Are you an undocumented immigrant hoping to purchase a home in the United States? Yes? Then you may have probably wondered if you qualify for an FHA loan.
While many immigrants believe that they are ineligible for home loans due to their status, the truth is that there are options available.
But even more important, it’s essential to understand the requirements and limitations of applying for an FHA loan as an illegal immigrant before beginning the process.
In this article, we’ll delve into the details and answer the question and explore the qualifications, the challenges you may face, and the potential options available to help make your dream of homeownership a reality.
So, if you’re ready, let’s dive in!
What are FHA Loans?
Before deep-diving, let’s make sure you understand what FHA loans are.
FHA loans are a type of mortgage that is backed by the Federal Housing Administration to allow you to buy a home with a lower down payment and lower credit score than a conventional loan.
There are also various types available to you depending on your needs, such as home refinancing or home financing and renovation with the FHA 203k loans.
FHA loans also have more flexible requirements for income, debt-to-income ratio, and employment history and can be a great option for those looking to become homeowners, especially if you have limited funds for a down payment.
Can a Non-Permanent Resident Get an FHA Loan?
FHA loans are popular among homebuyers since they offer low down payments and more lenient credit requirements than conventional loans.
They come with specific requirements that determine your eligibility and how much you qualify for. One of those requirements is that the borrower must be a permanent resident or a US citizen.
Still, some cases exist where non-permanent residents may qualify for an FHA loan. Here are the exceptions.
- Non-permanent residents with valid Social Security numbers and legally allowed to work in the United States may qualify for an FHA loan.
- Persons who aren’t US citizens but are in the US on a valid visa and are married to a US citizen or permanent resident may qualify for an FHA loan.
- Persons who aren’t US citizens but are in the US on a valid visa and have lived in the United States for at least two years may qualify for an FHA loan.
Can a Permanent Resident Get an FHA Loan?
Yes, a permanent resident can get an FHA loan, provided they meet all the requirements.
To qualify for FHA loans as a permanent resident, you ought to:
- Be of legal age to get a mortgage in the state where the home is located.
- Have a valid green card or evidence of legal permanent residency.
- Have a valid SSN (Social Security Number).
If you are looking to purchase a house in any of these areas, we are available to guide you through the process from start to finish to make the journey as smooth and seamless as possible.
What Are the FHA Loan Requirements for Non-Citizens?
Here are the requirements for getting an FHA loan if you’re a non-citizen
- Credit rating: You must have a credit rating of at least 580 to qualify for an FHA loan. Still, some lenders may require a higher credit rating.
- DTI ratio: You must meet the same DTI ratio requirements as US citizens. This means the total debt you owe monthly, including the mortgage payment, cannot exceed a specific proportion of your income.
- Occupation verification: You must provide occupation verification to prove your income and ability to repay the loan. This includes a two-year work history in the same line of work, as well as pay stubs and tax returns.
- Residency status: You must have valid residency status in the US, including permanent resident status or a valid work visa.
- SSN (Social Security Number): When applying for an FHA loan, you must have a valid social security number; otherwise, qualification won’t be possible.
Can a Foreign National Get an FHA Loan?
If you’re a foreign national but not a permanent US citizen, you don’t qualify for an FHA loan. Why? Because FHA loans require you to have a valid Social Security Number or other proof of legal residency, which you might not have yet.
But there are some exceptions to this rule. For instance, if you have a valid work visa or other documentation that allows you to work in the United States legally, you may qualify for an FHA loan.
To qualify for an FHA loan as a foreign national, you must also meet the same FHA qualification requirements as US citizens and permanent residents. This includes having:
- a DTI (debt-to-income) ratio that meets FHA guidelines.
- a good credit score.
- a stable employment history.
Frequently Asked Questions
Can a DACA recipient get an FHA loan?
DACA recipients are not considered lawful permanent residents and are not eligible for FHA loans. But, there have been recent changes in FHA guidelines that may allow you as a DACA recipient to get an FHA loan.In 2019, the FHA issued a new policy that allows DACA recipients to apply for FHA loans if they meet specific requirements. Under the new policy, you may qualify for FHA loans as a DACA recipient if you meet the following criteria:
- You must have an EAD (Employment Authorization Document) issued by the USCIS and a valid Social Security Number.
- You must meet the same credit, DTI ratio, and income qualifications as United States citizens and other eligible non-citizens.
- You must present a two-year history of residency in the US.
How can I qualify for an FHA loan as a non-citizen?
Here are some tips to help you qualify for an FHA loan as a non-citizen:
- Confirm your legal status: To qualify for an FHA loan, you must have legal status in the US. This means you should have the necessary documents to prove your legal statuses, such as a green card or a visa. If you’re unsure of your legal status, check with the USCIS (Citizenship and Immigration Services) portal.
- Have a steady income: FHA lenders require a steady income to ensure you can repay the loan. As a non-citizen, you will need to provide proof of income, such as bank statements and tax returns.
- Meet the credit rating requirements: To qualify for an FHA loan, you need a credit rating of at least 580. But you may still qualify for an FHA loan even if your credit rating is under 580, but you will need to make a substantial down payment of at least 10%.
What are the options for financing a home purchase for undocumented immigrants?
Here are some possible ways to finance a home as an undocumented immigrant:
- An FHA loan with an eligible co-signer: Although you don’t qualify for an FHA loan as an undocumented immigrant, you may get the loan if you find an eligible co-signer (a permanent resident or a United States citizen).
- Non-QM (Non-qualified mortgage) loans: These are loans that don’t meet the standards set by Fannie Mae or Freddie Mac. As a result, they may have more lenient qualification requirements that allow you to apply.
- Non-Profit Lenders: Some non-profit lenders offer loans to low-income families and first-time homebuyers, including undocumented immigrants.
- Private loans: Some private lenders may offer loans to undocumented immigrants but may require a significant down payment and higher interest rates.
- State and local programs: Some states and local governments offer programs to help undocumented immigrants access affordable housing.
Final Thoughts
While as an undocumented immigrant, you don’t typically qualify for an FHA loan due to your lack of legal status in the United States, other financing options are available if you wish to purchase a home.
Give us a call and we can explain all other home financing options available to you as an undocumented immigrant. We’ll ensure you have a stress-free home-buying process.
