The U.S. Department of Housing and Urban Development (HUD) has announced that individuals classified under DACA — the Deferred Action for Childhood Arrivals program — are now eligible to apply for mortgages backed by the Federal Housing Administration (FHA).
The announcement clarifies the ambiguity as to whether DACA recipients, sometimes known as “Dreamers” after the related, unpassed DREAM Act legislation, qualified for FHA loans. HUD originally explained via a June 2019 letter to Rep. Pete Aguilar, D-Calif., that DACA recipients were ineligible for FHA loans. HUD pointed to language in the FHA Single-Family Housing Handbook that said that “non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages,” a statement that was incorporated into FHA guidelines in 2003 and codified in the FHA Handbook in 2015.
The term “lawful residency,” however, pre-dates DACA, which was established in 2012. DACA recipiency is granted to undocumented individuals brought illegally into the United States before they were 16; prior to DACA, there was no precedent for the FHA determining if an individual who is considered legally present even though they entered the country illegally falls under the umbrella of lawful residency.
Because DACA “does not confer lawful status,” HUD said in the letter to Rep. Aguilar, DACA recipients were ineligible for FHA-backed mortgages. But one year later, former HUD secretary Ben Carson told Congress that he supported the FHA loan eligibility of DACA recipients, further muddying the clarity of their admissibility.
HUD’s new announcement essentially clears away that nebulousness by waiving the subsection in the FHA Handbook containing the sentence on lawful residency. It also pledges that the language will be completely removed in a subsequent update to the handbook.
Other FHA requirements remain in place for all potential borrowers of FHA loans, including DACA recipients. This means that DACA recipients applying for FHA mortgages must still conform to other FHA loan requirements, including the purchase of a property as a principal residence, proof of a valid Social Security Number and work eligibility via an Employment Authorization Document issued by U.S. Citizenship and Immigration Services.