New FHA Rule Shuts Out DACA Homebuyers—Here Are 10 Better Options

In 2025, a new FHA rule officially ended loan eligibility for DACA recipients, closing a key path to affordable homeownership.

But that doesn’t mean your dream of buying a home is out of reach.

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This guide breaks down 10 alternative programs and loan options—ranked from best to good—that offer similar benefits and keep the door to homeownership wide open.

The 2025 FHA Policy Change: What You Need to Know

In Title I Letter 490, HUD updated its residency requirements for FHA-insured loans, specifically eliminating eligibility for non-permanent residents—which includes DACA recipients.

This change is part of a broader federal focus on ensuring FHA loans are reserved for U.S. citizens and lawful permanent residents (green card holders).

What does this mean for DACA recipients?

• No more FHA loans for DACA recipients: As of May 25, 2025, if you're under DACA and don't have lawful permanent resident status, you're no longer eligible for FHA-insured loans.

• Proof of lawful permanent residency is required: Lenders must document this on the loan application, with evidence provided by U.S. Citizenship and Immigration Services (USCIS)

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Why FHA Loans Were Once Popular for DACA Buyers

FHA loans have always offered key benefits for first-time buyers and those with limited credit history:

• Low down payment (as low as 3.5%)

• Flexible credit score requirements

• Competitive interest rates

For DACA recipients navigating uncertain legal status, FHA loans once offered a structured and supportive path to homeownership. But now, those benefits are out of reach under current policy.

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10 Other Homebuyer Options for DACA Recipients (Ranked)

Even though FHA loans are no longer available to DACA recipients, other financing paths remain open.

Here are a few alternatives to explore:

1. Earned Equity With FHA Loan Program

Even if you can't qualify for a mortgage today, this program lets you build ownership over time while still benefiting from FHA insurance. Designed for self-employed buyers and those with credit or income documentation challenges, this could be the closest FHA-backed option still available to DACA recipients.

• How it works: Instead of upfront mortgage approval, you enter an agreement to earn equity while making consistent payments, eventually transitioning to full ownership.

• Why it ranks #1: It's backed by FHA mortgage insurance and offers a pathway to homeownership without traditional approval hurdles.

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2. Conventional Loans for DACA Recipients

Many lenders still offer conventional mortgages to DACA recipients with a valid Employment Authorization Document (EAD) and Social Security Number.

• How it works: Requires 620+ credit scores and typically 3-5% down.

• Benefits: Potentially lower private mortgage insurance (PMI) costs compared to FHA.

• Best for: Buyers with stable income and decent credit.

3. Freddie Mac Home Possible®

Freddie Mac allows non-permanent residents, including DACA recipients, to qualify under their Home Possible® program.

• How it works: 3% down payment, reduced mortgage insurance, and flexible credit terms.

• Best for: Low- to moderate-income buyers looking for affordability.

4. Fannie Mae HomeReady®

Fannie Mae’s HomeReady® program also supports DACA recipients with valid EADs.

• How it works: 3% down, flexible sources for down payment (gifts allowed), and lower PMI.

• Best for: First-time buyers who need flexibility on income sources.

5. ITIN Mortgage Loans

For DACA recipients without a Social Security Number, ITIN loans are an alternative.

• How it works: Uses an Individual Taxpayer Identification Number (ITIN). Down payments range from 10-20%.

• Best for: Buyers with stable income but without SSNs.

6. State-Specific Down Payment Assistance (DPA) Programs

Many state housing finance agencies (HFAs) offer DPA programs without strict residency status requirements.

• Examples: California Housing Finance Agency (CalHFA), Texas State Affordable Housing Corporation (TSAHC).

• How it works: Offers grants or second loans to cover down payment and closing costs.

• Best for: Buyers needing upfront cost help.

7. Chenoa Fund Down Payment Assistance

Chenoa offers national down payment assistance that can pair with FHA, conventional, or other loans—even for non-permanent residents in some cases.

• How it works: Provides 3-5% down payment assistance in the form of forgivable or repayable second loans.

• Best for: Buyers who qualify for a primary loan but need down payment support.

