The Complete Guide to Loans for DACA Recipients
Posted by Frank Gogol
When you are the holder of a DACA, you are probably thinking that your loan approval chances are limited – with every request for a loan that you make always getting declined. This is precisely why most people holding this kind of visa do not even dare to apply for a loan since they believe for sure that it is a complete waste of time.
Fortunately, you should be relieved to find out that this is not always the case. Even as the holder of a DACA, you should be able to get a loan from a wider range – and at great deals as well.
Table of Contents
What Is DACA?
DACA is short for Deferred Action for Childhood Arrivals, and it is a relief provided by the government for children of illegal immigrants, protecting them from being deported out of the United States. These children were brought in when they were minors, practically having no say in the matter – and over time, they have managed to build a life for them in the U.S.
This executive given by Obama allows them to remain in the States, also being granted a worker’s permit, a driver’s license, and a social security card. These DACA holders are also referred to as Dreamers, as most of these immigrants arrive in America by following the American dream for their child. This dream involves building a life through dedication and hard work.
Even with all the hard work, DACA banking is one of the greatest challenges that a DACA recipient can go through. Since not many banks want to give loans to these “high-risk” citizens, it is fairly difficult to receive financing. Thankfully, there are still some options for these people to receive loans.
What Loans Are DACA Recipients Eligible For?
There are several types of loans that DACA holders are eligible for, among which include the following.
There are many DACA holders that have yet to realize that their status does not prevent them from getting a personal loan – even if they have little documentation to bring to the table.
Granted, regular banks will not be as willing to provide DACA loans, considering your risk status – but if you go for alternative lenders, you can get a loan even without the documentation ready. Plus, depending on the lender, the interest rate might not even be that high.
A DACA student is generally not eligible for classic federal aid. But they could still get their hands on some private loans and scholarships, as well as aid provided by their college.
Generally, citizenship is required to get a loan – but alternative loans can still be given. Bear in mind that with the uncertainty of DACA renewals, you will be considered a high-risk borrower. In these cases, the interest rates can get fairly high – something that you will have to make peace with.
DACA holders can also receive financial assistance for their mortgage. Like with personal loans, you do not need to have citizenship in order to apply for a home loan. All you need is a residency status and that will be enough.
Granted, the lenders will have to make sure of your residency status, as well as your ability to pay before they grant you a loan. However, even if you are a non-permanent resident, this should not necessarily be a problem.
Personal Loans for DACA Recipients
The U.S. has some of the best universities in the world, as well as some really great work opportunities – but for most of those opportunities, you will likely need financing. In most cases, DACA recipients can get their hands on a personal loan – provided they look in the right places.
What Is a Personal Loan?
A personal loan is exactly what its name suggests: a loan given for personal reasons. These loans can usually be used to finance anything, from studies to repairs around the house and even the pixie prom dress of your daughter. The beauty of personal loans is that you do not have to give motivation for why you are taking it out.
Are DACA Recipients Eligible for Personal Loans?
Most of the times, yes, DACA recipients are eligible for personal loans – but this will mostly depend on where you are getting the loan from. There are some instances in which you might get the personal loan right away – and other instances in which you may come across some trouble with the approval.
Why It’s Hard for DACA Recipients to Borrow
Many lenders, particularly banks, refrain from offering DACA loans to people they consider a “risk.” With the status of DACA continuously at doubt, there is always the risk that the borrower can be deported due to change of law – making it difficult for banks to recover their money.
Risk factor aside, DACA recipients also do not have the necessary paperwork – and there is also a chance that they do not have a co-signer either. If they apply for a bank loan, there is a high chance that they will be refused – but if they go for an alternative lender, the chances of approval are significantly higher.
DACA Student Loans
As a DACA recipient, you will obviously want to go to university at some point – but with your status, you won’t be able to receive the typical type of financing that most American citizens do. However, hope is not lost.
Can a DACA Student Get a Loan?
When it comes to traditional, “federal” aid, DACA students do not qualify. These students are, after all, considered a risk factor – and they can also leave the country at a moment’s notice. However, they can be eligible for other kinds of loans – albeit less traditional ones.
Can DACA Students Get Financial Aid?
Yes, there is no reason why DACA students should have to pay for college from their own pockets – particularly since college is expensive and not everyone has that kind of funds.
While they may not be eligible for federal aid, they may still go for other types of financial aid for international students (e.g. private scholarships and private loans). The only issue is that since these loans are marked as “alternative,” the interest rates might be rather high. Plus, depending on the case, you might also have to find a cosigner.
DACA Home Loans
As a DACA recipient, if you’ve been living in the United States for quite some time, then there’s a chance that you might want to settle down at some point. Still, with the uncertainty of your status, can you still get a home loan so that you can fulfill your American Dream?
Can DACA Recipients Buy a House?
Yes, there is no reason why you should not be able to get a loan while you are on DACA. Granted, you might not be able to get a traditional bank loan – but there are quite some convenient alternatives that you can go for so that you may get a home loan. For instance, the FHA (Federal Housing Administration) provides financing aid for DACA recipients that wish to purchase a home.
DACA FHA Loan
There are four main requirements for a non-permanent resident to opt for an FHA loan, and they are as follows:
- The property that you are paying with the loan will be your primary residence
- Your SSN needs to be valid
- You have met all the other general requirements (e.g. the terms and conditions) of all the other U.S. citizens.
- You have brought proof of EAD (Employment Authorization Document) from USCIS (U.S. Citizenship and Immigration Services), which shows that you have permission to work in the U.S.
Conventional Loans for DACA
As a DACA recipient, you may also go for conventional loans given by private lenders. These loans generally do not require as much documentation – and even if you are considered a risk factor, you should not be denied a loan. The only issue here is that you will likely have a higher interest rate and a minimum 650 credit score.
Documents for a DACA Mortgage
There are three documents that you will need in order to apply for a DACA mortgage:
- Your social security number
- Your previously expired EAD card (Lenders will generally assume that USCIS will renew your DACA status)
- Your current EAD card issued by USCIS
You will also have to provide documents proving that you have stable income, as well as an account balance that says you have enough money to buy a home.
As a DACA recipient, you should still be eligible to get your hands on DACA loans – but you will need to know where to look. Considering the risk factor, there is a low chance that you’ll get that aid from a balk – which is why you have to get creative with your research.