Financing a US property. The rent carries the loan.

In brief

Foreigners usually finance US rental properties with rent-coverage financing (DSCR): the lender checks whether the rent covers the instalment and, according to 2026 market data, asks for around 20 to 35 percent equity plus reserves of several monthly instalments. The buyer is usually a US LLC, with a personal guarantee from the owner. The equity must come from your own, documented funds. When you sell later, the buyer withholds part of the price for US tax.

Rent coverage instead of income

The common financing for foreign investors is called a DSCR loan (debt service coverage ratio). The lender divides the expected rent by the monthly cost of interest, repayment, taxes and insurance. If the result is 1.0 or higher, the rent covers the instalment. Proof of income from Europe is usually not needed, and often a US credit history is not either. Some programmes ask for a foreign credit report or a bank reference letter. An existing US score can improve the terms.

The 2026 market picture

Figures from programme descriptions and market overviews of lenders and brokers, as of October 2026. Each lender sets its own conditions. Market data, not a commitment. The lender alone decides on the loan, its amount and its rate.

• Attribute: Equity on purchase · Usual range: 20 – 35% of the price
• Attribute: Interest, 30-year fixed · Usual range: approx. 6.9 – 9.5% p.a.
• Attribute: Rent coverage (DSCR) · Usual range: usually at least 1.0
• Attribute: Reserves · Usual range: 6 – 12 monthly instalments, often allowed abroad
• Attribute: Source of the deposit · Usual range: own account, 60 – 90 days beforehand, documented
• Attribute: Loan size · Usual range: approx. $100,000 – $5 million
• Attribute: Duration · Usual range: 21 – 45 days from complete application

The route to the property, from abroad

• 1. Company: A US LLC with an EIN holds the property; as owner you give a personal guarantee for the loan.
• 2. Document the equity: Deposit, closing costs and reserves sit verifiably in your own accounts. Lenders usually decline third-party loans as the deposit.
• 3. Property and rent appraisal: The appraiser estimates value and market rent; this gives the rent coverage.
• 4. Loan approval: The lender checks the documents, the property and the source of funds.
• 5. Closing: Often by notarised power of attorney or remote online notary; the money runs through the title company's escrow account.
• 6. Management: A local property manager lets and looks after the property; the rent flows to the company's account.

Three kinds of property financing

• Long term — Holding a rental: A DSCR loan with a long term, often thirty years; the rent carries the instalment. The usual route for investors from abroad.
• Short term — Buy and renovate: Short-term property loans (hard money) for purchase and renovation, according to market data approx. 8 to 15 percent interest plus fees. Expensive, meant for a clear exit.
• Negotiated — Seller financing: The seller defers part of the price. Terms are freely negotiated; the contract belongs in the hands of a US lawyer.

Where the equity comes from

Lenders want to see that the deposit and reserves are yours and have been in your account for some time. If you raise equity at home, for example by borrowing against a property you own, you use it as your own funds once it is in your own account and its source is documented. Clarify in writing beforehand whether a lender accepts equity raised this way, and disclose it openly. The capital is not tied to the US: your company can transfer funds to Europe or invest them in Europe — within the terms of the institution concerned. Our partner tax adviser clarifies with you in advance how transfers and investments are treated for tax purposes.

How FIAON Global prepares the purchase

We form the company that holds the property, apply for the EIN, open the account and put together the documents lenders want to see. Our partner tax adviser clarifies the tax questions on structure, rental income and sale with you before the purchase. FIAON is not a bank and neither grants nor brokers loans. The lender decides on every financing.

The company for your property

Company, tax numbers, account and the documents prepared for lenders — Global Capital.

What you need to know

• On a sale, the buyer generally withholds 15 percent of the price for US tax under FIRPTA, in some cases less for owner-occupied property priced at $1 million or less. Any excess withheld is recovered through the tax return.
• If an individual holds the property directly, US estate tax may apply; the partner tax adviser clarifies the right structure before the purchase.
• Market figures are not a commitment. The lender alone decides on the loan, its amount and its rate.
• A US company that is managed from Germany, Austria or Switzerland remains taxable there; its formation must be reported to the tax office (in Germany under section 138 of the German Fiscal Code, AO).

Frequently asked questions

Do I need US credit for a US property loan?

For rent-coverage financing (DSCR), often not. The lender mainly checks whether the rent covers the instalment. A US score can improve the terms.

How much equity do I need?

According to 2026 market data, usually 20 to 35 percent of the price, plus closing costs and reserves of several monthly instalments.

Can I finance the deposit?

Lenders usually decline third-party loans as the deposit. Your own funds, verifiably held in your account, are the reliable route; you disclose their source openly.

Do I have to travel to the US for the closing?

Often not. Many closings run through a notarised power of attorney or a remote online notary; the money goes to the title company's escrow account.

What happens when I sell?

Under FIRPTA, the buyer withholds part of the price for US tax and pays it to the IRS. The tax return settles the final amount.