When my husband and I bought our first property in the United States, I thought I knew what to expect. I grew up in Central Europe. I knew how banks worked. I knew what a mortgage was.
I was wrong.
The costs surprised me. So did the paperwork, the number of people involved, and the vocabulary. Credit scores. Title insurance. Escrow. Non-QM. None of these existed in the world I came from.
I still remember looking at the list of fees and turning to my husband. "I am not paying all these costs," I told him. He stayed completely calm. I could not understand why. He just shrugged and said, "This is how it goes here."
Today I work as a mortgage loan originator in the Washington, DC area. Now I see the system from the inside, and I understand why it works the way it does. This guide is for anyone moving from Europe to the US, especially from Central and Southeast Europe, who wants to understand how US home financing differs from European home financing before they buy.
The Big Picture: Two Very Different Philosophies
In most of Central and Southeast Europe, a mortgage is a relationship between you and your bank. The bank lends its own money, keeps the loan, and carries the risk. Regulators set firm limits on how much you can borrow.
In the US, a mortgage is closer to a product built for a national market. Your lender often sells the loan after closing. Government-sponsored enterprises like Fannie Mae and Freddie Mac buy and guarantee a large share of these loans. That one difference explains almost everything else.
Difference #1: The 30-Year Fixed Rate
Back home, most people I knew had variable-rate loans or fixed periods of a few years. When Euribor rose in 2022 and 2023, monthly payments rose with it. In Serbia, the problem got so serious that the central bank stepped in and temporarily capped interest rates on variable-rate housing loans for first-time borrowers.
In the US, the standard is the 30-year fixed-rate mortgage. Your rate is locked for the entire life of the loan. Even better, you can usually pay it off early or refinance without a prepayment penalty.
This combination is very unusual worldwide. A Freddie Mac economist once noted that other nations generally charge a prepayment penalty on long-term fixed-rate home loans. The US product exists largely because of government support. It traces back to the FHA in 1934, and today Fannie Mae and Freddie Mac buy roughly 70% of mortgages from lenders.
The trade-off
Long-term certainty has a price. According to the Freddie Mac Primary Mortgage Market Survey, the 30-year fixed rate averaged 7.24% as of October 29, 2026. That is well above the roughly 3% average rate on new housing loans that Croatia reported in late 2025. A euro area composite mortgage rate stood at 3.32% in December 2025.
So European rates often look cheaper on paper. But you carry the rate risk yourself. In the US, the lender and investors carry it for you, and you can refinance if rates fall.
Difference #2: Credit Scores vs. Credit Registries
This one confused me the most. In Slovenia, there is no three-digit number that follows you everywhere.
Slovenia has SISBON, a system for exchanging information on individuals' debts, managed by the central bank. But according to Banka Slovenije, SISBON does not assign a credit assessment. It contains no information about who is creditworthy. Each bank decides that for itself, based on its own lending policy.
In the US, your credit score is central. It affects whether you qualify, your interest rate, your mortgage insurance cost, and even your down payment options. New arrivals often have no US credit history at all. That can feel unfair when you had a spotless record at home.
My advice for newcomers
- Open a US credit card as soon as you arrive, even with a small limit.
- Pay it in full every month.
- Ask a loan officer early about options that use alternative credit, such as rent and utility history.
- Do not close old accounts once you build them.
Difference #3: Strict Rules vs. Flexible Options
Central and Southeast European banks follow firm limits set by their central banks.
- Slovenia: Banka Slovenije recommends a maximum loan-to-value (LTV) of 80% for housing loans. It also enforces a binding cap on debt service relative to income (DSTI). For lower incomes, that cap is 50%.
- Croatia: Since July 1, 2025, the Croatian National Bank limits DSTI to 45% for housing loans and LTV to 90%, with maturities capped at 30 years. From October 2026, the HNB also halved the share of real-estate-backed loans banks may grant above 90% LTV, from 20% to 10%.
In practice, this means one path: a bank loan, with standard documents, and a sizeable down payment.
The US is different. Yes, there are rules. But there are also many loan types.
- Conventional loans backed by Fannie Mae and Freddie Mac
- FHA loans with low down payments
- VA loans for veterans, often with no down payment
- Jumbo loans for higher-priced homes
- Non-QM loans, such as bank statement loans for the self-employed and DSCR loans for investors
The rise of non-QM lending
Non-QM ("non-qualified mortgage") loans were the biggest surprise for me. Nothing like them existed in my home country. They let lenders qualify borrowers outside the standard agency rules.
