovations

Purchased a US property with an older heating system or minimal insulation?

From heating and insulation upgrades to double glazing and draught proofing, there are lots of things you can do to improve the energy efficiency of your new home.

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And that’s about it - our comprehensive guide to buying property in the US for foreigners.

We’ve covered all of the essential info you need to know, including tips for starting your search, average property prices in the US and what fees and taxes are involved. You should also now have a better idea of how the buying process works in the US.

And, if you want to save money while buying your new property in the US, make sure to use the Wise account to send your international transfer. It’s not a bank account but offers many similar features.

Here are the main benefits for using Wise:
Fast and easy setup with no physical paperwork Low, upfront, transparent fees* Fully trackable transfers Fast transfer times Two-factor authentication and real-time notifications Dedicated support for large transfers

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Sources used:

1. Properstar - Buying Property in the United States as a Brit: 2024 Guide
2. Currencies Direct - Understanding US property taxes for UK buyers
3. Business Insider - Housing Market Predictions: What Homebuyers and Sellers Should Know
4. Statista - Average house price in the United Kingdom (UK) from January 2007 to July 2024
5. Numbeo - Prices by City
6. Bankrate - Cheapest housing markets in the U.S.

Sources last checked on date: 28-Oct-2024