Applying for and getting a mortgage to buy a home in Italy as a US citizen is possible, but be prepared for a very lengthy and tedious process. Italian loan requirements can be very stringent for foreigners, unless you have very good financials. There are two relatively easier ways to obtain a mortgage in Italy as an American: using an Italian loan broker or applying for a loan in the United States.
So, you are ready to take the leap and buy your dream home in Italy. House hunting in Italy starts with deciding on your budget, choosing the right location for you, then finding the perfect home. All these steps can take weeks sometimes months, since Italy is a big country with many attractive places to live. But it can also be a fun process up to this point.
However, things usually hit a wall as soon as you have to obtain financing. Is it even doable for an American who is not yet an Italian citizen to get a home loan in Italy?
Can I obtain a home loan in Italy as an American?
The short answer is yes, you can. But brace yourself for an uphill battle. Italian banks are starting to make it increasingly difficult for foreigners to obtain a mortgage, so getting all your documents in order ahead of time is a smart idea. If you are working with a real estate agent, which hopefully you are, they will provide you with the list of necessary documents for the bank. Before applying for the mortgage, you need to have all your financial documents translated by a certified translator.
Prove sustained income
Many American expats have voiced that getting a mortgage in Italy is extremely difficult unless you have very good financials. You must show certifiable, aka proven, income and assets. Investments or annuities are not considered income by Italian banks for the purpose of obtaining a home loan. Of course, the amounts vary depending on the size of the loan you are seeking. Unfortunately, the hard truth is that at this stage, the risk of denial is very high.
Put down at least 50% down payment
When you decide on how much you are willing to spend on a house in Italy which you intend to finance with a mortgage, expect to have to put a minimum of 50% down. The maximum loan to value allowed is 50% and banks want no more than 20% debt ratio. This is another reason that makes it hard for many Americans to get a home loan in Italy.
It can lower your price negotiation leverage
Besides the difficult process, there are other, less obvious, downsides to financing your home in Italy through a bank. If your home purchase depends on getting a mortgage approved, you may find that some real estate agents might not want to work with you because the chances of a successful mortgage are low. You also may face problems with your offer, as having to wait for financing of the purchase price weakens your negotiation leverage.
Alternatives to getting a mortgage in Italy as a US citizen
Get a loan in the United States
To avoid dealing with the Italian banking system and its requirements for foreign homebuyers, one popular alternative is to borrow the money in your home country through a line of credit (or a similar loan) and pay cash at purchase. This method is common among American expats in Italy, as it saves time, aggravation and having to understand and navigate a foreign banking system.
Use a loan broker
Using a loan broker can also ease the mortgage application process for you. Your real estate agent or the seller’s agent can usually recommend an Italian loan broker. Paying a broker to take care of the process can not only save you time and trouble, it can also make the difference between buying or not buying the home of your dreams. You may not have to translate any documents, submit any documents yourself or understand the Italian banking regulations, since the broker will be doing all that for you. The whole homebuying process typically takes less time than doing it DIY and it is much easier, according to Americans who have gone this route.
Make your move to Italy easier. Explore more great advice and how to guides about moving to Italy.
