03 Jul Getting a Personal Loan or Mortgage on DACA
The future for DACA holders (Dreamers) is still uncertain since Donald Trump took up the office of President of the United States. There’s about on whether Dreamers are eligible for loans and what the processes are to apply for loans for these non-permanent residents. As long as DACA remains, though, Dreamers can still get loans.
What is DACA?
DACA is short for Deferred Action for Childhood Arrivals.
The DACA program, established in 2012 under the Obama administration, is a relief program that gives certain undocumented youth who came into the U.S. as children (“childhood arrivals”), protection from deportation. It also has other benefits like:
- allowing DACA holders to have a social security card,
- a driver’s license,
- and a work permit.
“Dreamers” is a term used to describe those who fall within the DACA category.
DACA: The Latest News
During his first year as President of the U.S., Donald Trump decided to terminate DACA. This announcement was made on September 5, 2017.
On January 9, 2018, the matter was taken to court and the court ruled that Trump’s decision to end DACA was unlawful.
In April 2018, the court again ruled that DACA applications and renewals must stay open and the Trump administration was given 90 days to explain its decision to terminate the DACA program. Presently, DACA remains, but its future is uncertain.
What are DACA Holders Eligible for?
Dreamers are not eligible for much due to the uncertain future of the DACA program. This means that some of the benefits Dreamers received under DACA might be in jeopardy.
Dreamers may find it hard to apply for loans. Some of the reasons lenders are hesitant to grant loans to dreamers are:
- DACA students might be losing their financial aid to study, which means an end to their education in the U.S. and possibility of earning money to pay back their loans.
- The fact that DACA holders might be deported means there is a risk that loans granted will not be paid back if Dreamers have to leave the U.S.
Fortunately, there are still ways for DACA holders to get DACA loans and other funding.
Private Scholarships for Latinos
Since most of the illegal immigration issues in the U.S. relate to the Latino community, there are a wide variety of scholarships throughout the U.S. to help Latinos finish school. The common requirement among these scholarships is a GPA of 3.0. There are scholarships that use factors such as the field of study and extracurricular activities as a basis to grant scholarships.
Private Online Lenders
Some lenders look beyond the DACA uncertainty, if it is evident that you are a good applicant. Online lenders such as Stilt, provide a lending platform that offers loans to DACA and other immigrants.
Peer-to-peer lending gives you the option to borrow money from other people rather than getting it from formal institutions. An online platform plays matchmaker with what the lenders are willing to give and what the borrowers are willing to accept. As some lenders on these platforms are willing to look beyond a credit score and DACA status, this is definitely an option if you need a DACA loan.
Credit unions are nonprofit organizations that consist of members representing a certain class of people. There are many credit unions throughout the U.S. that give DACA loans.
Due to the uncertainty surrounding DACA, this will definitely be the most difficult option, but not an impossible one.
Can You Get a Personal Loan on DACA?
Some institutions like Self-Help Federal Credit Union, BB&T (Branch Banking and Trust Company) and the Dane County Credit Union offer specific personal loans for DACA holders. You’ll find more information about this below.
Can You Get a Mortgage on DACA?
Yes! As with personal loans, being a U.S. citizen is not a requirement to be eligible to apply for a mortgage. Just having residency status can be enough. Lenders will have to determine your residency status before they grant you a loan, but if you are a non-permanent resident this won’t be a problem.
The FHA (Federal Housing Administration) provides financing for DACA holders who want to buy a home. The requirements for eligibility are set out below.
Top Personal Loans for DACA Holders
There are various loans that DACA holders might be for. Lenders like Stilt, SoFi, and LendingClub provide personal loans to various forms of non-permanent residents. Other institutions like Self-Help Federal Credit Union, BB&T and the Dane County Credit Union focus specifically on DACA holders.
With Stilt, the requirement for a DACA loan is to be employed and have a U.S. bank account. Loan amounts vary between $2,000 and $50,000 for terms of 1, 2 or 3 years.
LendingClub requires applicants to be 18 years or older with a verifiable bank account.
They provide loans between $1,000 and $40,000 for terms between 3 and 5 years.
SoFi requires applicants to be 18 years or older with a verifiable bank account and requires good to excellent credit score. Loan amount varies between $5,000 and $100,000 for terms 3, 5 or 7 years.
Self-Help Federal Credit Union
Self-Help Federal Credit Union provides a DACA loan with no application fees and a 0% interest rate. This is a great option to cover the cost of the DACA renewal application. You will have to become a member of the credit union, but this membership also has other benefits like access to other financial services.
Loans are provided for up to 12 months for amounts between $465 and $800.
Dane County Credit Union
Dane County Credit Union gives loans specifically for the DACA renewal application. Applicants don’t need to have a credit history and there is no application fee. The loan can be paid back over a period of 6 months and the maximum loan amount is equal to the DACA renewal application fee.
This credit union also requires membership to provide the loan and proof of income. If you are under 18 years old, your parents or cosigner can apply with you.
How to Get a Mortgage on DACA
The four basic requirements for non-permanent residents to apply for FHA loans are:
- The property you need a loan for will be your primary residence
- You have a valid SSN
- Proof of an Employment Authorization Document (EAD) issued by the U.S. Citizenship and Immigration Services (USCIS) permitting you to work in the U.S, and
- You meet all the other general requirements (such as terms and conditions) that apply to U.S. citizens.
The Validation and Documentation of Each SSN
Lenders giving loans to non-permanent residents are required to validate and document an SSN for each borrower on the mortgage by:
- Using the FHA Connection to input the borrower’s name, date of birth and SSN.
- Inspecting documents such as the borrower’s original payslips, W-2 forms, valid tax returns directly from the Internal Revenue Service or any other documents used to underwrite the mortgage.
- Resolving inconsistencies during the process and reviewing multiple SSNs for individual borrowers with the Social Security Administration (SSA).
Other Requirements Related to Your EAD
If your EAD will expire within 1 year and there is a history of the existence of prior residency status renewals, lenders can assume continued employment beyond the expiry of the EAD.
If there no prior renewals exist, the lender must then determine whether the likelihood of a renewal exists on the information from the USCIS.
Just because you’re in the U.S. on DACA doesn’t mean you can’t get a mortgage or a loan. There are hurdles you’ll need to jump, sure, but armed with the information above, you’ll have a much eaiser time securing a home or education loan.