DACA Recipients Now Qualify For FHA Mortgages
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In January, the Federal Housing Administration (FHA) updated its guidelines to allow DACA beneficiaries, also known as Dreamers, to qualify for federally supported mortgages.
The change means that some undocumented immigrants who came to the United States as children are now eligible for home loans that target lower-income borrowers.
If you are a dreamer who now qualifies for an FHA loan, here are some things you should know.
What has changed?
Dreamers were previously banned from obtaining FHA mortgages under an agency policy that banned “non-US citizens not legally resident in the United States” from obtaining the loans.
In January the agency updated its guidelines and plans to remove this language from future versions of its manual.
“The term ‘legal residence’ dates back to pre-DACA and therefore did not anticipate a situation where a borrower may not have legally entered the country but is still considered to be lawfully present,” the agency said in a statement accompanying the announcement Modification.
What does this mean for dreamers?
This change is an important impetus for DACA recipients who are now more likely to become homeowners and benefit from the equity and stability associated with it.
“This latest eligibility expansion will open the doors for low-income DACA recipients to the new opportunities that come with owning a home and help provide stability and a safety net for them and their families,” said Sarah Cartagena. senior immigration policy analyst at The Latino Policy Forum told Bankrate. “Over the past year, many Latino DACA recipients and immigrant families have struggled to have a roof over their heads. The stability that comes with owning a home on a government-sponsored mortgage can help families weather a devastating pandemic. ”
What do DACA recipients need to apply?
Each FHA mortgage applicant is required to provide documents to demonstrate eligibility for the loan.
Here are the minimum qualifications according to the FHA:
- A valid social security number or a valid employer ID from the World Bank or a foreign embassy
- Permit to work from U.S. Citizenship and Immigration Services
- Minimum credit worth 580 for a 3.5 percent down payment or 500 for a 10 percent down payment
- Debt-to-income ratio less than 43 percent
The FHA also provided the following guidance on work permit documents to partner lenders: “If the work permit document expires within a year and there is a history of residency renewals, the lender can expect continuation to be granted. In the absence of previous renewals, the lender must use information from USCIS to determine the likelihood of renewal.
Note that FHA mortgages can only be used on the borrower’s primary residence.
What Are Alternatives To FHA Loans For Dreamers?
DACA beneficiaries have always qualified for conventional, compliant loans, but these can be more difficult to obtain for borrowers with lower credit ratings. If you are a dreamer looking to buy a home, it is worth browsing around and talking to lenders early on about your immigration status. A good mortgage broker or loan professional should be able to help you find the right mortgage loan.
The FHA’s policy change means their loans are now available to DACA beneficiaries who were previously prohibited from receiving their mortgages. “Dreamers are some of the most inspiring, courageous and innovative people in this country,” said Adina Appelbaum, co-founder of Immigrant Finance. “Improved access to finance for government-sponsored mortgages will enable Dreamers to develop more financial stability so they can focus on realizing their potential and expanding the far-reaching impact they have already made in this country.” new directive means the American dream may now be attainable for more dreamers than ever before.