They are not a niche anymore. Non-QM loans made up 9% of total rate-lock volume in May 2026, according to Optimal Blue. HMDA data show they accounted for about a tenth of owner-occupied and over a fifth of investment property purchase originations in 2025.
For foreign nationals, entrepreneurs, and real estate investors, this flexibility can be the difference between owning and renting.
Difference #4: Notaries and Land Registries vs. Title Companies
In Slovenia, you sign at a notary, the transfer goes to the land registry, and that's it. The Chamber of Notaries of Slovenia states that ownership of real estate is acquired only on entry in the land register. The state registry is the source of truth.
When I bought in the US, I met a title company and an escrow or settlement agent. I was asked to buy title insurance. I had never heard of it.
Why title insurance exists in the US
Most US jurisdictions use recording systems. Deeds are filed, but the register itself does not guarantee title. So there is real demand for title insurance to protect buyers and lenders against hidden problems: old liens, forged signatures, missing heirs, or recording errors.
In much of continental Europe, the notary and the public registry do much of that work. In France, for example, title insurance is described as essentially unheard of in an ordinary purchase. It is starting to appear in some Western European deals, mostly in large commercial transactions.
Once I understood this, title insurance stopped feeling like an extra fee. It replaces the protection that a state registry gives Europeans.
Difference #5: Closing Costs
This was the moment I nearly fell off my chair.
In Slovenia, the main tax on a resale is a 2% real estate transfer tax, which the seller pays by law, though the parties may agree otherwise. Notary and land registry fees are modest. Other countries in the region vary. Hungary charges a 4% acquisition duty. Slovakia has no transfer tax at all.
In the US, closing costs come from many directions:
- Lender fees (origination, underwriting, points)
- Appraisal and credit report fees
- Title search and title insurance
- Settlement or attorney fees
- Recording fees and transfer taxes
- Prepaid items: homeowners insurance, property taxes, and interest
- Escrow deposits for future taxes and insurance
ClosingCorp reported an average closing cost of $6,905 for a single-family purchase excluding taxes, and $10,980 including transfer taxes. Many consumer guides use 2% to 5% of the purchase price as a planning range. Here in the DC area, costs tend to be on the higher end.
Why it costs more
More parties means more fees. Lender, appraiser, title company, settlement agent, insurer, and local government all play a role. Each one manages a specific risk. In Europe, many of those risks are absorbed by the state registry, the notary, or the bank itself.
Difference #6: The Paperwork
I expected less paperwork in the US. In reality, I signed more documents than ever.
US borrowers receive a Loan Estimate shortly after applying and a Closing Disclosure before closing. Income, assets, and large deposits must be documented in detail. Underwriters verify everything because the loan will likely be sold to investors who need confidence in every file.
The process is heavy. But it is also very transparent. Once I knew what each document was for, the system made sense.
So Which System Is Better?
Honestly, neither. They solve different problems.
Where Europe wins
- Lower transaction costs in many countries
- Simpler legal transfer through notaries and state land registries
- Often lower headline interest rates
Where the US wins
- Long-term fixed rates with no prepayment penalty
- Many loan programs for different borrowers
- Lower down payment options
- Paths for self-employed borrowers, investors, and foreign nationals through non-QM lending
Europe protects borrowers by limiting how much they can borrow. The US protects borrowers by offering choice, long-term stability, and layers of insurance. Each layer adds cost. But each layer also opens a door.
Tips for Europeans Buying a Home in the US
- Start building US credit immediately. Even one card helps.
- Budget for closing costs separately. Do not assume your down payment is your only cash need.
- Keep records of money transfers from abroad. Lenders will ask where your funds came from.
- Buy owner's title insurance. It is a one-time premium for long-term protection.
- Talk to a loan officer before you shop. A pre-approval shows you which programs fit your situation.
- Ask about non-QM options if you are self-employed, newly arrived, or buying an investment property.
Let's Talk About Your Situation
I understand the shock because I lived it. If you are relocating from Europe, buying as a foreign national, or investing in US real estate, I would be glad to walk you through your options in plain language.
Learn more about my services at Mortgages by Sasha or explore loan programs from Buckingham Mortgage.
Sasha Mrak Hendrickson, MBA | Team Lead & Mortgage Loan Originator | Buckingham Mortgage LLC | NMLS# 2574246 | Company NMLS 1124970
