You’d like to buy a home! But you’re not sure what kind of loan you qualify for, because you’re in the Deferred Action for Childhood Arrivals program. Here’s how you can get a DACA mortgage loan to buy a home when you have DACA status.
What does DACA mean?
First things first, before we talk about how you can qualify for a DACA mortgage… What does DACA actually mean. Deferred Action for Childhood Arrivals is a kind of administrative relief from deportation. The purpose of DACA is to protect eligible immigrant youth who came to the United States when they were children from deportation.
DACA gives young undocumented immigrants: 1) protection from deportation, and 2) a work permit. The program expires after two years, subject to renewal.
History of DACA
The DACA program was established after Congress failed to pass Obama’s Development, Relief, and Education for Alien Minors (DREAM) Act. And it was aimed at granting legal status to young immigrants living in the US. In the absence of legislative support, Obama issued DACA via executive order as a temporary measure.
The original DACA program in 2012:
- Allowed young non-documented immigrants to avoid deportation and obtain work permits for a period of two years
- Created a program that was renewable based on good behavior
- And it let certain immigrants apply, based on the following requirements:
- Be younger than 31 on June 15, 2012
- Came to the United States when they were younger than 16
- Lived in the United States since 2007
Then after Obama, the Trump administration spent years confusing borrowers and lenders about what could or couldn’t be done. And in June 2019, the Department of Housing and Urban Development (HUD) made an abrupt decision to deny access to FHA mortgage loans for DACA recipients. According to the FHA Single Family Housing Handbook, “Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.”
And up until January 19, those classified under the Deferred Action for Childhood Arrivals program (DACA) were counted as citizens without lawful residency, according to HUD.
But on January 19th, 2021, the Trump Administration finally reversed its policy. It confirmed that DACA recipients were fully eligible for Federal Housing Administration (FHA) loans.
FHA’s new policy should make it easier for many Dreamers to buy real estate in the United States.
So what do you need to qualify for a mortgage under DACA?
If you have an unexpired Employment Authorization Card and a valid Social Security Number or an Individual Taxpayer Identification Number, you qualify for mortgage loan program under the same terms as a US citizen.
As a DACA recipient, your residency status is Non-Permanent Resident. There are four basic requirements to be eligible for a DACA mortgage:
- The property will be your principal residence.
- Valid Social Security Number (SSN), except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD.
- Eligible to work in the US, as evidenced by the Employment Authorization Document issued by the USCIS.
- You satisfy the same requirements, terms and conditions as those for US citizens.
Applicants still need to meet the same eligibility guidelines as every other lawful resident in order to get their mortgage loan approved. And note that Dreamers weren’t entirely locked out of homeownership even before the most recent change, just access to FHA loans.
So you have always been eligible for some conventional loans, subject to lenders’ policies. These include conforming ones that are offered by Fannie Mae. But of particular interest to DACA recipients after the change may be FHA loans.
Federal Housing Administration loans, which you can get with as little as 3.5% down, are loans for people with low to moderate income. You need to live in the house you’re buying as your primary residence. You also need to buy a home that meets livability standards and move in within 60 days of closing. For a 3.5% down payment FHA loan, you’ll need a credit score of at least 580.
You’ll also need to pay for mortgage insurance throughout the life of the loan, if you have a down payment of less than 10% of the sale price of the home. It’s also possible to get an FHA loan, build 20% equity in your house. And then refinance to a conventional loan as a workaround. This will eliminate the lifetime-of-the-loan mortgage insurance requirement.
Employment Authorization Document
That Employment Authorization Document is clearly central to your application succeeding. But suppose yours is due to expire within a year.
That shouldn’t be a problem. The FHA says:
“If the Employment Authorization Document will expire within one year and a prior history of residency status renewals exists, the lender may assume that continuation will be granted. If there are no prior renewals, the lender must determine the likelihood of renewal based on information from the USCIS.”
In other words, you should be fine to get a DACA mortgage if your status has already been renewed at least once. There’s an assumption it will be again.
If it hasn’t already been renewed, the lender will check with US Citizenship and Immigration Services (USCIS) to see how likely a renewal is.