DACA Mortgage Loans

In this blog, we will cover how DACA mortgage loans work. DACA, introduced in 2012, is an immigration policy designed to offer temporary deportation protection for individuals who arrived in the US as children and are undocumented immigrants. Work with a housing counselor. A housing counselor can provide guidance and support throughout the mortgage loan application process. They can help you understand the requirements and qualifications, find a lender, and prepare for the application process. John Strange, a senior mortgage loan originator at GCA Forums Mortgage Group, says the following about DACA mortgage loans:

Conventional mortgages are available to DACA recipients under the same terms as U.S. citizens. FHA will permit DACA status recipients, effective January 19, 2021. USDA has issued a temporary waiver expiring on May 2, 2025.

DACA recipients can increase their chances of securing a mortgage loan and achieving the American Dream by following these tips and working with a trusted lender and housing counselor. Since its implementation, DACA has allowed thousands of young immigrants to live and work legally in the United States. However, despite being able to work in the US legally, DACA recipients face significant hurdles when purchasing homes due to the lack of available DACA mortgage loans. In the following paragraphs, we will cover what DACA mortgage loans are, how they work, and their eligibility requirements.

Who Are Dreamers and What Is DACA?

DACA is a policy that was introduced in 2012 by then-President Barack Obama to protect undocumented individuals who arrived in the United States as minors. Many dreamers in the United States have worked hard to save money for the down payment on a traditional or jumbo mortgage loan.

DACA allowed these individuals to apply for a two-year work permit and protection from deportation, provided they met certain eligibility requirements. To be eligible for DACA, an individual must have arrived in the United States before age 16 and lived there continuously for at least five years.

Additionally, they must have no criminal record and be enrolled in school, have graduated from high school, or have obtained a GED. Individuals who have received DACA protection are commonly known as Dreamers, a term from the DREAM Act, or Development, Relief, and Education for Alien Minors, a bill introduced in 2001 but has yet to be enacted.

What are DACA Mortgage Loans?

DACA mortgage loans are a type of mortgage loan specifically designed for individuals eligible for DACA. These loans are intended to help DACA recipients purchase homes in the United States. However, due to the complex legal status of DACA recipients, many lenders are hesitant to offer these loans. DACA recipients often face significant hurdles when securing a mortgage loan.

For many, owning a home is fundamental to achieving the American Dream. It represents a significant investment in their future. However, for DACA recipients, the dream of homeownership can take time due to the need for more available mortgage loans.

This can be particularly challenging for DACA recipients who have resided in the United States for most of their lives and consider it their home. Access to DACA mortgage loans is necessary for many Dreamers to take advantage of the benefits of homeownership, including building equity and stability for themselves and their families.

What Are the Requirements for DACA Mortgage Loans?

The requirements for DACA mortgage loans can vary depending on the lender. However, there are some general guidelines that most lenders will follow. DACA recipients usually require a 620 or higher credit score and a debt-to-income ratio that does not exceed 43%.

They may also be required to provide a larger down payment than other borrowers. For DACA recipients interested in pursuing a mortgage loan, it is important to do your research and be prepared for the application process.

Here are some points to help you in this. Please be sure to understand the requirements before you apply for a mortgage loan. It is important to understand the requirements and qualifications for DACA recipients. You must have a valid DACA status, a Social Security number, and a stable income and employment history.

Lenders For DACA Mortgage Loans

Find a lender: Not all lenders offer DACA mortgage loans, so it is important to shop around and find a willing lender to work with you. Look for lenders with experience working with DACA recipients and offering competitive rates and fees. Build your credit score:

Your credit score will be an important factor in your ability to qualify for a mortgage loan and the interest rate you are offered. Before submitting a mortgage application, please make sure you pay your bills on schedule, maintain low balances on your credit cards, and avoid opening new credit accounts.

Allocate funds for a down payment: Depending on the lender and the type of mortgage loan you seek, you might have to provide a down payment. Start saving early to ensure you have enough money to meet your lender’s requirements.

Dream of homeownership.

