This article will cover HUD DACA mortgage guidelines on FHA loans for DREAMERS. Gustan Cho Associates have some good news surrounding FHA mortgage lending.

The Federal Housing Administration (FHA) has recently added “dreamers” to the list of acceptable borrowers for all FHA mortgage products. This is a big step. 

This news means roughly 640,000 people in the United States may now be eligible for FHA financing. In the past, dreamers could get a mortgage on the conventional side, but they could not utilize the advantages of FHA mortgage loans. In this product, we will detail the new change, outline some key aspects of FHA lending, and explain how to apply for an FHA loan with Gustan Cho Associates.

HUD DACA Mortgage Guidelines: What Is A DREAMER

Who is a dreamer? People who are part of the DACA program are often called Dreamers. They are legal residents of the United States. They should have the same opportunity to become American citizens as anyone else.

DREAMERS, synonymous with DACA recipients, possess the legal authorization to work and reside in the United States without the threat of deportation.

Many dreamers were born and educated in the United States, differing from U.S. citizens only because their parents lacked documentation. As of June 15, 2012, DACA status applies to undocumented immigrants who entered the United States before turning 16 and were under 31. Consequently, DREAMERS can now pursue mortgage loans and realize their dream of homeownership per HUD DACA Mortgage Guidelines.

What is a DACA Loan?

A HUD DACA Mortgage Guidelines loan is a specialized program tailored for individuals enrolled in the Deferred Action for Childhood Arrivals (DACA) program. Given DACA recipients’ distinctive hurdles when seeking traditional financial services due to their immigration status, select lenders provide customized loan options to meet their needs. Click here to apply for DACA loans

How Many Homebuyers Do HUD DACA Mortgage Guidelines Impact

As of 2023, data from migrationpolicy.org indicates that more than 640,000 DACA residents reside in the United States. Although this figure has decreased since the Obama administration, it’s worth noting that many older DACA recipients have obtained legal citizenship, which consequently reduces the total number of individuals under DACA protection.

To clarify and eliminate confusion, the FHA has revised its stance and redefined the term “lawful resident.” This significant development can be explored further by referring to the official release document, accessible through the link provided: FHA DACA.

A significant portion of DACA recipients originate from countries such as Mexico and other regions in Central America. South Korea follows closely, with an estimated 6,210 DACA recipients. DACA recipients are predominantly concentrated in states like California, Texas, and Illinois.

These states heavily rely on FHA mortgage lending, and the recent HUD DACA Mortgage Guidelines adjustment presents an opportunity for many DACA recipients to realize their dream of homeownership.

The Reason HUD Makes Changes

What prompted the FHA to enact this change by HUD DACA Mortgage Guidelines? While the precise rationale behind the change remains unclear, it is one of the final initiatives undertaken during the Trump administration before its conclusion. The declaration explicitly states that all DACA recipients are now qualified to apply for mortgages backed by the Federal Housing Administration, as per a statement from Deputy Secretary Brian Montgomery:

“This is the first time since DACA’s inception in 2012 that it has been made unequivocally clear that DACA status recipients are eligible to apply, provided they meet other FHA requirements.”

Before this announcement, DACA beneficiaries and other non-citizens were ineligible for FHA-insured mortgages. On January 20, 2021, the Federal Housing Administration released a statement clarifying the ambiguity surrounding the term “lawful residency,” aligning with HUD DACA Mortgage Guidelines.

The term “lawful residency” predates DACA and thus did not anticipate scenarios where a borrower may not be considered lawfully present while legally entering the country.

Eligibility Requirements For DREAMERS To Qualify For FHA Loans

All the following must apply for a DACA borrower to use an FHA loan. The property must be the borrower’s primary residence. The borrower must have a valid Social Security number, except for those employed by the World Bank, a foreign Embassy, or an equivalent employer as identified by Housing and Urban Development.

The borrower is eligible to work in the United States as documented by the employment authorization document issued by the ISCIS. The borrower satisfies the same requirements, terms, and conditions as those for current US residents (standard FHA guidelines).

