By Adam Luehrs
For millions of people, owning their own home is a crucial part of the American Dream. Not only does owning a home allow people to build wealth through home equity, but there are also tax breaks available for home buyers.
For generations, immigrants who may have entered the United States illegally have been prevented from buying property. Primarily because they don’t have Social Security numbers, immigrants have struggled to gain access to the financial resources they need to make home ownership a reality.
However, a change made on January 19, 2021 by the Trump administration has opened the door for DACA recipients, often referred to as “Dreamers,” to get Federal Housing Administration loans to help in their pursuit of home ownership.
What is DACA?
DACA, or Deferred Action for Children Arrivals, is the term used in a bill signed by President Obama in 2012 to describe children who were brought into the United States illegally by their parents. While previous versions of the immigration law viewed these children as illegal immigrants, DACA created the opportunity for them to obtain legal US citizenship even though they were brought into the United States illegally.
What is an FHA Loan?
FHA loans are the most common type of loan used by first-time home buyers. Primarily because of their lower credit score requirements, down payments and more, many first-time home buyers choose FHA loans. Borrowers with a credit score of 580 can often get approved for a mortgage while only paying a 3.5% down payment under FHA requirements.
The Old Law
Under old FHA regulations, borrowers had to provide a Social Security number to be eligible to receive a mortgage at these favorable rates. That requirement automatically eliminated potential borrowers who had been brought into the United States illegally by parents who didn’t file the necessary paperwork to obtain citizenship themselves. In 2003, the officials who oversee the FHA program ruled that anyone who could not provide valid proof of legal US residency was ineligible to apply for FHA loans.
The New Law
The order signed last month lifted these restrictions and opened the door for Dreamers to apply for such loans. Instead of requiring social security numbers, the recently signed bill allows for DACA recipients to use a tax ID number on their loan application.
The United States Department of Housing and Urban Development supported the change, primarily because they “did not accept a situation in which a borrower might not have entered the country legally, but nevertheless be considered lawfully present.” Ultimately, the old FHA requirements were not updated when the immigration laws that created a path for citizenship through DACA were instituted.
Sen. Sherrod Brown, the chairman of the Banking, Housing and Urban Affairs Committee, welcomed the change.
“After spending years confusing borrowers and lenders, at the eleventh hour the Trump Administration finally reversed its discriminatory policy and confirmed what we all know should have been true all along – that DACA recipients are fully eligible for FHA loans,” Brown said. “This should never have been in question, and I look forward to working with the Biden Administration to make sure all aspiring borrowers, including DACA recipients, can access homeownership.”
Nationwide Mortgage Bankers and its Hispanic market subsidiary Americasa quickly announced it was eager to provide FHA Mortgages to DACA borrowers.
“FHA loans, with their modest credit requirements and 3.5% down payment minimum, have been helping families achieve the dream of homeownership for decades,” NMB President Jodi Hall said. “To be able to offer this product to our Dreamers all across the United States makes us extremely proud of our country and our craft.”