What Are the Challenges Facing DACA Mortgage Loans? Despite the importance of DACA mortgage loans, many DACA recipients need help securing these loans. One of the biggest challenges facing DACA mortgage loans is the need for more legal clarity surrounding the status of DACA recipients.

Although DACA provides temporary protection from deportation, it does not offer a route to obtaining permanent legal status or citizenship. As a result, lenders often hesitate to offer DACA mortgage loans because they are concerned about the legal risks of lending to individuals with an uncertain legal status. Another challenge facing DACA mortgage loans is the political climate surrounding immigration.

Since the introduction of DACA, the program has been heavily debated in the political arena, and its fate is still uncertain. This uncertainty has created a challenging environment for DACA recipients seeking to purchase homes. Many lenders are hesitant to offer DACA mortgage loans because they are unsure of how changes to immigration policy could impact their ability to recoup their investments. In addition to these challenges, DACA recipients may also face discrimination from lenders reluctant to work with individuals who are not US citizens or permanent residents.

What Are the Benefits of DACA Mortgage Loans?

Despite the challenges facing DACA mortgage loans, these loans have many benefits for DACA recipients. First and foremost, DACA mortgage loans allow Dreamers to achieve the American Dream of homeownership. It can provide stability and security for DACA recipients and their families and the opportunity to build wealth through home equity. In addition to these benefits, DACA mortgage loans can help boost the economy. Ravinder Sharma, the Digital Media Director at GCA Forums Mortgage Group, said the following:

DACA mortgage loans can help stimulate the housing market and create jobs in the construction and real estate industries by allowing DACA recipients to purchase homes. Finally, they can help promote social equity by providing access to homeownership for individuals who might be ineligible for the housing market.

DACA mortgage loans are important for promoting homeownership and economic growth for DACA recipients. However, many lenders hesitate to offer them due to the legal and political challenges facing these loans. For dreamers who need to overcome these challenges, DACA recipients must research and explore multiple lenders to locate one that is ready to work with them. They may also consider working with a housing counselor or other professional to help them navigate the complex process of securing a mortgage loan. Ultimately, by promoting access to homeownership for DACA recipients, we can create a more equitable and inclusive society for all Americans.

Common Frequently Asked Questions About DACA Mortgage Loans

Can DACA holders obtain mortgage loans?

• Yes.
• Under certain criteria, DACA recipients qualify for a number of mortgage products, including conventional, FHA, and USDA loans.
• Conventional loans are offered under the same conditions as those available to citizens.
• FHA loans became available to DACA recipients starting January 19, 2021, and USDA loans are offered with a temporary waiver until May 2, 2025.

What types of mortgage loans can DACA recipients apply for?

DACA recipients can apply for:

Conventional Loans:

• Private lenders provide these and are not government-supported.
• They are offered on a similar basis to citizens.
• Usually, a minimum credit score of 620 and a debt-to-income ratio of 45% are required.

FHA Loans:

• The Federal Housing Administration backs these, and they are accessible to borrowers with a credit score 580 and a 3.5% down payment.
• Furthermore, they are more forgiving for those with higher debt-to-income ratios than other loans.

USDA Loans:

• These are offered in rural areas and have a temporary waiver for DACA holders until May 2, 2025.
• No down payment is required, and the credit requirements are flexible (the lowest acceptable score is 640).

What are the requirements for DACA recipients to qualify for an FHA loan?  

To qualify for an FHA loan, DACA recipients must:  

• Reside at the property being purchased as their primary home.
• Possess a Social Security Number (SSN) unless working for the World Bank, foreign embassies, or similar employers as defined by HUD.
• Possess a current Employment Authorization Document (EAD) issued by USCIS under category C33 as proof of work eligibility in the United States.
• They must meet the same financial requirements as U.S. citizens, including having a minimum credit score 580 and income and bank account statements guaranteeing a 3.5 percent down payment and closing costs.

What documentation is required to apply for DACA mortgage loans?  

