DREAMers have many of the same goals and dreams as U.S. citizens and legal permanent residents: get a good education, raise a family, make a good living and have a home they can call their own.
The U.S. Department of Housing and Urban Development (HUD) announced on January 20, 2021, that effective January 19, 2021, the Federal Housing Administration (FHA) is permitting individuals classified under the “Deferred Action for Childhood Arrivals” program (DACA) with the U.S. Citizenship & Immigration Service (USCIS) and are legally permitted to work in the U.S. are eligible to apply for mortgages backed by the FHA.
California Congressman Juan Vargas (one of the Members of Congress that introduced the legislation) said that “Dreamers” deserve the same access to opportunities offered to other Americans.
The FHA permitting DACA recipients to apply opens up the dream of homeownership to countless DREAMers across the United States. Prior to HUD’s announcement, the FHA Single Family Housing Handbook stated that "Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages”.
DACA recipients should be sure not to claim that they are Lawful Permanent Residents (Green Card holders) or U.S. Citizens on any document or loan applications. That could result in loan denial and even imprisonment or inadmissibility to the United States.
FHA loans are backed by the Federal Housing Administration and are great options for first-time homebuyers. These loans provide a safety net in the event the homeowner fails to pay back their mortgage loan, which means mortgage lenders can offer these home loans with less stringent requirements. Some basic benefits of FHA loans include:
- Down payment as low as 3.5% (many States offer down payment assistance programs that work with FHA mortgage lenders)
- FICO (credit score) as low as 620
- Low fixed mortgage insurance premiums
- Low fixed interest rate options
- Manual underwriting allowed
- Renovation loan available
- Higher debt to income thresholds (compared to conventional lending)
DREAMers will have to abide by the same FHA requirements as other borrowers:
- The property must be the DREAMer’s principal residence
- The DREAMer must have a valid Social Security Number (SSN), except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD
- The DREAMer must be eligible to work in the U.S., as evidenced by the Employment Authorization Document (EAD) or work permit issued by USCIS. The work permit is required to substantiate work status. If the work permit will expire within one (1) year and a prior history of residency status renewals exists, the lender may assume that continuation will be granted. If there are no prior renewals, the lender must determine the likelihood of renewal based on information from the USCIS
The DREAMer must satisfy the same requirements, terms, and conditions as those set for U.S. citizens and demonstrate his/her ability to make the monthly mortgage payments
The Fair Housing Act makes it illegal for anyone to discriminate against a buyer based on their immigration status. If you’re a DACA recipient and interested in buying your first home, doing a little research and getting your finances in order in advance is a good idea.
Some ways to prepare in advance include saving for a down payment, as well as putting money aside for closing costs and fees. Focus on paying off as much debt as possible; your debt to income ratio could be a major factor in whether a mortgage is approved. Paying off debts also has another benefit, a lower debt to income ratio, as well as making payments consistently and on time can help improve your credit score.
It is very important to obtain and/or maintain your DACA status. On March 18, 2021, the U.S. House of Representatives overwhelmingly passed the American Dream and Promise Act of 2021 that offers to provide a permanent legislative solution for certain immigrants including DREAMers to end the limbo they have been in for years. The bill has an uncertain future when it comes to passage in the Senate and at this time there is nothing that can be done but wait to see if the bill hopefully becomes law in the near future.
You can contact the FHA at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at 1-800-877-8339.
POSTED BY: Mara Montini
Related Links
Renew your DACA Status
Check your FICO Credit Score
Find an FHA Lender
The American Dream and Promise Act of 2021
Need an Immigration Attorney?
How can I Review my Criminal Record?