How to Fund a US Property Purchase From the UK

I had a client lose a deal once for a reason nobody had warned him about.

He had the deposit. He had the property under contract. He had a lender who had pre-approved the deal.

The money came from unsecured credit, and when the lender saw that, it died.

Not delayed. Dead. He had done nothing dishonest and nothing unusual. He simply did not know that US lenders care where your deposit comes from, and by the time anyone found out, the borrowed funds were already in his bank account.

So this article is about the two jobs nobody explains to British buyers: raising the deposit in a way your lender will accept, and then getting it to the US.

If you are still deciding whether to buy at all, start with is buy-to-let in the USA a good investment.

The rule that killed the deal

Here is the thing to understand before you raise a penny.

Your US lender will ask where your deposit came from, and some answers end the application.

Across the lender rules I have read, and my own experience with hundreds of foreign national mortgage applications across a range of lenders, these are refused if the money is recent:

• Credit cards and credit card cash advances
• Unsecured lines of credit
• Personal loans
• Any other borrowed money
• Crypto that has not been converted and seasoned in a dollar account

And one thing that stays refused regardless of timing. Assets already pledged as security for another loan. That is not a timing problem, it is an availability problem, so waiting does not cure it.

The lender's logic is simple. They are deciding whether you have real capital in the deal. If your deposit landed last week and it is borrowed, you have none, and they price the risk accordingly.

Now the funny thing here is that it is a timing rule rather than a permanent bar. I went back to the lender who refused my client and asked directly. They confirmed the same funds would have been accepted if they had sat in his account for 60 days.

So if you are going to use unsecured credit, you need to do it well ahead of your US purchase, in order to season the funds.

My client had borrowed his deposit on unsecured credit. He could afford the repayments and he had a good income. It made no difference, because those funds had been in his account for a week when he applied. The rule is the rule, and it came to light too late.

That is the whole reason this article exists. Check what your lender will accept, and how long they need it to have been there, before you raise the money rather than after.

What your lender will accept

The accepted list is longer, and it covers what most people actually do.

Sale proceeds. Selling another property, or any other asset. This is the most common source among my own clients, and if you are selling a US rental to fund the next one, the tax side is in selling a US rental as a UK resident.

Savings, investments, or money you have been left. Your own accumulated capital, documented.

Business profits, taken properly, with a paper trail.

And borrowing secured against another property. This is the important one, because it is borrowing and it is fine straight away. A remortgage, a further advance or a second charge on a property you own counts as your own equity, not as borrowed money.

That difference is the most useful thing in this article. Secured borrowing against real equity is accepted immediately. Unsecured borrowing is accepted only once it has been seasoned, usually for 60 days.

Gifts work with some lenders, with conditions: a signed gift letter confirming no repayment is expected, proof of where the gift came from, and usually a rule that you put in a minimum share yourself. Rules vary, so ask rather than assume. We looked at this as an option for that buyer and it was a dead end.

The one thing to remember: ask your lender what they will accept and how long it needs to have been there before you raise the deposit. It is a five minute conversation and it is the difference between a completed purchase and a dead file with borrowing already in place.

Why funds need to sit still

The seasoning rule catches people who did everything else right.

Most lenders want to see the money in your account for 30 to 60 days before they will count it. They call it seasoning. Money that lands a week before closing gets questioned, and questions cost time you may not have.

Some lenders are more relaxed than others, and at least one says large deposits need no sourcing at all on DSCR loans. So it varies. Another reason to ask early, rather than plan around a rule that may not be yours.

And here is the ordering point, which matters more than the rule itself.

If your money needs seasoning, then the sequence is: raise it, wait, then start looking at properties. Not the other way round.

A buyer who finds a house first and raises the deposit second has already lost, because a purchase contract will not wait two months while your funds mature. Sixty days is a minimum, not a target. Give yourself longer.

If your funds are not seasoned, whatever the source, you will have to provide provenance. The lender will want to trace them back the full 60 days to wherever they came from, and verify that original source is acceptable.

Releasing equity from a UK property

This is the main route for many of the British buyers I work with.

You have three ways to take money out of a property you already own.

A further advance, which is additional borrowing from your existing lender alongside your current mortgage.

A remortgage, moving to a new lender and borrowing more in the process.

A second charge, a separate loan sitting behind your existing mortgage. Dearer, but it leaves your current rate alone, which matters if it is a good one.

What UK buy-to-let lenders typically require. At least 25% equity remaining after the borrowing. A tenant in place, with the agreement ready if asked. And rent covering the payment by roughly 125% to 145%, depending on the lender and your tax position.

And they will ask what the money is for. Policies differ. Some lenders are comfortable with overseas investment, some are not, and some treat home loans and buy-to-let quite differently. Ask before you apply.

It is also worth knowing how the income will be taxed before you commit, which I have set out in UK tax on US rental income.

