The DACA (Deferred Action for Childhood Arrivals) is a program designed to protect individuals who were brought to the U.S. as minors from deportation, allowing them to stay in the country legally. DACA recipients, often referred to as “Dreamers,” enjoy more protections than other undocumented individuals. But is the American dream of home ownership open to DACA recipients?

Yes, DACA recipients may purchase homes and obtain mortgages. However, the process can be more challenging compared to U.S. citizens or permanent residents. As with many potential homeowners, saving for the down payment can be a hurdle. Some DACA recipients may additionally have limited financial histories, potentially impacting their ability to secure a mortgage.

DACA recipients may struggle to achieve their dream of homeownership, despite their legal status. Fortunately, there are resources available to help them navigate the challenges associated with buying a home.

DACA recipients seeking to purchase a home may benefit from understanding the process of buying a home, the history of the DACA program, the challenges they face in the home-buying process, and the available loan options and assistance programs.

The History of DACA

DACA was established in 2012 to protect individuals brought to the U.S. as children from deportation. As of 2022, there were over 580,000 DACA recipients. Despite its existence, there is no established path to permanent citizenship for DACA recipients, despite numerous legal efforts.

DACA Status Supports Home Ownership

DACA status allows recipients to apply for a Social Security number, opening up various opportunities, including homeownership. 

DACA Home Buying Loan Options

DACA recipients may access government and lender assistance programs to overcome financial barriers, particularly for down payments. DACA FHA Loans offer lower down payment requirements at 3.5% at certain credit rating levels, compared to 5% for conventional mortgages. DACA recipients can qualify for FHA loans by meeting specific criteria, including having a Social Security number, using the home that is being purchased as their primary residence, and being eligible to work in the U.S. FHA loans have a lower minimum credit score requirement of 500, with a 10% down payment required for scores between 500 and 579.

The FHA loan program has stringent home inspection requirements. While a conventional loan or a cash purchase may allow for fixer-upper home purchases, homes that need work are less likely to be approved by the FHA program.

The Fannie Mae HomeReady Loan is available for low-income borrowers and DACA recipients, allowing a down payment as low as 3%. Eligibility depends on income limits based on the area’s median income. To qualify, DACA recipients need a Social Security number or Individual Taxpayer Identification Number, documented immigrant status, and income within 80% of the area’s median income.

Conventional loans from banks or large institutional lenders typically require a 5 percent or greater down payment and a higher credit score of 620. 

Documentation Requirements for Loan Qualifications 

Just as any future homeowner seeking a home loan needs to prepare documentation, DACA recipients looking to purchase a home must do the same – with a few additional steps. This includes providing:

• Proof of DACA status, often via the Employment Authorization Document (EAD) issued by the United States Citizenship and Immigration Services.
• Proof of identification, such as a driver’s license, to verify identity.
• Bank statements spanning several months, a requirement by most mortgage lenders.
• Employment verification, typically through pay stubs or a company letter confirming current employment.
• Tax returns, especially for self-employed individuals, to demonstrate business income over two years.

Determining your maximum monthly housing payment, which encompasses mortgage, property taxes, and homeowners insurance, is a preliminary step a loan expert can help you discern. Additionally, accounting for monthly maintenance expenses and utility fees, which could surpass current rental costs, is important so your family can keep up loan payments without additional hardship.

Seek an Experienced, Local Real Estate Agent

Ideally, it is helpful to choose an agent experienced in assisting DACA recipients and familiar with relevant home-buying programs. An agent frequently will be able to refer you to home loan experts, as well.

Gain Pre-Approval for a Loan Before House Hunting

Prior to house hunting, secure preapproval for a mortgage to determine how much of a home you can purchase. This will simplify the process and increase the likelihood of your offer being accepted, as sellers are reassured that financing won’t be an obstacle. In many cases, agents will not even review offers from potential buyers without pre-approval or proof of financing in hand. 

Make an Offer and Get Inspections Done

The general rule is that sellers are supposed to disclose information, and buyers are supposed to inspect the home thoroughly. This may include a pest inspection, a roof inspection, and an overall home inspection. If you discover issues that were not disclosed, or that are worse than the disclosures indicate, your agent may be able to negotiate on your behalf to repair or credit you with repair costs before closing.

Closing on your home typically happens about a month after the seller has accepted your offer. Please refer to loan experts for timelines in the event you choose an FHA loan, as the timeline for these loans can be longer than a conventional loan. During this stage, you’ll be required to make your down payment.

Once the home purchase is finalized, you have the flexibility to either move in right away or take your time for personal touches like painting or repairs.

There are several organizations committed to aiding DACA recipients, including housing assistance. Some of these organizations are highlighted below, but it’s also recommended to explore local options.

Immigrant Legal Resource Center

The Immigrant Legal Resource Center connects immigrants with lawyers when required and educates them about their legal rights. They are also involved in advocating for more favorable immigration laws.

United We Dream

United We Dream provides support to undocumented and documented immigrants. DACA recipients can seek assistance in renewing their Dreamer status, and the organization actively advocates for improved immigration policies benefiting all immigrants.

National Association of Latino Community Asset Builders

Latino DACA recipients aspiring to launch or manage their businesses can apply for small-business grants through the National Association of Latino Community Asset Builders. This group is also dedicated to supporting affordable housing and providing loans to Latino business owners.

National Immigration Law Center

DACA recipients in need of legal guidance can turn to the National Immigration Law Center. This organization not only offers legal support but also advocates for immigrant rights.

Contact Our Firm If You’re an Immigrant Seeking Legal Assistance in Connecticut

An immigration attorney in Connecticut can help you understand your rights in the USA. Book a consultation with the Law Offices of James A. Welcome at (475) 241-0824 to learn more.