Commercial real estate loans for foreign nationals

The decision

A foreign investor’s financing choice turns on two questions. Who stands behind the loan in the U.S. if something goes wrong? And how much documentation can you produce in a form a U.S. lender can verify? The answers set the lender list, the leverage and the price.

How the deal is usually structured

1. A U.S. single-purpose entity owns the property. Typically a Delaware or state LLC formed only to hold this asset. Lenders want the property and its income inside a borrower they can lend to and, if needed, foreclose on under U.S. law.
2. Your ownership sits above it. A foreign parent company or a trust can own the U.S. LLC. Fannie Mae’s DUS language allows this. Its rule: Single-asset U.S. borrower with U.S. ownership; indirect foreign ownership possible with proper structuring².
3. Someone signs the carve-out guarantee. Non-recourse lenders still need a guarantor for bad acts such as fraud or an unauthorized transfer. A U.S. resident partner, a U.S. holding company with assets, or the foreign sponsor itself with verified net worth can fill this role.
4. A U.S. bank account holds rents and reserves. Lenders want cash management in the U.S.

Lenders ranked for a foreign sponsor

Rank	Lender type	Why it fits	What it will ask
1	Life company	Low leverage, quality asset, long fixed rate	Strong sponsor balance sheet, clean property
2	CMBS conduit	Non-recourse; sizes on the property	Carve-out guarantor with verifiable net worth and liquidity
3	Bank with international clients	Relationship lending, deposits	Know-your-customer review, often a guarantee
4	Agency (apartments)	Long fixed rate, non-recourse	U.S. borrower and an ownership structure the lender accepts
5	DSCR lender	Qualifies on rent, lighter on personal income	Higher rate, lower leverage
6	Private or hard money	Fastest, most flexible on documents	Highest cost; short term

Life companies hold 15% ($782 billion)³ of U.S. commercial and multifamily mortgage debt, and they lend conservatively: ACLI’s 2024 data put $615 billion (78%)⁴ of life companies’ general-account mortgages in the low loan-to-value band of its fact book table. That is the profile foreign capital fits best.

What lenders verify

• Identity and ownership. Passport, organizational charts down to every individual owner, and beneficial ownership certifications. Lenders also screen every owner against U.S. sanctions lists.
• Source of funds. Where the equity came from and how it reached the U.S. Bank statements and wire records.
• Net worth and liquidity. Audited or accountant-prepared statements, translated, with values in U.S. dollars.
• Credit. Home-country credit reports or bank reference letters when there is no U.S. file.
• Tax identification. An EIN for the U.S. entity, and tax advice on withholding.

Worked example: leverage for a foreign sponsor

Illustration. A foreign family office buys a stabilized retail center for $5,000,000 with $400,000 of NOI. A domestic sponsor might get 65% leverage. The foreign sponsor, with no U.S. co-guarantor, is offered 55%.

Illustration	Domestic sponsor	Foreign sponsor
Loan	$3,250,000	$2,750,000
Equity before costs	$1,750,000	$2,250,000
Coverage at 6.50%, 30-year amortization	about 1.62x	about 1.92x

The extra $500,000 of equity is the cost of not having a U.S. guarantor. Adding one, or holding deposits with the lending bank, can recover part of it. Run your own sizing in the LTV and LTC calculator.

Timeline and documents

Allow extra time for document collection, translation, apostilles and lender compliance review, on top of the normal appraisal and underwriting.

• Organizational documents for every entity in the chain, with a chart.
• Passports and proof of address for every individual owner and guarantor.
• Financial statements, translated and in U.S. dollars, and bank reference letters.
• Evidence of the equity’s source and its transfer to the U.S.
• Property documents: rent roll, operating statements, leases, purchase contract.

Pitfalls

1. Forming the entity late. Lenders want the borrowing entity set up before closing documents are drafted. Form it early with U.S. counsel.
2. Tax surprises on exit. U.S. tax rules can require withholding when a foreign person sells U.S. real property. See the IRS FIRPTA page listed in sources and get tax advice before you buy.
3. Federal review near sensitive sites. Some real estate purchases by foreign persons near military installations and other sensitive sites can fall under CFIUS review (31 CFR Part 802, listed in sources). Check before you sign.
4. Assuming SBA programs apply. All owners must be U.S. citizens or U.S. nationals living in the U.S.; green card holders are no longer eligible¹.
5. Currency risk. Rents and debt are in dollars; your equity may not be. Plan for exchange-rate moves on reserves and capital calls.