If you have moved to the US on an H1 visa and are looking to buy a house for yourself, then this article is worth reading for you. Here we will provide a complete guide on how and when should you buy a house in the US on an H1 visa.
So, stay tuned to us and read this article till the end carefully to get familiarized with the process of buying or renting a house in the US when you are on an H1 visa.
Let’s start the discussion by discovering what H1 visa is?
What is an H1 Visa?
H1 visa is a temporary work visa that permits foreigners to work in the US. H1 visa is temporary and comes up with certain limitations for foreign employees.
So, they usually find it challenging to manage their daily livings and face difficulties in enjoying all those facilities which a US citizen enjoys.
H1 visa, however, is extendable and can be extended by your employer if he plans to hire you in his firm for a longer duration. So, if your visa is extended and you plan to stay for a longer time in the US, you can easily buy a new house for yourself.
The problem arises when you are on an H1 visa and are not sure for how long will you stay there. Let’s discuss how and when should you buy a house while being on an H1 visa.
Can I buy a House on H1 Visa?
The first question that comes into mind is that “Am I legally eligible to buy a house in the US while being on an H1 Visa?”. The answer is, “Yes.” You are allowed to buy a house even if you are a temporary worker in the US.
Should I buy a House on an H1 Visa?
However, before making a decision, you must critically look at all the advantages and disadvantages of buying a house in the US.
Then based on these circumstances, you have to decide that either it is a good idea or not to buy a house while being on an H1 visa? You should consider all the factors before making the final decision, such as your job security, your visa status, and so on.
Buying a House on H1 Visa is Risky
Buying a house in the US on an H1 visa is full of risks, but it may turn out to be a profitable deal if you plan to stay for five years or more. You must keep in mind that the home prices in the US drop very fast, depending on the city and its capacity to expand.
Buying a house in the US majorly depends on the location or the city. Some cities, such as New York, Boston, etc. are costly to buy a house. You will pay a considerable amount of money on property taxes.
Contrarily, in some other cities like Dallas, Tampa, etc. the houses might be available at an economical price, but you might not get a good profit if you plan to sell it later.
So, if you plan to stay for a longer duration and not to sell your house at a later stage, then you can consider buying a home in these cities.
When Does it make sense to buy a house in the US while Being on H1 Visa?
If you are on an H1 visa and temporarily staying in the US, then buying a house makes sense only under the following conditions.
1. Owning a House is more economical than Renting one
Owning or renting a house in the US significantly depends on the city in which you are living. In some cities, you can save about $200 to $400 monthly by owning a house instead of renting it.
While in other cities, renting is more economical instead of making mortgage payments.
So, before renting or buying a house in the US, conduct thorough research of the prices in your city and calculate the total monthly expenditures that you will encounter. Make the final decision based on these monthly expenditures.
2. Mortgage Interest Deduction can help in Reducing Tax Liability
You can claim certain tax benefits if you have a mortgage. By declaring the deductions on your tax return, you can get the mortgage interest deduction. That’s how you can save a significant amount of tax by itemizing your deductions.
3. Buy a Home if Mortgage Payments are More Stable than Rent Payments
In most of the states of the US, the mortgage payments are mostly uniform and do not increase significantly.
On the other hand, if you rent a house, your landlord may increase the rent once you plan to renew the contract.
So, there is a possibility that you might reduce the chances of encountering unexpected costs if you buy a house instead of renting one.
How much Down Payment Will I have to Make to Buy a House?
When it comes to buying a house on an H1 visa, you can buy it with a down payment as low as 5%. That’s highly advantageous, as you can keep as much money as you want, which would be needed in case of any emergency.
Challenges You May Face While Buying a House on an H1 Visa
As explained earlier, buying a house on an H1 visa is full of risks. You might want to buy a house, but the major problem is that you are uncertain about the duration of your stay in the US. Your relationship with your employer is significant as it affects your visa status.
In case you are fired from your job, your visa extension gets in danger. Your company may fire you if it experiences and financial loss. This alarming situation will make it difficult for you to pay your mortgage payments, and even your visa extension would get rejected.
In the worst-case scenario, suppose if you are fired from your job and your H1 visa gets canceled, you can stay in the US for a maximum of 60 days. Even this duration is not guaranteed, and the grace period may shorten or get eliminated by the immigration services abruptly.
Hence, you must secure your job before buying a house on an H1 visa because you would face many problems to deal with a purchased home if your visa is rejected.
What to do with your Home or Mortgage if you have to move back to your Country
In case you are fired from your job, you will have to leave the US within a set time duration. In this worst situation, if you also have a house purchased, you may face many difficulties in dealing with that.
If you are asked to go back to your home country immediately, there are not many options available to you. You will have to obey the immigration laws in any case.
The thing that adds fuel to the fire is that you will still have to pay the mortgage installment, home insurance, maintenance, and property taxes even if you are an absentee landlord. It does not matter how you pay. The bank wants its money back, and the government wants their taxes.
So, here are a few things that you can do with a purchased home if you have to leave the Country.
1. Sell Your Home
The best thing you can do is to sell your house and recover your investment. If you have decided to go back to your home country, then selling your house is the best option.
You might not get a reasonable price to sell your property if you are in a hurry to sell it. But if this is the last option to go then sell it even if you have to face marginal loss. Otherwise, you won’t be able to recover your investment.
Unfortunately, you will have to sell your house at a much lower price if you want to leave the Country quickly.
However, if you sell your house, you are eligible to apply for the B1 (business activity) or B2 visa (pleasure or tourism) so that you can remain in the US to complete the transaction.
Moreover, if you are unable to be present, you can authorize someone to sell the property on your behalf by giving him a power of attorney to execute the sale.
2. Rent Out Your Home
If you are unable to generate a significant amount of income by selling your property, then you can rent out the home even though you are not physically present in the USA. This is allowed legally.
In that case, you will have to hire a property manager to manage your house and collect the rental amounts. Moreover, you will have to bear additional expenses in maintaining the home frequently.
So, before deciding to rent it out, consider all such expenditures and choose what suits you the most.
In light of all the discussion above, we always suggest you delay your plan of buying a house when you are on an H1 visa. Wait until you get a green card
However, if you do decide to buy on an H1 visa, purchase a home that is no more than 250% of your annual income
Moreover, do make a contingency plan in case you need to leave the US.