U.S. residents with DACA status can now get home loans using FHA financing. This opens up more access to home ownership. Until now, the only option was Fannie Mae conventional loans. FHA announced it’s policy change for those that are here with DACA status effective on January 19, 2021.
FHA can be one of the easier mortgage loans to qualify for so this should open up more home mortgage possibilities for people. Some of the benefits of using FHA financing is a small down payment, you just need 3.5% of the purchase price for a down payment. Credit scores can be lower – minimum scores required are typically 580. The debt to income ratios can usually be higher on FHA loans than conventional loans. So depending on your existing debt, you may be able to qualify for more home. There may also be down payment assistance options if you need help with the down payment.
In order for a DACA recipient to qualify for FHA financing, you will need the following:
- -a valid social security number
- eligibility to work in the U.S. as evidenced by the Employment Authorization Document that is issued by the USCIS
- meet all other credit and income requirements for FHA loans
There are other options available to finance mortgages for those with DACA status. The other popular option is a conventional loan with Fannie Mae. Freddie Mac has not allowed mortgages for DACA status, they have not changed their status and do not allow financing at this time. Fannie and Freddie are the agencies that back conventional (conforming) loans. Conventional loans do allow you to purchase with as little as 3% down but typically require higher credit scores than FHA.
VA and USDA financing is still not an option at this point. They may update their guidelines to match FHA but have not yet.
If you are a DACA recipient and you want to purchase a home soon, it may be a great time to meet with a loan officer and see what you can qualify for. There are options for you depending on your situation. If you have lower credit scores and higher debt, you may want to look at FHA financing now that it is a possibility. If you have great credit and less debt, you may want to look at conventional financing. And of course, if you are not sure what you can do, talk to your loan officer and find out!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website