RickyOtto

Dear All,

Firstly, I'm new to the forum so sincere apologies if this has been asked previously. I've been a reader for a few months in anticipation of a move I'm making to Houston, TX with work in November of this year.

I'm rather excited if not a little nervous, but luckily my wingwoman (or wife as she prefers to be called) is American so some of the culture shock will be less impacting hopefully.

However one area where she isn't able to guide me is in property. I would like to buy reasonably soon (6-12 months) once we arrive however I don't think I'll be using more than 30-40% deposit. As such I had a number of questions:

1. How much credit history do you have to build up in terms of length of stay before being eligible for a mortgage with US lenders?

2a. Do they take into account UK lending, and if so, do they place the same emphasis on home ownership versus buy to lets when deciding how much they are likely to lend?

2b. What tends to be the standard salary to loan ratio? Its approximately 4x salary in the UK at the moment.

3. I currently bank as an HSBC Advance customer (with whom my current mortgages sit). This should allow me to create a US HSBC bank account. Does anyone have experience of being able to use their UK credit history with HSBC Advance to secure a US mortgage?

4. London & Country is a superb mortgage comparison site in the UK as it includes almost every lender, is fee free and is not driven by commission. I think I found it on MoneySavingExpert.com. Is there a US equivalent?

Sorry for the multiple questions but all contributions gratefully received.

rpjs

Can't answer your specifics but we bought a house after a couple of years in. We went through a broker that was used (FSOV) to dealing with ex-pats. Whilst we had something of a credit history built up (esp. my wife who'd maintained a US credit history by paying her US student loans from the UK) the brokers did say that they'd dealt with newly-arrived Brits before and found them mortgages.

This was in NY, but I believe the company trades nationwide, so I'd be glad to give you their details if interested. Our initial rate wasn't stellar, but we just refinanced through them to get a much better deal.

Mr Weeze

For your standard lender you will be in a world of hurt without 2 years - i.e. computer says no and they aren't interested in your business because of the perceived risk. I tried with Wells Fargo (my bank) after 2.5 years and gave up after about 30 days of back and forth.

They take into account everything - they look at your overall outgoings and affordability. I don't think they work to a "standard" - it's more a monthly outgoings kind of calculation.

The simple answer is "No" - there are very few people who have been pleased (based on anecdotal evidence here as well as people I work with who tried this) with the service offered by HSBC.

Not really - the US is more about the "personal touch" on this one, i.e. you go through a broker. It's typically the same with insurance too.

Because your wife is from the US you may not have any of the initial issues expats have on the whole lack of credit thing, but if you do there are people in Houston who have realized that actually there is good money and not much competition in the expat space. I can recommend you someone, if needed. I will add in that he occasionally buys me drinks as he keeps getting business from me, but the reason I recommend him is he organized my mortgage and actually worked with me to understand what the hell I was on about and has since convinced his company to set up specifically to be able to handle expat mortgages as well as regular US citizens.

celticgrid

You should check with your employer if they can help. Mine had a package that included a mortgage if required from one of the banks they use for business - and not at silly rates. No hassles over lack of history etc. A very helpful relocation perk.

hungryhorace

I had ~18 months of US credit. My USC wife had 15+ years.

Not sure I understand your question re 'UK lending', but the criteria for lending here is different (easier IMO) that's for sure.

This is one area which I noticed was different. The up to 4x rule doesn't seem to apply here. It is what you are deemed to be able to afford based on the information presented.

Suz16

We are just about to close on a house, we got approved for a mortgage after 18 months. There really is no " one size fits all", it depends on your circumstances.

Pulaski

There doesn't appear to be a one size fits all answer to your question, as others have reported getting a mortgage from Wells Fargo after just a few months. A "standard" deposit is 20%, so 30-40% puts you waaaay ahead of most people, and greatly reduces the risk of the mortgage and of a loss (to the mortgage lender) if you default.

If you bring a copy of your UK credit history there is a good chance that the mortgage bank may be willing to take it into account.

The "limit" on the mortgage size in the US is defined as the mortgage payments as a percentage of your gross (?) income. IIRC it is capped at 28% and total loan payments (auto loans, credit cards, etc) not to exceed 36%. So if your gross income is $100,000, I think your monthly mortgage payments can't exceed $28,000/12. If your other debt payments exceed 8% of your income they will further cut the amount you can borrow.

Clrsth

We moved here last July and have just closed on our first house (so after 10 months) We bank with Wells Fargo, but ended up getting a mortgage with a broker and we got a mortgage with only a 10% deposit, but we have to pay insurance, which is an extra payment until we reach a 20% deposit - this is still cheaper than us renting though.
We did not need to take our UK credit history into account, it was never mentioned.

Pulaski

They wouldn't ask for your UK credit history, they wouldn't even know it exists, but some people have offered it, and reported it was well received. In truth we will never know if it helped, but it won't have done any harm (as long as it is a good credit report).

RICH

I came across a loan today where the borrower had "no traditional credit history". The loan was manually underwritten, ie special case, and there was some kind of referral instead of credit score. I think it was with Wells Fargo and a FHA/VA loan. No idea of the circumstances, and this is only one out of thousands I see with "traditional" credit.

sir_eccles

A few years back "manually underwritten" was code for "types of loan that caused the mortgage bubble".

RICH

Good point!

RickyOtto

Thank you for all your thoughtful and varied responses people. A credit to the value of this forum that a newby like me can come on and ask what are probably noddy questions to most of you and get such sincere replies.

Interesting that it seems to be more based on your historical monthly income and outgoings netted off rather than an overall salary calculation as has historically been more the case in the UK. I've a very good UK credit rating but sounds like that will only very marginally useful at best, if not redundant, so I will go and read some of your historical threads on building up effective credit scores.

It also sounds like if I can rustle up a 50% deposit then I'll be in a very solid spot based on some of the above.

RickyOtto

UK mortgage lenders, if you're looking to invest in a buy to let, tend to review your overall loans value on all property e.g. your own home and any other buy to let and then multiply the total loans versus your salary to establish what you can borrow. It's far more stringent than it was before the 2008 crash (understandably).

I'm tempted to invest in a buy-to-let in a London growth spot before I leave and my rather clumsy question was whether it would impact on how much I could borrow in the US or whether I'd effectively be on a clean slate and they'd ignore the total of UK loans.

Pulaski

If you do that, and can prove the income (mortgage underwriters like to see the income in your tax return), then it doesn't necessarily impinge on your ability to borrow in the US because you can include the rent in your income when calculating how much you can borrow.

That said there are other peculiar limitations in the US on how many "conventional" mortgage loans you can have. Most lenders won't allow you to have more than four mortgage loans, and there is a regulatory cap at ten mortgage loans.