Securing a mortgage with foreign income can be challenging, as a result, we have put together this guide to help you understand how foreign income sources are treated when it comes to qualifying for a mortgage loan.
Understanding Foreign Income and Taxes
If you’re a U.S. citizen or a foreigner working abroad, you’re taxed on worldwide income. However, the IRS offers exclusions and deductions that impact your tax liability and mortgage eligibility.
The IRS excludes a certain amount of foreign-earned income from U.S. federal taxes (up to $130,000 in 2025). Foreign housing cost exclusions/deductions also apply. Talk to your tax professional for all the ins and outs.
Qualifying for Exclusions
You must meet specific residency and presence requirements: generally, foreign earned income, a foreign tax home, and one of the following:
- Bona fide resident of a foreign country for a full tax year.
- Resident alien (from a treaty country) and bona fide resident for a full tax year.
- Physically present in a foreign country for at least 330 days in 12 months.
The IRS offers an online tool to check if your income qualifies.
What is Foreign-Earned Income?
This includes wages, salaries, and professional fees for personal services. It excludes:
- U.S. government employee pay.
- Pay for services in international waters/airspace.
- Certain pensions.
How Foreign Income Impacts Mortgages
Lenders assess income stability, currency fluctuations, and tax implications. Just like a domestic job, underwriting will need to document stability and continuity. Be prepared to provide documentation (likely more than a domestic job), and potentially longer review times as documents may need to be translated.
If you have questions, please contact our office to discuss your mortgage needs with one of our experienced Mortgage Loan Originators at (760) 930-0569.