8. Credit Union Mortgages for DACA Recipients

Some local credit unions offer in-house mortgage products designed for underserved communities, including DACA recipients.

• How it works: Varies by lender, but often features manual underwriting and more flexible terms.

• Best for: Those who prefer a community-based lender.

9. Portfolio Loans from Community Banks

These are non-conforming loans that don’t follow Fannie Mae/Freddie Mac guidelines, giving lenders flexibility.

• How it works: Banks set their own rules, so they may work with DACA recipients.

• Best for: Buyers who have strong financials but don’t fit standard loan criteria.

10. Land Contract / Lease-to-Own Programs

While not traditional mortgages, these options allow buyers to lease a home with the option to purchase later.

• How it works: A portion of rent payments go toward the purchase price.

• Best for: Buyers working on credit or documentation issues while securing a future home.

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Can DACA Recipients Still Buy a Home in 2025?

Yes, DACA recipients can still buy a home—just not with FHA loans after the 2025 rule change.

The good news?

Many lenders and programs recognize non-permanent residents with valid work permits (EAD).

While FHA is off the table, there are conventional loans, down payment assistance programs, and alternative financing options that can help you achieve homeownership.

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What to Look for in a Home Loan Program (If You’re on DACA)

When choosing a mortgage as a DACA recipient, here are key factors to consider:

• Residency Requirements: Does the lender accept DACA status or require permanent residency?

• Down Payment: Look for low down payment options like 3-5% or grants that cover it.

• Credit Flexibility: Some programs allow non-traditional credit history or lower scores.

• Mortgage Insurance Costs: Consider PMI or alternative insurance fees that affect your monthly payment.

• Documentation Needed: Confirm what proof of work status or income is required (EAD, ITIN, etc.).

By focusing on these factors, you can find a program that fits your financial situation and legal status.

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FAQs for DACA Homebuyers After the 2025 FHA Rule Change

1. Can DACA recipients still buy a home in 2025?
Yes, DACA recipients can still buy a home, but FHA loans are no longer an option. Other programs like conventional loans, HomeReady®, Home Possible®, and ITIN loans remain available.

2. Why did FHA stop allowing DACA recipients?
As of May 25, 2025, FHA updated its rules to only allow U.S. citizens and lawful permanent residents to qualify for FHA loans. This was part of a broader policy shift under Title I Letter 490.

3. What is the best loan program for DACA homebuyers now?
The Earned Equity With FHA Loan Program ranks #1 because it still uses FHA insurance while helping buyers who can’t qualify for a mortgage today build ownership over time.

4. Do DACA recipients need a Social Security Number to get a mortgage?
For conventional loans, yes. But ITIN mortgage loans are available if you only have an Individual Taxpayer Identification Number.

5. What credit score do I need to get a loan as a DACA recipient?
For conventional loans, most lenders require at least 620-640. However, portfolio lenders, credit unions, or ITIN loans may offer more flexible credit requirements.

6. Can I still get down payment assistance as a DACA recipient?
Yes, many state-specific down payment assistance programs (DPAs) don’t require permanent residency. Programs like CalHFA or TSAHC could help.

7. Is mortgage insurance higher for DACA homebuyers?
It depends on the loan program. Conventional loans often have lower PMI costs compared to FHA, especially if you have good credit.

8. What documents do I need to qualify for a mortgage on DACA?
You’ll typically need a valid Employment Authorization Document (EAD), proof of income, and sometimes two years of work history. Requirements vary by lender.

9. Can I qualify for a mortgage with self-employment income on DACA?
Yes, but you may need to provide two years of tax returns. Programs like the Earned Equity With FHA Loan Program are designed to help self-employed buyers.

10. Are there national programs that help DACA recipients buy homes?
Yes! Options like Chenoa Fund down payment assistance and HomeReady® are available nationwide, with some accepting non-permanent residents.

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Final Thoughts: Don’t Let the FHA Change Stop You

The FHA policy shift in 2025 feels like a setback—but it doesn’t have to be the end of your homeownership journey.

With these 10 alternative programs, DACA recipients still have real options.

Whether you’re ready to buy today or just starting to plan, the right loan or assistance program can help make your dream of owning a home a reality.

Check Your Florida FHA Loan Eligibility