As a DACA recipient, you can buy a home for just 3.5% down via an FHA DACA loan.
This wasn’t always the case. Prior to January 19, 2021, many buyers with Deferred Action for Childhood Arrivals status could not get an FHA loan. So if you hear that you’re not eligible, that’s probably why. Fortunately, rules have changed since 2021.
Now, DACA recipients can qualify under the same guidelines as any FHA applicant.
- The home will be your primary residence.
- You have a social security number.
- You have a valid Employment Authorization Document (EAD) from the USCIS.
- You meet standard FHA approval guidelines.
Standard FHA loan guidelines
FHA loans are some of the most lenient when it comes to qualification standards. Here are the basic requirements for the program.
- 3.5% down payment (can come from an eligible down payment assistance program)
- Enough cash (or closing cost assistance) to cover closing costs, typically 2-5% of the loan amount
- 580+ credit score
- 2 years employment in the same line of work or similar schooling
- Adequate income to support the payment
Your maximum mortgage payment including property taxes, insurance, and HOA dues can be around 30-40% of gross income. So if you make $7,000 per month, you may be approved for a full housing payment of $2,800. But the percentage varies based on credit score and other loan factors.
In fact, those with a very strong file may be approved for a housing payment up to 46.9% of their gross income, much higher than most other programs.
So how much debt can you have on top of that housing payment? Your total housing plus debt payments can be between 40-50% of your income, though FHA’s maximum is 56.9%.
In most cases, an expiring EAD within one year won’t derail your approval.
Supply previous renewals to the lender. If you’ve renewed your EAD before, the lender has permission from FHA to assume it will be renewed again.
If you’ve never renewed the EAD, “the lender must determine the likelihood of renewal based on information from the USCIS,” according to FHA. It’s unclear how the lender would determine likelihood of renewal, but it will vary by lender. If you’re denied, try another company.
FHA DACA loans FAQ
If you don’t have one, request an EAD by completing form I-765 using eligibility category (c)(33) here. Keep in mind that you generally need two years of work experience to qualify for an FHA loan. If you’re not working now due to no EAD, apply for work authorization and start building your work history as soon as possible.
If you have prior renewals, the lender will assume your EAD will be renewed again. If this is the first renewal, the lender will have its own guideline to determine likelihood of renewal. FHA requires the lender to gather information from the USCIS to do so, but does not state specific factors that would support the case for renewal.
You can apply online, on the phone, or in person with any lender that does FHA loans, which is most of them. Inform your loan officer of your DACA status. He or she will then send you a to-do list of documentation needed to process the loan application.
Yes. In the past, there was confusion as to whether DACA recipients were eligible for FHA loans. From 2012 to 2019, many DACA-status loan applicants were approved depending on how lenders interpreted FHA guidelines. Then in June 2019, HUD, the overseer of FHA, issued a statement stating DACA homebuyers were not eligible. But this position was reversed on January 19, 2021 with HUD’s clear policy announcement declaring DACA recipients as FHA-eligible. Because of the gray area prior to June 2019, some DACA-status homebuyers were approved.
A lender should not deny you for being a DACA recipient. HUD guidelines clearly state that DACA recipients are FHA-eligible. There are many other possible reasons for denial, though, so make sure you get a clear answer on why you were denied. It could be due to an expiring EAD that has never been renewed, or some other loan criteria not being met. If it is only because of your DACA status, you should file a complaint with the CFPB.
Conventional loans from Fannie Mae are available to those with DACA status. However, DACA recipients are ineligible for Freddie Mac, Fannie Mae’s competing conventional loan agency. If you apply with a lender, make sure they are approved to issue Fannie Mae loans. Some lenders can only underwrite by Freddie Mac standards.
DACA recipient? Start the homebuying process
If you have a social security number, EAD, and meet FHA qualifications, you use the popular FHA program.
It’s a great time for Dreamers to get into their first home.