HUD DACA Mortgage Guidelines

HUD DACA Mortgage Guidelines For DREAMERS on FHA Loans

Gustan Cho Associates are mortgage brokers licensed in 48 states

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

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What is a dreamer? Dreamer is the slang term for immigrants under the Deferred Action for Childhood Arrivals or DACA program. DACA recipients are commonly referred to as dreamers in modern culture.  Dreamers are residents of the United States who, like any American, should have the right to be U.S. citizens.

DACA recipients are often referred to as DREAMERS. Dreamers are legally permitted to work in the United States. DACA recipients can work and live in the United States without getting deported.

Many Dreamers were born and educated in the United States—the only difference between DACA recipients and U.S. citizens is their parents are not documented, immigrants. DREAMERS can now become eligible for a mortgage loan and purchase a home. DACA status applies to undocumented immigrants who arrived in the United States before their 16th birthday and were under 31 when the DACA program went into effect on June 15, 2012.

How Many Homebuyers Do HUD DACA Mortgage Guidelines Impact

According to USAFACTS.ORG, there are over 640,000 DACA residents in the United States as of 2020. This number is lower now than under the Obama administration; however, many of the older DACA recipients are now legal citizens of the United States, removing them from the DAC totals.

To avoid confusion and provide clarity FHA changed its stance and clarified the definition of “lawful resident.”  This is exciting news. Please click FHA DACA for the official release document. 

Most dreamers come from Mexico and other regions of Central America. After Central America, South Korea has the largest number of DACA recipients, with an estimated 6210.  The majority of DACA recipients live in California, Texas, and Illinois. The states rely heavily on FHA mortgage lending, and this change will help many DACA recipients the opportunity to own a home. 

The Reason HUD Makes Changes

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Why did FHA make the change?  While the exact reason for the change is unclear, this was one of the last actions under the Trump administration before he left office. The announcement clarifies that any DACA recipients are now eligible for mortgages insured by the Federal Housing Administration. A statement from deputy secretary Brian Montgomery stated this notification:

“is the first time since DACA was established in 2012 that makes clear DACA status recipients are eligible to apply provided they need other FHA requirements”.

Before this announcement, DACA and other non-citizens were not eligible for FHA-insured mortgages. On a note released on January 20, 2021, the Federal Housing Administration clarified the confusion about the term “lawful residency.” “Lawful Residency” predates DACA and thus did not anticipate a situation where a borrower may have entered the country legally but be considered lawfully present.

Eligibility Requirements For DREAMERS To Qualify For FHA Loans

HUD DACA Mortgage GuidelinesAll 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.

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.

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HUD DACA Mortgage Guidelines Versus Overlays

HUD DACA Mortgage GuidelinesApplying 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.

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