How To Get Loans With an ITIN Number

If you live and work in the United States but are not eligible for a Social Security number (SSN), it can be more difficult to access some financial services that many U.S. citizens take for granted, such as loans. A resident alien living and working in the U.S., on the other hand, may find it challenging to buy a car, purchase a home, or start a business without access to lending services. If this is your plight, you may be wondering: Can I get loans with an ITIN number?

Can you get a loan with an ITIN number?

“The biggest challenge for ITIN holders is finding financial institutions that accept ITIN numbers for credit applications. Additionally, building a credit history from scratch can be a slow process, much like climbing a mountain. You have to be patient and persistent,” says James Allen, a CPA, CFP, CFEI, and founder of Billpin.com.

Keep reading to learn more about what an Individual Taxpayer Identification Number (ITIN) is, how you can use one to apply for different kinds of loans, what types of lenders offer ITIN loans, and everything else you need to know to get a loan using an ITIN number. Let’s start by clarifying the primary purpose of an ITIN number.

What is an ITIN number?

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS). ITINs may be issued to non-resident and resident aliens, their spouses, and dependents who have a U.S. tax filing or reporting requirement, as dictated by the IRS, and are not eligible for a Social Security number.

It’s important to note that while these numbers are similar to Social Security numbers — i.e., they’re both used for tax reporting purposes — there are a few key distinctions between the two:

• ITINs do not make the ITIN holder eligible for Social Security benefits.
• ITINs do not authorize work in the United States.
• ITINs do not allow the ITIN holder to claim the Earned Income Tax Credit (EITC).

However, while the Internal Revenue Service states that ITINs are only used for tax purposes, such as filing tax returns, some organizations and financial institutions will accept ITINs as an additional form of identification. They can also be used to help resident aliens build a credit file, which is an important part of the loan process.

It is a challenge for ITIN holders trying to build their credit history to qualify for credit products that can help them establish a credit file. The good news is more financial providers are offering products that don’t require an SSN or credit history.

Can you get a loan with an ITIN number?

Most traditional banks require you to have a Social Security number to qualify for lending options. Having said that, some financial institutions are willing to work with you even if you don’t have an SSN. However, you will need to meet other requirements, provide certain documents, put up collateral (depending on the loan type), and verify your credit profile. At the very least, the lender will need to confirm your ability to repay the borrowed money.

Circumstances may vary depending on where you live, but ITIN borrowers have a few options when it comes to acquiring loans. While most major banks typically don’t offer ITIN lending, you may have luck with local banks or credit unions, online lenders, or, in the case of an auto loan, a car dealership.

Credit unions

A credit union could be your best chance to find a tax-ID-based auto loan or other lending products that don’t require a Social Security number. Oftentimes a credit union will have better interest rates than other lending programs, so it’s worth including credit unions in your search to find the best loan rates and terms. You may also want to explore local community banks.

Of course, you will need to become a member of the credit union first, which you can do by opening a bank account with them. This shouldn’t be a problem, as the criteria to join is usually to live and work in that state. Another bonus of working with a credit union is that, unlike other lending options available, some credit unions can also help you resolve any credit issues you may have.

For example, if you have poor credit or no credit history at all, many credit unions offer credit-building products such as secured credit cards and credit-builder loans. These can be great avenues to build or boost your credit file before you attempt to finance a car, home, or business.

“Various financial institutions, including some credit unions and banks, can help you build your credit with an ITIN,” explains Allen. “It’s important to do your research and find institutions that accept ITIN numbers for credit applications.”

Online lenders

You can find lenders online for pretty much any type of loan these days, including an ITIN auto loan, mortgage, personal loan, or business loan. In addition, an online lender typically doesn’t have the overhead of a brick-and-mortar financial institution, which means you could find more competitive rates online if you meet the lender’s qualifications.

Car dealerships

Many dealerships have in-house financing, which means your local dealership may offer ITIN auto loans. If not, they may have relationships with multiple lenders who do provide vehicle financing for ITIN borrowers. In many cases, you can even get pre-approved for an auto loan online before you even start shopping for a car.

How to get car loans with ITIN number

Applying for a car loan using an Individual Taxpayer Identification Number is pretty much the same process as if you were applying with a Social Security number. You’ll likely need to supply the following documentation to obtain loan approval, though keep in mind that some lenders may need additional information to approve your car loan:

• A valid ITIN
• Proof of identity, such as a passport or driver’s license
• Proof of income, such as pay stubs or bank statements
• Proof of residency, such as utility bills or a lease agreement
• A valid driver’s license

Down payment

Depending on the lender, you may also be required to make a down payment when you finance an automobile using your tax ID number. Even if it isn’t required, doing so could be beneficial: not only will it lower your monthly payments, but it will also save you money on interest over the life of the loan. If possible, try to put down at least 20% of the sales price of the car.

Other factors to consider when purchasing a car

Buying an automobile is a significant investment, so you definitely want to think through your options before committing to a purchase. The following are some factors to consider before buying a car:

• New or used: If you’re looking to save money, you may want to consider buying a used car rather than a brand-new one. Additionally, dealers that sell used cars may also be more willing than new car dealers to provide financing for a buyer with an ITIN.
• Pre-approval: If possible, getting pre-approved for an auto loan before you start shopping will save you time and help you set a budget for your purchase.
• Review purchase agreement: Once you’ve found a vehicle to buy, negotiated a price, and agreed on the length of the term, you’re ready to sign the sales agreement. Before you do, however, be sure to carefully read it over to check for clauses such as hidden fees or prepayment penalties. If there’s anything you don’t understand, don’t be afraid to ask for clarification!
• Registration and insurance: Along with your financing, the dealer will also help you register your car, and they will often set you up with insurance as well. However, you may want to obtain your car insurance separately to save a few bucks. Be sure to compare rates to get the best deal on insurance for your vehicle!

