There are mortgages available for Dreamers!
And, believe it or not, the process is easier than you may have thought. When looking for a DACA mortgage, it’s important that you bring the right information and work with the right lending agent.
You may have been denied for other loans in the past because of your involvement with the Deferred Action for Childhood Arrivals, but there are options. After reading this article, you’ll understand how to get a DACA mortgage that will help you purchase an outstanding home.
How to Get a DACA Mortgage
Let’s explore what loans are available, and how you can secure financing…
As a DACA Dreamer, Am I Eligible for a Mortgage?
Absolutely yes! As a Dreamer, you are able to get a loan for a home purchase. However, your options are slightly limited, as only a certain type of loan is available. (Fortunately, the type of loan that is available is also the most common type in the industry!) Your DACA status does in fact make you eligible for mortgage lending through a specific option.
A legal non-permanent resident is eligible for practically all types of mortgage lending, including both FHA loans and conventional loans. If you can prove that you are a legal resident of the United States, then you meet the residency requirements, which means other forms of financing may be available to you.
But the DACA program is more vague, ambiguous, and (quite frankly) uncertain. Agencies that create policies for loan programs interpret the DACA system differently, so they have different ways of approaching Dreamers. Political uncertainty can also play a role, as different administrations and congresses take differing opinions of the program. All of this makes it harder for lenders to say “yes, I will loan the money you need for a home purchase.” According to many people who are responsible for creating mortgage policy, DACA does not prove that you are a lawful resident of the United States; others may say that it does.
All of these uncertainties make providing DACA mortgages more difficult. But it’s far from impossible.
To understand DACA mortgages, let’s first look at the current policy from one of the largest agencies involved in the real estate industry: the Federal Housing Administration.
Are FHA Loans Available as DACA Mortgages?
Unfortunately, FHA loans are not available for DACA recipients. There was some confusion on this topic, but Len Wolfson, the Assistant Secretary for Congressional and Intergovernmental Relations with the Department of Housing and Urban Development (HUD), which oversees the FHA, released a letter that cleared the issue. In his letter, Wolfson stated that non-U.S. citizens without lawful residency are ineligible for FHA-insured loans. This policy, according to the letter, was in place almost a decade before the creation of DACA.
Basically, because DACA does not give lawful status, Dreamers are ineligible for FHA loans.
Private lenders essentially follow the rules established by HUD and the FHA. Basically, borrowers apply for an FHA loan with a lender or lending agent. The lender is then responsible for confirming that the borrower meets the requirements set by the FHA.
There is the chance that FHA loans could become available in the future. The “Homeownership for DREAMers Act,” which was introduced in 2019, could open the door for other loan options, especially FHA loans. Basically, this bill would force the FHA to provide insurance for people participating in the DACA program.
This bill, if it ever passes through both branches of Congress and gets signed into law by the president, would open FHA loans as DACA mortgages. This would help Dreamers buy a home if their credit is low and they do not have a large downpayment. If it became a reality, Dreamers could secure a mortgage with a credit score as low as 580. (Or possibly lower in certain situations.)
For the time being, unfortunately, FHA loans are unavailable for Dreamers. But there is another option…
What About Conventional Loans?
Currently, the one option available for DACA recipients is a conventional loan. As outlined in Fannie Mae’s Non-Citizen Borrower Eligibility guide, people who are in the country under the DACA program are eligible for a conventional loan supported by Fannie Mae (as well as Freddie Mac).
To qualify for a conventional loan, you basically have to meet the same requirements as any other borrower. The property will need to be your primary residence (not an investment property), and you will need at least a 3% downpayment.
These conventional loans require a credit score of 620 or higher, and you will need to show stable employment, including an employment history and indication that the job will continue.
What Documents are Required for a DACA Mortgage?
Like any loan application, a DACA mortgage (in this case a conventional loan) requires some specific documents and information. You will need to provide your Social Security number, as well as your current Employment Authorization Document, which is often called an “EAD card.” This card is issued by the United States Citizenship and Immigration Services, and the card should have a C33 category. You should also bring any previous EAD cards that may have expired.
But the above documents are basically what you need if you are applying for a loan specifically as a Dreamer. You’ll also need to prove to the lending agent that you can handle the loan payments and that you have enough income for the house.
Basic income documents are the first step. The agent or lender will want to see copies of pay stubs, W-2 statements, federal income tax returns, and other forms of information that establish your income. You may also bring bank account statements that display the balances on your accounts. The most recent statements covering two months of information will be useful for finalizing the loan application.
By choosing the right loan and organizing your information, Dreamers can get outstanding loans to purchase a comfortable, affordable house.
Reliable Mortgage Support for DACA Dreamers
Chad Baker and the Cross Country Mortgage team is ready to help you find a DACA mortgage. We are fluent in Spanish and dedicated to world-class service, so contact us today!
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