FHA Mortgages

FHA Points Steering on Eligibility of DACA Recipients


As we explained in our previous legal update on January 19, 2021, the FHA has expanded the eligibility to apply for FHA-insured mortgages to US residents under the DACA program by addressing certain requirements of the FHA- Manual has waived.[1] On May 28, 2021, the FHA released Mortgage Letter 2021-12, which clarifies the FHA’s existing eligibility requirements for DACA participants and other non-permanent residents applying for FHA loans, and which the prior waiver introduced into the HUD manual Implements admission requirements.[2]

In particular, non-permanent residents, including DACA participants, persons with refugee or asylum status, citizens of the Free Associated States (“FAS”)[3] and people with an H-1B visa must meet the following requirements:

  • the property will be the principal residence of the borrower;
  • the borrower must have a valid SSN, with the exception of those employed by the World Bank, a foreign embassy or an equivalent employer identified by HUD;
  • The borrower must be eligible to work in the United States as evidenced by:
    • an Employment Permit Document (“EAD”) (USCIS Form I-766) confirming that the permit status is up to date;
    • a USCIS Form I-94 proving H-1B status and proof of employment by the authorized H-1B employer for at least one year;
    • Proof of granting refugee or asylum status by the USCIS (e.g. USCIS Form I-94 or Form I-797); or
    • Proof of citizenship of the Federated States of Micronesia, the Republic of the Marshall Islands or the Republic of Palau; and
  • the borrower must meet the same requirements and conditions as US citizens.

Previously, under the January 19 waiver, FHA mortgage applicants with perpetual residence were required to file an EAD issued by USCIS to prove eligibility to work in the United States. The updates now allow applicants to alternatively submit documents proving refugee or asylum status.

The manual update also removes the requirement for FAS citizens and certain individuals with an H-1B visa to obtain an EAD. Alternatively, individuals with an H-1B visa can now submit USCIS Form I-94, which provides H-1B status and evidence of employment by the H-1B authorized employer for at least one year. FAS citizens only need to prove citizenship.

In addition, under the new FHA guidelines, lenders can expect continuation to be granted if an EAD or proof of H-1B status expires within a year and the applicant has a history of extension of residence status. If the EAD or H-1B has not previously been renewed, the lender must determine the likelihood of renewal based on information from USCIS or the applicant’s employer.