For DACA, recipients usually need to submit:

• An Employment Authorization Document (EAD) under category C33.
• Taxable Social Security Number (SSN) or Tax ID number.
• Two years of income documentation that includes recent pay stubs, W-2s, or tax returns.
• Employment documentation supporting guaranteed ongoing income based on past trends.
• Bank statements for the account verifying the funds for the down payment and closing costs.
• Expired EAD cards evidencing renewals to reinforce work authorization attesting renewals beyond the expiration will make lenders more comfortable that work authorization is guaranteed on a continual basis.

What is the status of USDA loans for DACA recipients?

• Currently, USDA loans are accessible to DACA recipients due to a temporary waiver.
• However, this waiver is set to expire on May 2, 2025.
• DACA mortgage loans are intended for rural and semi-rural regions. They do not require a down payment and have a minimum credit score 640.
• Eligibility may shift after May 2, 2025, unless a new waiver is implemented or a policy change occurs.

Are mortgage costs different for DACA recipients versus U.S. citizens?  

• No, mortgage costs for DACA recipients remain the same as those for U.S. citizens.
• Costs vary based on the loan amount, down payment, repayment timeframe, interest, and additional fees.
• For FHA loans, borrowers must pay an upfront mortgage insurance premium (1.75%) and a monthly premium (0.55% of the loan value).
• Furthermore, conventional loans will often require Private Mortgage Insurance (PMI) if the downpayment is under 20%.

Does the mortgage application process present any difficulties to DACA recipients?  

Some potential difficulties for DACA recipients include:

• There is a lack of lender options as some do not issue loans to DACA recipients, particularly large banks that tend to limit lending to citizens or permanent residents.
• Some lenders retain tougher policies, for example, requiring higher credit scores or bigger down payments.
• Working with lenders familiar with DACA mortgage loans, such as Non-QM Mortgage Lenders or GCA Mortgage Group, can ease some of these concerns.

Are DACA recipients eligible for down payment assistance programs?  

• DACA recipients may qualify for down payment assistance programs like Preferred Mortgage Rates or GCA Mortgage Group, which are offered to lower-income or first-time homebuyers.
• Although these programs are not specifically tailored for DACA recipients, they can still help with a portion of the down payment and closing costs.
• Inquire with local lenders or housing authorities.

What happens if my EAD is set to expire soon?  

• Suppose your Employment Authorization Document (EAD) expires within a year.
• In that case, lenders may assume you’re still employed if there’s been a history of residency status renewals.
• You may need to present an expired EAD or Form I-797 (Extension Notice) as proof for timely renewal filing.
• This evidence assures lenders that the borrower will have the necessary work authorization to service the debt.

Where can lenders willing to issue these loans to DACA recipients be found?  

DACA recipients need to look for lenders who work with non-citizen borrowers, such as:

• Preferred Mortgage Rates (Offers texts: Conventional, FHA, and USDA loans in Florida, Illinois, Indiana, and Tennessee).
• FHA Bad Credit Lenders (FHA loans).
• Non-QM Mortgage Lenders.
• GCA Forums Mortgage Group (Specializes in DACA home loans).
• Getting pre-approval from multiple lenders is suggested to ensure the best terms are met, offering comparison rates.

Are there other mortgage options available for DACA recipients?  

Apart from conventional, FHA, and USDA loans, DACA recipients could apply for Fannie Mae’s HomeReady Loan, which has flexible credit and down payment requirements. Freddie Mac has unclear policies regarding DACA eligibility, and VA loans cannot be issued to DACA recipients. However, community development financial institutions like The Community First Fund may offer loans to those with limited options.

How can DACA recipients prepare themselves when applying for a mortgage?  

To increase their chances of approval, DACA recipients must:

• Keep a credit score of no less than 580 (FHA) or 620 (conventional).
• Save a downpayment (3.5% for FHA – 3% or greater for Conventional and 0% for USDA.).
• Prepare necessary documents (EAD, SSN, income documents, bank statements).
• Partner with an immigration lawyer or a housing counselor to verify that all documents are properly completed.
• Obtain pre-approval to comprehend their borrowing ability and enhance their home purchase offer.

The information provided is subject to change based on immigration and housing policies. For the most accurate information, always consult a qualified lender or immigration attorney.