Social
Parents want to buy a house for their child in the United States, how should they proceed?
Many international students in the United States rely on their parents' financial support when purchasing their first home. Therefore, it is important to understand the process and considerations for parents in another country who wish to buy a house for their children.
1
Why Many International Students Need Parental Support
Many international students in the United States rely on their parents’ financial assistance when purchasing their first home. Understanding the process and legal considerations for overseas parents is essential.
A larger down payment—especially one exceeding 25%—can help children secure better loan terms, waive mortgage insurance, and qualify for lower interest rates.
To verify parental financial assistance, banks require specific documentation from the child and the parents.
2
The Gift Letter Requirement
When parents provide financial support, the loan officer will prepare a gift letter confirming that the funds are a non-repayable gift.
This letter must specify the amount and be signed by both the parents and the child.
💡 Tip: If the money has been in the child’s account for over three months, banks usually treat it as the child’s own asset and waive the gift letter requirement.
3
Understanding U.S. Gift Tax Rules
The IRS (Internal Revenue Service) allows each parent to gift up to $17,000 per child per year without incurring gift tax.
📊 Example:
If both sets of parents (four individuals) give $17,000 each to a newlywed couple, that totals $136,000 ($17,000 × 8).
-
No gift tax for parents
-
No income tax for the recipients
4
Two Legal Ways to Maximize Gift Amounts
Method 1:
Each parent can gift $17,000 at the end of one year and another $17,000 at the beginning of the next year, effectively doubling the amount exempt from gift tax.
Method 2:
If gifting mid-year, excess amounts can be applied toward the lifetime gift tax exemption:
-
U.S. citizens/residents: $12.92 million lifetime exemption
5
Different Rules for U.S. and Chinese Parents
If parents hold U.S. citizenship or Green Cards:
-
Lifetime gift exemption: $12.92 million
-
Gifts over $5.49 million require filing Form 709
If parents hold Chinese nationality:
-
Lifetime exemption: $60,000
-
The U.S. government cannot tax foreign citizens directly
-
However, if a child (as a U.S. tax resident) receives over $100,000 in a year from abroad, they must file Form 3520or face penalties
6
China’s Foreign Exchange Restriction
Under Chinese law, each citizen can transfer up to $50,000 per year overseas.
Therefore, parents should transfer funds directly from their Chinese accounts to their children’s U.S. accounts —
not through their own U.S. accounts — to avoid triggering tax scrutiny.
💡 Avoid transferring large amounts of cash:
If over $10,000 in cash is deposited into a U.S. account, the bank must report the source of funds.
7
Visa Status and Home Purchase Eligibility
The home-buying process depends heavily on the child’s visa status in the United States.
(1) F-1 Student Visa
Students on F-1 visas can buy property but often face higher mortgage rates and stricter approval requirements.
They can either:
-
Pay in full
-
Or apply for foreign national loans
(2) OPT Stage
After graduation, F-1 students can apply for OPT (Optional Practical Training), a one-year work authorization.
Once they begin working and filing taxes in the U.S., they become eligible for:
-
Lower down payments
-
Standard mortgage rates similar to U.S. citizens
Banks such as Chase and Bank of America often accept OPT or H1B applicants, even if they don’t lend to foreign nationals.
(3) H-1B Work Visa
The H-1B visa gives stronger loan eligibility.
H-1B holders with steady income and tax returns can access:
-
Conventional loans with low interest rates
-
Tax deductions for primary residences
-
Easier qualification for mortgage approval
8
H1B Loan Program Requirements
To qualify for most traditional U.S. mortgage programs:
-
Minimum credit score: 620+
-
At least 2 years of tax returns
-
Stable income (verified through pay stubs)
-
No income cap restrictions
Once 20% of the loan balance is paid, mortgage insurance can be removed.
No broker or application fee is typically required.
9
Tax Considerations for H1B Holders
The H-1B visa is a non-immigrant visa valid for up to six years.
If you sell the property before leaving the U.S., any capital gain from the sale is taxable.
Those planning to change visa status (e.g., to Green Card) should prepare documentation early to avoid future tax issues.
10
Final Thoughts
For Chinese citizens holding H-1B visas, as long as all documents are complete,
obtaining a mortgage in the U.S. is highly feasible—and you can still enjoy tax benefits and favorable interest rates.
💬 If you plan to purchase property in the United States, especially in New York,
feel free to contact ACRE NY for consultation and access to high-quality listings.
Submit Your
Request
Tell us what you're looking for —
we’ll take care of the rest.
Contact us on
WeChat
Contact us on
Instagram
