DACA (Deferred Action for Childhood Arrivals) is a government program created for undocumented individuals brought to the United States as children who were raised in the U.S. and primarily identify as American, even though they are currently in the country unlawfully. They are sometimes referred to as “DREAMers” as they benefit from the Development, Relief, and Education for Alien Minors Act, which grants temporary conditional residency with the right to work.
As of 2021, there are several types of home loans available to DACA recipients, including FHA loans. Let’s take a look at how DACA recipients can obtain an FHA home loan and buy a house with undocumented status.
Key Takeaway
When it comes to obtaining a home loan, DACA recipients are eligible for FHA loans. These loans allow them to purchase a home while living in the United States with undocumented status. FHA loans have certain requirements that must be met, such as having a minimum credit score of 500 and paying an insurance premium upfront to cover certain risks associated with the loan. By understanding these requirements and comparing different lenders, DACA recipients can find a loan that fits their financial needs and enables them to purchase a home.
DACA Defined
DACA (Deferred Action for Childhood Arrivals) is a program designed to protect undocumented individuals who were brought to the United States as children. The program was created by the Obama administration in 2012, and it provides a temporary reprieve from deportation and grants recipients the right to work legally within the United States. DACA grantees are granted a two-year renewable period of deferred action, during which they can apply for a work permit and other benefits such as education assistance and driver’s licenses.
Initially, individuals could request DACA status if they came to the U.S. before turning 16, continuously lived in the country since June 15, 2007, and were under the age of 31 on June 15, 2012. DACA recipients also cannot have a criminal record or any type of criminal history.
There is some confusion about what protections the program does and does not provide. DACA does not pave the way for recipients to obtain lawful citizenship, nor does it allow recipients to obtain lawful status via a visa or green card, but participants can renew DACA eligibility when the 2-year term expires and continue to stay in the country as long as their status continually renews.
History Of The DACA Program
The DACA program was first introduced under the Obama administration in 2012 via executive action after Congress failed to pass the DREAM Act that same year. At the time of its development, more than 1.7 million undocumented individuals were eligible for the DACA program relief. Since the program was created under executive action, the legality of the DACA program has been challenged via lawsuit several times in the years since its inception.
Throughout his 4-year term, President Donald Trump worked to eliminate DACA. While he prevented new DACA applications in 2017, President Trump was never able to eliminate the DACA program entirely.
On his inauguration day on January 20, 2021, President Joe Biden signed several executive orders to overturn Trump-era mandates related to immigration. Additionally, on inauguration day, President Biden sent the U.S. Citizenship Act of 2021 to Congress, which signaled his administration’s strong support for DACA program protections and outlined efforts to fast-track DACA recipients, or “DREAMers,” toward lawful citizenship.
DACA FHA Loan Eligibility
Early in 2021, upon the change of the presidential administration, the Federal Housing Administration (FHA) issued a massive change to its policy on home loans for DACA recipients. Previously, those without lawful residency were unable to obtain an FHA loan.
Now, noncitizen U.S. immigrants enrolled in the DACA program are eligible to apply for a loan through the FHA.
DACA FHA Requirements
DACA borrowers applying for an FHA loan need all of the following:
A minimum 3.5% down payment and a minimum 580 credit score.
The property must be the borrower’s primary residence.
The borrower must have a valid Social Security number (SSN).
The borrower must be eligible to work in the U.S. and provide an Employment Authorization Document (EAD) stating such to the lender.
The EAD must be issued by the U.S. Citizenship and Immigration Services (USCIS) in the C33 category.
Any previously expired EAD card(s) must be included with the application.
Otherwise, the FHA requirements for obtaining a mortgage are the same for DACA recipients.
Other DACA Home Loan Options
More options are likely to be added as other organizations update their policies, especially in light of changing presidential administrations and political sentiments. However, here is a current list of all mortgage options for those in the DACA program.
Conventional Loans
Conventional loans are one of the primary options for DACA recipients to obtain a mortgage. These loans typically have higher credit standards than government-backed programs, but this also allows them to be more flexible in terms of loan sizes, structures, and rates. With conventional loans, borrowers must meet certain income requirements to qualify - typically borrowers should earn at least two and a half times their monthly mortgage payments in order to be approved.
FHA Loans
As previously mentioned, FHA loans are now available for DACA borrowers. FHA loans require slightly lower credit scores than conventional loans do, as well as smaller down payments. However, they also come with higher fees and additional insurance premiums.
Fannie Mae Conforming Loans
Fannie Mae Conforming Loans are mortgages available to DACA recipients that meet the criteria required by Fannie Mae. These loans often come with fixed rates and have lower down payment requirements than other types of mortgages. Additionally, borrowers typically need a minimum credit score of 620 to qualify for a Fannie Mae loan, as well as have a debt-to-income ratio of 45% or less.
USDA Loans
The U.S. Department of Agriculture (USDA) provides mortgage loans for those living in rural and semi-rural areas, and DACA recipients can now qualify for these mortgages as well. These loans come with no down payment requirements but do have income restrictions which vary based on location.
Find The DACA Loan Option That Works For You
Finding the right DACA loan option for you can be an overwhelming undertaking. To ensure that your application meets the requirements of all lenders, it is important to thoroughly research each option and understand the qualifications and benefits offered by each one. Make owning a home a reality with the best DACA option for you.