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DACA and Homeownership

June 25, 2021

DACA (Deferred Action for Childhood Arrivals) is a government program to protect undocumented people who were brought to the United States as children. Often referred to as Dreamers, they have grown up in the U.S. and identify as Americans.

DACA enables them to receive a two-year deferral on deportation, subject to renewal when it expires. The program also allows recipients to obtain work permits, a Social Security number, and state-issued identifications.

DACA FHA Loan Eligibility

Prior to January 19, DACA recipients were barred from receiving FHA mortgage loans because they are not considered lawful residents of the United States. When the new presidential administration took office, the Federal Housing Administration (FHA) issued a significant change to its policy on home loans for DACA recipients.

“The term ‘lawful residency’ pre-dates DACA and thus did not anticipate a situation in which a borrower might not have entered the country legally, but nevertheless be considered lawfully present,” the agency said when announcing the change.

Now, all noncitizen U.S. immigrants enrolled in the DACA program who meet the eligibility requirements can apply for a loan through the FHA.

Current estimates show that well over 600,000 people are enrolled in the DACA program. Many Dreamers are entering adulthood, and the ability to buy a home will offer them the stability that comes with that.

DACA FHA Requirements

To be eligible for an FHA loan, DACA recipients must meet the following requirements:

  • The borrower has a valid Social Security Number (SSN) or,
  • The borrower has a qualifying employer ID from the World Bank, a foreign embassy, or equivalent employer identified by HUD
  • The borrower is eligible to work in the U.S. and can provide an Employment Authorization Document (EAD)
  • EAD is issued by the U.S. Citizenship and Immigration Services (USCIS)
  • A minimum credit score of 500
    • 10% down payment is required if your credit score is 500-579
    • 3.5% down payment is required if your credit score is 580 or higher
  • The house must be the borrower’s primary residence and must meet the FHA’s minimum property requirements

Additional Loan Options

Before the change to the FHA policy, DACA recipients were qualified to apply for conventional, conforming loans through private lenders. However, conventional loans can be more complicated to secure, and the requirements and restrictions vary from lender to lender.

Fortunately, with this latest change, owning a home is now more attainable for DACA recipients.

If you are a Dreamer and would like more information on how you can make owning a home a reality, contact our mortgage experts today.

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