The advantage nobody explains

Here is something that surprises people. Your UK borrowing does not reduce what you can borrow in the US.

A US DSCR loan qualifies on the property income, not yours. The lender divides the rent on the US house by the mortgage, taxes and insurance on that same house. Your income does not come into it, and nor do your other debts or credit.

So a British buyer who remortgages to raise a deposit has added a payment at home and changed nothing about what they can borrow in the US. On a normal mortgage that payment would count against you. On a DSCR loan it does not.

That is one of the reasons the DSCR product suits overseas buyers, and I have set out how it works in my guide to DSCR loans and how the terms actually compare in buy-to-let mortgages in the USA.

The risk nobody mentions either

There are some additional risks to buying a US rental as a UK citizen that you also need to think about.

You have borrowed in pounds to buy an asset priced in dollars.

Say you release £40,300 from a UK property to fund a 30% deposit of $54,000 on a $180,000 house. Your debt is fixed in sterling. The value of your American equity, measured in sterling, moves with the exchange rate.

If sterling strengthens 19%, you are £6,550 down on the currency alone, before the property has done anything at all. And it is leveraged, because you borrowed the whole deposit.

But hold the property for ten years, with the market growing at its long run historical rate of about 4.3% a year, and the house is worth around $274,000 with the loan partially repaid. Even at an exchange rate of 1.60, where sterling has strengthened sharply, your equity is worth about £103,700 against that same £40,300 debt. More than double your money, before tax.

So the currency risk is real and it is short term. If you are forced to sell in year two it can wipe out your whole return, especially combined with the higher buying and selling costs in the US. Over a decade, appreciation and the mortgage paying itself down do far more than the exchange rate does.

Which is the same conclusion as everything else I write about American property. It works if you can hold it. It is potentially risky if you cannot.

Moving the money

Once you have the deposit, you need it in the US, in dollars, in your LLC's bank account.

Almost all my clients use the same route. Convert pounds to dollars using an FX provider like Wise, then send dollars from Wise to the US business account. Two simple steps, and the conversion happens before the money crosses over.

The reason is cost. Wise converts at the mid-market rate and charges a visible fee. A UK high street bank hides its margin in the rate, where you cannot see it.

Roughly a thousand pounds on a typical deposit for a Midwest rental, just for using the right process. If you are interested in what that level of deposit actually buys, I set it out in the best buy-to-let markets in the USA.

When the bank freezes it

Expect this, because it happens often and it panics people who are not expecting it.

A large dollar transfer arriving into a newly opened US business account from overseas will frequently be held. The bank will ask two things: where the money came from, and what it is for.

That is not suspicion of you. It is standard money laundering checking, and a first overseas transfer into a new company account is exactly what their systems look for.

At the time of writing I am working with a Canadian client whose deposit for a second US rental has just been held pending further checks. He has to resupply his identification, proof of address, and an explanation of both the source of the funds and their intended use.

What resolves it, in my experience:

• The purchase contract, showing what the money is being used for
• A draft settlement statement if one is available, showing the amount required to close
• Proof of where the money came from, which is why seasoning and paperwork matter earlier in the process

With that provided, the freeze is normally released within about 24 hours.

The problem is never the proof. It is having to go and find it while a closing date approaches. Have all of it ready before you send the money.

What I would do, in order

Six steps, and the order matters more than any individual step.

One. Ask the lender what they will accept, before you raise anything, and how long it needs to have been in your account.

Two. Raise it the right way. Secured against property you own, or from sale proceeds, savings or a legacy. If it has to be unsecured credit, raise it early enough to season.

Three. Let it sit. Two months in your account at least, before you go looking at properties rather than before you close.

Four. Get properly pre-approved, with real terms from the lender based on checked facts rather than a rough estimate. That is the point at which you find out whether your funding is acceptable, and it is much better to find out then.

Five. Check the property as carefully as the funding.

Six. Convert and send, in the two steps above, once the contract exists so you have something to show the bank. And have your paperwork ready before the money lands, not after it is frozen.

None of it is hard. All of it is easier before the money moves than after.

If you want to work out what deposit a specific property needs before you start raising it, the free tools in my investor starter kit will size the deal, the cash to close and the reserves.

The bottom line

Most people worry about the exchange rate. The exchange rate is a small problem, easily solved by following the process above.

The big one is that your US lender has rules about where your deposit came from, and how long it has been there. Break them by accident and you find out too late to fix it. That is what happened to my client, and he had done nothing wrong except not ask.

Secured borrowing against something you own is fine straight away. Sale proceeds are fine. Savings and inheritance are fine. Unsecured credit is fine too, but only once it has sat there long enough that the lender counts it as yours.

Get that right, let the money settle, keep your paperwork to hand, and the rest is admin.

Remember, investing is a game of probabilities. This part is not. It is a set of rules, and you can read them before you commit.