Getting a mortgage loan with an ITIN number

Similar to applying for a car loan, there are some financial institutions that will accept ITINs for mortgage applications. However, there may be additional requirements that an ITIN borrower will need to meet before approval.

For example, institutions that offer ITIN mortgages usually require a 15% minimum down payment (potentially a lot more), depending on your income, credit score, and other factors. Other documentation and requirements for a mortgage typically include the following:

• A valid Individual Taxpayer Identification Number
• A green card or visa
• Other proof of identity, such as a passport
• Two years of tax returns
• Pay stubs (or bank statements, if self-employed)
• Two years of employment history
• Two years’ proof of residency
• Credit information, such as a U.S. credit report or international credit profile

There are also some downsides to ITIN mortgages, including higher mortgage rates, larger down payments, and stricter qualifying requirements. Still, buying your own home is a great investment, as it will help you build equity and improve your credit file for the future.

What to consider when searching for an ITIN-based mortgage

If you’re looking to acquire a mortgage — whether it’s for an investment property or a primary residence — you should consider the following factors before starting the loan application process:

• Budget: Clearly you need to know how much you can afford to spend before you buy a house. Sometimes it’s best to think about how much you can afford to spend on a monthly basis and work backward from there. Keep in mind that a monthly mortgage bill includes the principal, interest, taxes, and insurance, so be sure to factor all of those values into your calculations.
• Interest rates: Mortgage rates tend to be higher than average for foreign buyers, so be sure to shop around for the best rates from ITIN lenders.
• Down payment: While a conventional mortgage typically requires a down payment between 3% and 10%, an ITIN mortgage may require you to put down as much as 15% (or more, depending on your credit score and income). Still, a larger down payment is a worthwhile investment, as you’ll pay less in interest and lower your monthly mortgage bill.
• Insurance: If you finance your home, you’ll be required to have homeowners insurance. Rates can vary greatly, so you’ll want to do some comparison shopping before you choose an insurance company.
• Taxes: Taxes can take a sizable chunk out of your housing budget, so make sure you know what the tax bill will be on the home you’re interested in. A home’s sale price may seem reasonable up front, until you find out how much you’ll owe to the IRS every year!
• HOA: Many communities have homeowners associations (HOAs), and with an HOA come fees. HOA fees are separate from your mortgage payment and typically cover community expenses such as landscaping, snow removal, and maintenance of common areas. If you plan to move into an HOA community, it’s important to know beforehand how much the HOA will charge you per month so you can factor that cost into your overall budget.

Small business loans for ITIN holders

Many immigrants come to the United States looking for a better life and more opportunities than they could find in their home country. However, unless you’re independently wealthy, starting or growing a business will require raising capital through lines of credit or loans. Fortunately, while your options may be more limited, there are lenders willing to issue loans to business owners with ITINs.

Loan options for small business owners

There are a variety of lending products available for small businesses. Rates and terms will vary, and the requirements to qualify may be more or less stringent depending on the lender and loan type. Here are a few lending options for businesses to consider:

• Short- or long-term business loans
• Business lines of credit
• Small Business Administration (SBA) loans
• Invoice financing or invoice factoring
• Merchant cash advances
• Equipment or inventory financing

Applying for small business loans with an ITIN

An ITIN business loan can be more challanging to acquire, but it’s not out of reach if you have the proper documentation, good credit, and sufficient assets. First, you’ll need to locate an organization that offers small business loans for immigrants. In general, you’ll need to provide the following documentation and information to these lenders:

• Green card or visa
• Credit file (some lenders accept credit reports from other countries or an international credit report)
• Business plan
• The company’s line of business
• Assets of the business owner and the company itself (you may need to put up some collateral)
• Current debt burdens
• Financial statements of the business owner and company
• Profitability of the business

Other funding options for ITIN business owners

If you’re having trouble finding traditional (or non-traditional) business lending for immigrants, the following are other options you can consider:

• Grants: Federal and state agencies, as well as private corporations, offer grants to minority and immigrant business owners and start-ups. These can be difficult to obtain, but the possibility of free funding may be worth the time required to research these opportunities. Many of the organizations that offer grants also offer other resources for immigrant business owners, such as counseling, training, and help raising capital.
• Crowdfunding: Crowdfunding is an alternative method of raising capital for your business — namely, through small donations from a large number of people. There are some restrictions on who is allowed to fund a business this way, but if you qualify, it may be worth considering as another way to raise money for your business.

Additional credit options for ITIN holders

Short on cash for personal expenses? The following are other ways you can acquire credit using an ITIN number:

Personal loans

Ironically, a personal loan can sometimes be harder to get than a car loan. This is because personal loans are usually unsecured, which means the bank doesn’t have an asset to seize if you fail to repay the loan. However, some banks, credit unions, and non-traditional lenders offer personal loan options for ITIN borrowers.

In fact, if you have already established a relationship (and a credit file) with a credit union, a personal loan may be in reach. You may also be able to get better rates and terms from your current credit union than from other lenders.

Credit cards

While credit cards may not be your first choice when you need to finance a project, they can sometimes be easier to get with an ITIN than a loan. However, your interest rate could be relatively high, and your credit limit will likely start fairly low.

That said, a credit card will help you to build your credit history. Plus, if you keep your balance low and pay it off regularly, you can minimize your interest payments — and possibly even receive a credit limit increase.