If you're thinking about buying a house in the United States, there are several important factors to consider before diving into the actual purchase.
Here’s a checklist of things to look into to help you make a more informed decision as a foreign buyer of American real estate.
1. Location and state laws
The US is a huge country encompassing various landscapes, climates and cultures. Furthermore, each state has significant control over legislation – including things like tax structures, zoning laws and property laws – so the rules and regulations vary from state to state.
Therefore it’s vital to do a deep dive into where you want to buy. Consider whether the climate and culture will suit your lifestyle, along with things like amenities and infrastructure. Make sure you also research property prices, laws and taxes in the states and counties you’re considering buying in.
Take a look at our list of the best places to buy property in the USA if you need some inspiration.
2. Affordability and budgeting
Buying property in the US involves more than just the purchase price. Additional costs such as property taxes, utilities, insurance, maintenance, and homeowners’ association (HOA) fees can add up quickly. Costs also vary widely between states and even cities, so researching price trends in your chosen area is essential.
Ensure that your budget accounts for both the initial costs and the ongoing expenses of property ownership. It’s also best to have a contingency fund of around 15%. If you're comparing costs to your home country, take into consideration exchange rates and potential currency fluctuations, as these can impact your overall spending power.
3. Financing options
Foreign buyers may face more restrictions when it comes to securing a mortgage in the US. Some US lenders offer financing for non-residents, but requirements can be strict, often including higher down payments and interest rates. You may also have the option of obtaining an international mortgage through a bank in your home country.
Explore different financing options early in the process, and check what documentation is required. If you're planning to take out a mortgage, consider getting pre-approved to understand how much you can borrow and what the repayment terms will be.
Learn more about securing a mortgage for buying property abroad.
4. Visa and residency considerations
Owning property in the US does not automatically grant you residency, so if you plan to spend extended periods in your home, you’ll need to check visa requirements. Some visa categories may allow for longer stays or multiple entries, while others have stricter limitations.
Before purchasing, research how your property ownership might affect your ability to stay in the country long-term, especially if you’re considering living in the US for part of the year. Consulting with an immigration lawyer may help clarify your options.
5. Usage and purpose of the property
Consider why you're buying the property and how you intend to use it. If you plan to rent the property out – either full-time as an investment or part-time when you’re not using it – you’ll need to check local rental regulations. You should also research rental demand, potential income, and tax implications for foreign landlords.
If you're moving to the US, take into account local amenities, schooling options, healthcare, and employment opportunities, as well as community services and whether the climate and lifestyle align with your long-term needs.
6. Maintenance and property management
If you won’t be living in the property full-time, you’ll need to think about how to manage and maintain it. Properties in areas prone to extreme weather, such as hurricanes or snowstorms, may require extra upkeep. And if you plan to rent the property, regular maintenance will be necessary to keep it in good condition.
Many foreign owners hire a property management company to handle maintenance, tenant screening, rent collection, and repairs. Before purchasing, research the availability and cost of property management services in your chosen area.
7. Local economy and future growth
Property values are closely linked to the local economy. Areas with strong job markets, growing industries, and investment in infrastructure tend to see better long-term property appreciation. Conversely, regions experiencing economic decline or stagnation may pose a higher investment risk.
Look into the area’s economic drivers, population growth trends, and upcoming developments. If major businesses or government initiatives are investing in the region, this could be a sign of strong future demand for housing.
8. Legal and tax obligations
As a foreign buyer, you may be subject to different tax rules than US residents. Property taxes vary by state and county, and if you rent out your property, you’ll likely have to pay income tax on your rental earnings. Capital gains tax may also apply when selling the property.
It’s advisable to consult with a tax professional who specialises in international property transactions to ensure you understand your obligations and can take advantage of any tax treaties that may reduce your liability.
9. Insurance requirements
Insurance is essential for protecting your investment, and the type of coverage you need depends on the location of your property. Standard homeowners’ insurance covers basic risks, but additional policies may be required for natural disasters such as floods, hurricanes, or earthquakes.
Check local insurance requirements and get quotes from multiple providers to ensure you have adequate coverage at a reasonable price. Be aware that premiums can be significantly higher in high-risk areas.
10. International money transfers
Transferring funds for a US property purchase involves exchange rate considerations and potential fees. Fluctuations in currency value can impact the cost of your property, but planning your transfers in advance can help you secure a stronger rate.
Using a currency transfer specialist like Currencies Direct can also help you get more from your money. We offer services such as forward contracts (which allow you to lock in exchange rates for future payments) paired with expert guidance and insights.
It’s free and easy to create an account with us, and there’s no obligation for you to use your account after it’s set up. Once registered, you’ll have access to your own account manager, who’s there to provide personalised support.
11. Exit strategy
Even if you’re buying for the long term, it’s wise to have an exit strategy. Market conditions, personal circumstances, or changes in local regulations could influence your decision to sell in the future.
Research resale values in your chosen area and consider the demand for properties similar to yours. Some locations may offer strong appreciation potential, while others may have a slower property market with limited buyer interest.
Preparation is key
Buying property in the US as a foreign buyer involves careful planning and research. From understanding local laws and tax obligations to considering long-term financial commitments, taking the time to evaluate each factor will help you make a sound investment.
Hopefully this checklist will help you approach your purchase with confidence and ensure that your decision aligns with your financial and lifestyle goals.
Want to know more? Check out our ultimate guide on buying property in the USA or view live exchange rates for GBP/USD and EUR/USD.
