DACA recipients again eligible for popular FHA loans

It just got easier and more affordable for Dreamers to buy a home.

Recipients of the federal DACA program, known as Dreamers, can once again apply for FHA loans, according to the Federal Housing Administration. 

The program was closed to recipients for three years under the Trump administration. Recently, the FHA reversed that decision. That means Dreamers can access the popular first-time home buyer program that offers a lower down payment than most conventional loans. 

“It’s very exciting. It’s a way that a lot of immigrant families start their American Dream,” said Jose Patiño, a Dreamer and the director of education and advocacy for the nonprofit Aliento that aids and advocates for Dreamers and undocumented youth in Arizona. 

A former loan officer, Patiño said being accepted into DACA allows young adults to obtain credit cards and build credit and that an FHA loan is one of the few ways for immigrants to build wealth. 

“It’s the first step to be able to build wealth, so it’s such an important opportunity that people are going to be able to have now,” said Patiño, 32, of Gilbert.   

Before the program was closed in 2018, Patiño and four of his siblings bought homes with an FHA loan and later refinanced them through conventional lenders. His eldest sister recently paid off her loan in full. 

FHA loans offer low down payment, modest credit requirements

FHA loans have some of the least stringent qualifying standards, requiring  a 500 to 580 credit score minimum to qualify. Lenders can also accept up to 50 percent debt-to-income ratios.

FHA loans only require a 3.5 percent minimum down payment, making it easier to purchase a home or property.

DACA recipients must abide by certain rules that come with federally backed loans, including that the home must be their primary residence or, if they purchase a multifamily property, that they must live in one of the units.  

They also must have a valid Social Security card and valid work authorization. 

Home lenders, real estate industry advocates for DACA buyers

For Arizona, the FHA announcement was good news for real estate agents, lenders and others who advocate for Hispanic homeownership and equity in mortgage lending.

Officials from Nationwide Mortgage Bankers and its Hispanic market subsidiary Americasa, said last month that they were “extremely proud of our country” for making home ownership more accessible to DACA recipients. 

Americasa was created in 2019 to provide a team of advisers for the Hispanic community. Since then, the two companies have originated more than one billion dollars in loans for Hispanic clients. 

“Our vision for creating Americasa was to build a mortgage company that lowered the barriers to homeownership for the Hispanic community. Giving Dreamers access to FHA loans gives us a powerful tool to continue driving this important vision,” Richard Steinberg, Founder and Chairman of NMB & Americasa, said in a prepared statement. 

DACA recipients represent large market in Arizona 

DACA recipients also represent a large market in the state. Arizona is one of the five top states for Hispanics and DACA recipients. Currently, there are about 24,000 Dreamers here.

According to research conducted in 2017, approximately 15-20 percent of DACA recipients over 25 years old purchase homes. 

With Dreamers allowed back in the market, Patiño expects to see that  percentage rise with more homebuyers purchasing a first home.  

“A lot of us have really begun and continue on our financial goals with the DACA program,” he said.