Many States offer down payment assistance programs. Many of these programs work with FHA mortgage lending. That said, DACA residents may utilize down payment assistance programs that comply with federal and state FHA requirements. Usually, income limits do apply.

For more information on down payment assistance programs, please call us, at Gustan Cho Associates at 800-900-8569 or text John for a faster response. You can email at alex@gustancho.com. Get Qualify for a FHA loans, click here

What Do You Need for a DACA Loan?

Lenders may have different requirements depending on loan types. Still, typically, you will need to provide certain qualifications and documents when applying for a DACA loan.

1. DACA documentation: To qualify, individuals must show a valid Employment Authorization Document (EAD) issued by the United States Citizenship and Immigration Services (USCIS).
2. Identification: Valid government-issued identification may be required, such as a passport or driver’s license.
3. Employment and income verification: Lenders may request documentation to verify employment and income, such as pay stubs, tax returns, or employment verification letters from employers.
4. Credit history: When evaluating DACA loans, lenders may consider credit score, payment history, and debt-to-income ratio to assess creditworthiness. While some lenders may have more lenient credit history requirements, it is important to be aware of these factors.
5. Banking statements: Lenders may request recent bank statements to verify financial stability and track record of managing finances.
6. Proof of residency: Lenders may ask for proof of residency and personal references to verify your dependability.

It’s important to note that eligibility criteria and required documentation may vary between lenders, so it’s recommended to inquire directly with lenders offering DACA loans to understand their specific requirements and application process.

Additionally, working with lenders experienced in serving DACA recipients may help streamline the process and ensure you receive accurate guidance throughout the loan application process.

HUD DACA Mortgage Guidelines on Benefits For DREAMERS

The advantages of FHA mortgage lending include low down payment requirements. FHA loans only require a 3.5% down payment with credit scores over 580. Credit scores are down to 500 with a 10% down payment. Low fixed mortgage insurance premiums. Low fixed interest rate options. Manual underwriting is allowed.

Renovation loan available. Higher debt-to-income thresholds (compared to conventional lending). Non-traditional credit can be used versus traditional credit tradelines.

Can I Get Credit with DACA?

Yes, DACA recipients can access credit, though they may face some challenges due to their immigration status. Here are some avenues through which DACA recipients can potentially access credit:

1. Credit Cards: Some credit card issuers may be willing to extend credit to DACA recipients. Secured credit cards, which require a security deposit, may be easier to obtain for individuals with limited credit history or unconventional financial backgrounds.
2. Personal Loans: Some lenders can help DACA recipients obtain personal loans. You’ll typically need to provide proof of your DACA status and income and meet other basic eligibility requirements.
3. Auto Loans: DACA recipients may qualify for auto loans, but lenders may require proof of DACA status, income verification, and higher down payment or interest rates.
4. Mortgages: While obtaining a mortgage as a DACA recipient may be more challenging due to stricter eligibility criteria and potential limitations, some lenders offer mortgage programs specifically tailored to DACA recipients.
5. Credit Unions and Community Banks: Smaller financial institutions like credit unions and community banks may offer better services and more flexibility in assessing DACA recipients’ creditworthiness.
6. Cosigners: Consider finding a US citizen or permanent resident you trust to cosign on your loan or credit card application. A cosigner with good credit can improve your chances of approval and strengthen your application.

DACA recipients need to be proactive in building and maintaining good credit. Paying bills promptly, maintaining low credit card balances, and verifying credit reports for correctness are all important steps for good credit management. Additionally, seeking guidance from financial advisors or organizations specializing in assisting immigrants with financial matters can be beneficial in navigating the complexities of accessing credit with DACA status. Qualify for a DACA loan with low credit scores, contact us

HUD DACA Mortgage Guidelines Versus Overlays

Applying for an FHA loan with Gustan Cho Associates is easy and seamless. Technology has come a long way in the mortgage industry. First, you want to contact us at Gustan Cho Associates. After a mortgage consultation with John Parker, NMLS 124935, you will be paired with a licensed loan officer in your state.

