We are closing a loan this week for a hard-working young man who wanted to buy a home for his family. He did a ton of Research, and had many great questions. But, he started with, “Can a DACA Buy A House in NC?” Which kind of blew us away, because I’d always assumed everyone understood how this worked, and I quickly realized that there are many “urban legends” about buying a house as a DACA “Dreamer.”
Clearly, since I started with the statement that we are closing his mortgage on Friday – it CAN be done. I’m going to share the vague details of what worked in his situation.
DACA Buy A House in NC
He got a Work Visa at the age of 16, and then received a social security number. The Work Visa must be renewed every 4 years. He renewed his Work Visa at 20, and immediately contacted us to qualify to buy a house. This is important, because most Banks want to see the ability for income to continue for at least 3 years.
FHA will close on a house for someone with DACA with at least one renewal. Conventional Loans for DACA recipients can be obtained with no renewals and can be done with assistance programs too. For purposes of this Post, we are ONLY discussing the FHA Loan Program requirements for a DACA to buy a house in NC.
If you have a 4 year Work Visa, you would want to have at least 3 years left on the Visa. Is that mandatory? NO. But if you read the stuff I write about, I’m trying to tell you the way we see folks getting approved, which does not always strictly follow the standard mortgage loan guidelines. Those Guidelines read:
“The borrower is eligible to work in the United States as evidenced by an Employment Authorization Document (EAD) issued by BCIS. If the authorization for temporary residency status will expire within one year, please refer to the guidelines set forth in the 4155.1 for guidance.”
INCOME: DACA Buy A House in NC
Documented income is the first thing we need to qualify you for a mortgage. This DACA borrower worked full-time for 2 non-profits for the last 2 years, so we were able to count both incomes to qualify him. If he was only working one job, at a low paying non-profit, he probably wouldn’t have the income to qualify to buy a house as large as he wanted for his family. If you are working multiple jobs, we will need history for at least 2 years. We have made loans to folks who worked 3 part-time jobs. It can be done, we just need the work history – and tax returns showing that you claim all of the income.
If you received bonuses, tips, commissions over time – any kind of variable pay, we will need a 2 year history of that income as well. We will also need to know if you write-off any UN-reimbursed business expenses on your taxes. The most difficult of these kinds of incomes to get through to Underwriting are Nurses that work varying schedules and different pay scales, and truck drivers who count mileage – but we’ve done many loans for both of these professions. We just need a ton of paperwork.
What if you’ve just gotten out of school as a Technician, and you are now working full-time as a Technician (could be any full-time, W2 job), do you still need 2 years of Work History? No. If we are qualifying you on your full-time job and you have a social security number, are W2 employed, and have a work Visa, you will need your first pay stub, that’s all… meaning you could be working there for one month, and it could work.
Down Payment: DACA Buy A House in NC
This borrower initially contacted us to see, “Can a DACA Buy A House using the USDA Home Loan Program?” The reason they wanted to know is that USDA Home Loans do not require any down payment. Unfortunately, USDA is not an option for a DACA – however, FHA is a great program that works
His mom and dad just sold their mobile home, and received several thousand dollars, which he could use as a gift. FHA allows gift funds for the 3.5% down payment. It must be documented funds.
**It occurs to me that when I’m saying “documented,” it makes it sound like the guideline is just for the DACAs, it’s not just for you. We have to document down payment for everyone. Same thing with the Income Requirements, these are standard documentation requests we have for ALL borrowers. Additionally, I want to apologize for continuing to use the “Term” DACA. I’m intentionally doing this to get Google’s Attention, and for no other reason. I want folks searching on the Internet to get the good news!
We’ve had folks come to us who just “happen to have” 3 or 4 thousand dollars. If that’s the case, and you are wanting to make a cash deposit on a home, we need for it to be “seasoned” in a bank account. Generally they need to be on deposit for at least 2 months before you apply for a mortgage.
Clearly there’s no law that says money must be in a bank – but there is (literally in NC) a law that says I have to document where the money for your down payment and deposit come from. It’s literally the hardest part of our job. Money that is in a safe in your house does not qualify as money I can count for down payment. A Money Order doesn’t work either. IF you give a Seller a Money Order, I have to know where the money for the Money Order came from…
GOOD NEWS FOR DOWN PAYMENT
What if you don’t have a stash of cash saved up to buy a house? GREAT NEWS! The NC Housing and Finance Agency has Down Payment Assistance available for you! That’s right with a Work Visa, a Social Security and income that is under their income caps, they will provide a 3% or a 5% down payment assistance, forgivable loan to you!
