It’s the summer of 2025, and the mortgage landscape is evolving rapidly. One of the Federal Reserve’s key members, Governor Waller, recently shared three critical scenarios that could shape the future of interest rates:
- If tariffs remain high, unemployment could rise to 5%.
- If inflation continues to decline and tariffs stabilize around 10%, the Fed may consider rate cuts under a “good news” scenario.
- If labor market data weakens, rates may still be lowered — but this time as a response to economic slowdown.
In short: the Fed is closely watching both inflation and employment data. These two indicators are likely to guide the direction of mortgage rates.
What Is a Mortgage? How Does It Work in Florida?
A mortgage is a loan used to finance the purchase of real estate. The property itself serves as collateral for the loan. However, the legal structure of mortgages differs from state to state across the U.S. Florida follows a Lien Theory system.
What does that mean?
- In lien theory states like Florida, the borrower (homeowner) is the legal owner of the property.
- However, the lender places a lien on the property as security until the loan is fully repaid.
- This means the title remains with the homeowner, but the lender can initiate judicial foreclosure if the borrower defaults.
In contrast, some states — such as California — operate under a Title Theory system, where the title may be held by the lender or a third-party trustee until the loan is paid off.
Bottom line: When you buy a home in Florida with a mortgage, the title is recorded in your name — while the lender maintains a lien on the property. This legal protection is especially reassuring for foreign investors.
What Are Homeowners Doing? HELOCs Are on the Rise…
In a high-interest-rate environment, many homeowners are choosing to access the equity in their homes rather than refinance with new loans. This is where the HELOC comes into play.
What Is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving line of credit based on the value of your home. It works like a credit card: you draw funds as needed and only pay interest on the amount used.
What is Equity?
Equity is the portion of your home’s value that you actually own — calculated by subtracting your remaining mortgage balance from the current market value.
For example:
Home value = $500,000
Remaining mortgage = $300,000
→ Equity = $200,000
Lenders typically allow access to up to 80% of this equity. In this example, a homeowner could be eligible for a HELOC of up to $160,000.
Benefits of a HELOC:
- You only pay interest on what you use
- Generally lower interest rates
- Your existing mortgage remains intact
- Flexible repayment terms
- In some cases, closing can happen in as little as 5 business days
Homeowners are using HELOC funds to cover expenses such as:
- Home renovations
- Pool construction
- Paying off high-interest debts
- Down payments for investment properties
All this without selling their home — just by tapping into its built-up value.
Is a HELOC Available for Foreign Investors?
Generally, no. HELOCs are usually only available to U.S. citizens or permanent residents. But this doesn’t mean foreign investors are out of options. Here are two strong alternatives:
- Cash-Out Refinance
With a cash-out refinance, you replace your existing mortgage with a new, larger loan — and receive the difference in cash.
Example:
Home value = $500,000
Remaining mortgage = $300,000
New loan = $400,000
→ You receive $100,000 in cash
For foreign investors, cash-out refinances typically allow a Loan-to-Value (LTV) ratio of up to 70%.
Key Terms to Know:
Refinance: The process of replacing an existing mortgage with a new loan, often to secure better terms or pull out cash.
LTV (Loan-to-Value): This measures the ratio of the loan amount to the appraised value of the property.
Formula:
LTV = Loan Amount ÷ Property Value
Lower LTV = less risk for lenders → more likely to get approved
2. Foreign National Mortgage Programs
These programs are designed specifically for non-U.S. citizens or residents who want to purchase or refinance real estate in the U.S.
Key features often include:
- LTV ratios of 70–75%
- No requirement for Social Security Number (SSN) or Green Card
- Applications allowed with an ITIN (Individual Taxpayer Identification Number), issued by the IRS to non-residents for tax purposes
- Qualification via DSCR (Debt-Service Coverage Ratio), which evaluates whether the rental income from the property can cover the loan payment
DSCR Example:
Monthly rental income = $2,000
Monthly mortgage payment = $1,600
→ DSCR = 2,000 ÷ 1,600 = 1.25
Since the income exceeds the debt, this is considered a strong ratio.
These programs are offered by institutions such as HSBC, Griffin Funding, and other lenders specializing in international clients.
Mortgage Rate Overview – June 2025
Mortgage interest rates have shown signs of stabilization in the first half of the year, yet they remain high enough to place continued pressure on buyers. Jumbo loans, with rates reaching up to 7.875%, are making high-budget purchases more challenging, while FHA and VA loans continue to offer more sustainable alternatives for first-time buyers or those with fixed incomes. Down Payment Assistance programs, with rates climbing as high as 8.5%, are also challenging the assumption that these programs are always the most affordable option.
As of mid-June 2025, the latest rate ranges are as follows:
• Conventional Loans: 6.625% – 7.625%
• Jumbo Loans: 6.875% – 7.875%
• FHA Loans: 6.5% – 7.375%
• VA Loans: 6.5% – 7.125%
• Down Payment Assistance Programs: 6.5% – 8.5%
Even small increases in rates can add up over time — potentially leading to higher long-term costs and delayed equity building. Waiting for a major rate drop might not be the best strategy in today’s climate.
The market appears to be pricing in the Fed’s cautious stance, which suggests gradual easing rather than dramatic cuts in the near future. That’s why strategic planning and selecting the right loan product for your situation remain critical when entering the housing market.
Every investor’s ideal solution is different.
If you’d like help evaluating your options, I work closely with a trusted network of licensed mortgage advisors. I’d be happy to connect you with someone reliable based on your needs and situation. I’m always here to assist you.
Warm regards,
References
Griffin Funding. (2025). Home Equity Line of Credit (HELOC). Griffin Funding website
Federal Reserve. (2025, April 14). Speech by Governor Waller on the economic outlook.
Griffin Funding. (2025). DSCR Cash‑Out Refinance Loans. Griffin Funding website
Griffin Funding. (2025). Foreign National Loans & Non‑U.S. Citizen Mortgages. Griffin Funding website
Bloomberg. (2025, April 24). Fed’s Waller Says He’d Support Rate Cuts If Tariffs Drive Job Losses.
Reuters. (2025, June 13). Fed’s Waller still open to cutting interest rates later this year.
Financial Times. (2025, April). Top Federal Reserve official says US could require rate cuts if big tariffs return.
