DACA Recipients Are Now Eligible For FHA Loans

The U.S. Department of Housing and Urban Development (HUD) has announced that the Federal Housing Administration (FHA) will once again back mortgages for immigrants under the Deferred Action for Childhood Arrivals (DACA) program.

HUD said DACA recipients who are legally permitted to work in the U.S. are eligible to apply for mortgages backed by the FHA.

“Earlier today and prior to 12:00 p.m., Secretary Carson and I posted a waiver and other documents to the HUD website that makes clear DACA status recipients are now eligible to apply for mortgages insured by the Federal Housing Administration,” former HUD Deputy Secretary Brian Montgomery announced. “This notification marks the first time since DACA was established in 2012 that makes clear DACA status recipients are eligible to apply provided they meet other FHA requirements.”

FHA’s Single Family Housing Handbook included the following statement: “Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.” This language was incorporated into the FHA Handbook by the Obama Administration in September 2015, although it was first incorporated into FHA guidelines in 2003.

“Determination of citizenship and immigration status is not the responsibility of HUD and the Department relies on other government agencies for this information,” HUD Assistant Secretary for Congressional and Intergovernmental Relations Len Wolfson said, “Accordingly, because DACA does not confer lawful status, DACA recipients remain ineligible for FHA loans.”

Then in 2020, former HUD Secretary Ben Carson retracted those remarks, saying no changes were made and that he would cooperate with an investigation to look into that rule.

Now, HUD is officially backing DACA mortgages once again.

“To avoid confusion and provide needed clarity to HUD’s lending partners, FHA is waiving the above referenced FHA Handbook subsection in its entirety,” The HUD announced. “In a subsequent update to the FHA Handbook the language will be removed.”

The following FHA requirements will remain in effect for all potential borrowers including DACA status recipients:

• The property will be the borrower’s principal residence
• The borrower has a valid Social Security Number, except for those employed by the World Bank, a foreign embassy or equivalent employer identified by HUD
• The borrower is eligible to work in the U.S., as evidenced by the Employment Authorization Document issued by the USCIS
• The borrower satisfies the same requirements, terms and conditions as those for U.S. citizens

This is a landmark decision that will shape homeownership across the United States.