Being paid in foreign currency does not automatically make your income ineligible for mortgage qualification. We need to verify the employment, evaluate the qualifying income, and review the required U.S. tax records. Foreign-language documents must also meet applicable translation requirements.
Fannie Mae Requires Two Years of Tax Returns
For borrowers employed by a foreign corporation or foreign government and paid in foreign currency, Fannie Mae requires signed U.S. federal income tax returns for the most recent two years that include the foreign employment income. Foreign-origin documents must be in English or accompanied by complete, accurate translations. Income must also be converted to U.S. dollars to qualify.
Freddie Mac Offers a Different Documentation Path
Freddie Mac allows qualifying employment income from a foreign source when it is reported on the borrower’s U.S. federal individual income tax return for the most recent year, provided its other employment-income requirements are met.
Why This Matters for Arizona Homebuyers
Imagine you’re moving to the Phoenix area while continuing to work for an overseas employer. Your foreign employment income appears on your most recent U.S. federal tax return, but not on the previous year’s return.
Fannie Mae’s two-year documentation requirement may present an obstacle. A Freddie Mac-based loan may provide another path, depending on your complete financial profile. An early income review can help you understand your options before you make an offer on an Arizona property.
What Documents Should You Prepare?
- Your employer’s name and location
- Your employment history
- The currency in which you are paid
- Your U.S. federal income tax returns
- Available pay records and employment verification
- Whether supporting documents need English translation
If your income comes from a foreign employer, start with a review rather than assuming it cannot be used; contact our office for more information.