The assigned loan officer from the John Parker Mortgage Team loan will review an application link with you and ask you for the required documentation. You should be prepared to upload things such as bank statements, pay stubs, W-2s, potentially your tax returns, and a driver’s license or a government-issued photo ID.

After completing the application and sending in the required documentation, your loan officer will verify your credit report. This is one of the most important steps in applying for a mortgage. Depending on the severity of your credit report, you will be issued a pre-approval letter, or your loan officer will devise a plan to qualify as soon as possible. Gustan Cho Associates has no lender overlays on DACA FHA loans. We follow the minimum HUD DACA Mortgage Guidelines.

Bad Credit Mortgages For DACA Borrowers

Gustan Cho Associates understand that everybody’s credit is not perfect.  We are experts in low credit score mortgage lending and are here to help. Once you do receive your pre-approval letter, you are now able to go out house shopping. This is an exciting time for you and your family.

Once you select the house you like, you and your realtor will send in an offer. After accepting the offer, you officially start the mortgage lending process. With the right team, this process does not need to be stressful. We are the experts and look forward to helping and guiding you into homeownership.

Start The Qualification and Pre-Approval Process Today 

We are excited to introduce this change to FHA mortgage lending. If you are a dreamer or know anyone who is a dreamer, we would love to answer and help you obtain homeownership.  FHA mortgage lending opens the door for thousands of these dreamers to purchase or refinance a home. We encourage you to reach out to us today with any questions.

The John Parker Mortgage Team at Gustan Cho Associates stays current on the latest mortgage lending guidelines, including adding Dreamer to the list of acceptable borrowers for FHA mortgage lending.

We look forward to helping you and your family buy or refinance your next property. We are available seven days a week to answer any questions. The John Parker Mortgage Team at Gustan Cho Associates looks forward to hearing from you! For more details, please call or text at (800) 900-8569, or email at alex@gustancho.com.

FAQs About HUD DACA Mortgage Guidelines For DREAMERS on FHA Loans

1. What is a DREAMER? DREAMER is a term used for immigrants under the Deferred Action for Childhood Arrivals (DACA) program. These individuals are also known as DACA recipients, and they are United States residents with the legal right to work and live in the country under certain conditions.

2. What is a DACA loan? A DACA loan is a mortgage program specifically designed for DACA recipients. These loans are tailored to accommodate individuals who may face challenges accessing traditional financial services due to their immigration status.

3. How many homebuyers do HUD DACA mortgage guidelines impact? As of 2020, the United States has over 640,000 DACA residents. While this number has decreased over time, many DACA recipients are now eligible for FHA financing following recent changes to HUD guidelines.

4. Why did FHA change to allow DACA recipients to qualify for mortgages? The change was made to clarify eligibility criteria and ensure that DACA recipients are treated equally under FHA lending guidelines. This decision was one of the Trump administration’s last actions before the change occurred.

5. What are the eligibility requirements for DREAMERS to qualify for FHA loans? Certain criteria must be met to qualify for an FHA loan as a DACA borrower. These include having a valid Social Security number, being eligible to work in the United States, and meeting standard FHA guidelines for residency and creditworthiness.

6. Can DACA recipients access credit? DACA recipients may encounter obstacles when attempting to access credit, but they can do so. Credit cards, personal loans, auto loans, and mortgages are all potential options.

7. How can I apply for an FHA loan with Gustan Cho Associates? Schedule a mortgage consultation to apply for an FHA loan with Gustan Cho Associates. Submit your application and required documentation. Await credit report verification and pre-approval letter.

8. Are there options for DACA borrowers with bad credit? Yes, Gustan Cho Associates specializes in low credit score mortgage lending and can help DACA borrowers with less-than-perfect credit obtain financing for homeownership.

9. How can I start the qualification and pre-approval process for an FHA loan? You can start the qualification and pre-approval process by contacting Gustan Cho Associates. Their team is available seven days a week to answer any questions and guide you through obtaining an FHA loan as a DACA borrower.