There’s no interest on the loan, there are no payments. If you live in the house for 15 years, it is fully forgiven. Otherwise, if you sell your home in the first 10 years, you pay it back with the sale of the home. Between years 11 and 15, it will be partially forgiven. This is available through any of the Lenders who are approved to do loans with NCHFA, we are one of the top lenders, and close many loans with them.
The minimum credit score for this program is 640. The mortgage rates on this program is set by NCHFA, and the rates are higher than other “typical” programs… but they are paying for your down payment.
**NC Housing has a new program coming out at the end of the first quarter. It has a component, similar to the USDA Home Loan Guidelines, that will prohibit us from qualifying a DACA to Buy A House with that other program. So, it’s just the 3% and 5% down payment program that will qualify for down payment assistance in NC. There are Housing and Finance agencies all across the country. If you want to buy a house that is not in NC, leave a comment and I’ll help recommend who you should talk to you in your state.
Credit Scores: DACA Buy A House in NC
With a FHA Loan, Credit is pretty flexible. Because there are so many options with a FHA Underwriter and how they might look at your loan, I’m going to try to break this down into Credit Score “Buckets.”
NO Credit Score: If you are a DACA with no credit score, we might be able to make you a loan IF we can document 12 months of one time rent. We will need, for instance copies of cancelled checks. So if you don’t pay rent, or you pay in cash, that could be a problem. We will also need 2 other non-traditional credit sources. So for instance, if you’ve been paying your cell phone, car insurance, health insurance, day care – something on a regular basis for 12 months, we can likely count it. You will have a Manually underwritten loan, so the mortgage rates will be slightly higher. You will not qualify for down payment assistance.
ONE Credit Score: IF the credit is at least 2 years old, and the payments are all on time, it’s possible that the Automated system will approve your loan. This will get you better rates. IF you do not have Automated Approval, then you will be subject to the rules above for No Score. Either way, with only one score, even if it’s over 640, you will not qualify for down payment assistance.
TWO Credit Scores: If your 2 credit scores are over 640, you will qualify for NC Housing Down Payment Assistance. If the scores are at 600 to 640 we might still be able to get an Automated approval, but you will need to make your own down payment… if not, you are looking at Manual Underwriting Guidelines in the No Score bucket above.
THREE Scores Over 640: You will likely get an Automated Approval. If you have the down payment yourself, you can get the very best mortgage rates. If you need the down payment assistance, you can get that too!
THREE Scores Under 640: If your loan does not get approved through the Automated Underwriting Approval System (AUS) then there are specific guidelines for approving a loan with a lower credit score. They are pretty tight, but we DO approve Manual Underwritten loans for folks with less than perfect credit.
There are some amazingly complex things that can be done to raise credit scores. Here’s my suggestion. If you are in this process of figuring out how to buy a house in NC, don’t worry too much about credit… just call us. The scores that you see on Credit Karma are not the same as the ones we use for mortgage lending – so let us help you with part of buying a house.
Student Loans: DACA Buy A House in NC
No doubt, one of the legacy points for the Current DACA millennial, is Student Loan Debt. IBR Payments and PAYE Student Loan Payments must be calculated by FHA Home Loan Underwriters as 1% of the Balance owed. If we can establish a NON IBR payment, we can count the ACTUAL payment on ALL Student Loans in qualifying a borrower for a mortgage.
I’m going to say that again…if we can establish the payment amount that is from a LEVEL payment plan (so higher than any IBR payment), we can count the actual payment, and not the 1%.
However, if we can NOT establish a payment that is a NON IBR payment, then we will be required to count a payment of 1% of the balance owed for all FHA and USDA Home Loans.
If you are asking, “Can a DACA Buy A House in NC?” The Answer is YES! Is it as simple as it should be? NO. We believe in Dreamers, and we want to see you fulfill your Dreams of Home Ownership. We specialize our Mortgage Practice with first time home buyers. We would be honored to help you. Please call Steve and Eleanor Thorne 919 649 5058.