It is well-known; the DACA recipients were eligible before the Department of Housing and Urban Development and could apply for the FHA loans. However, HUD changed the rules and excluded the recipients from FHA loan programs. They probed into the definition of lawful residency. As a result of it, the government-backed mortgage was not an option for the Dreamers.
This year, Ben Carson showed support for Deferred Action for Childhood Arrival recipients, but nothing has been finalized. In this context, many lenders have also told that HUD representatives notified the FHA loans are not available for the Dreamers.
Things are likely to change as the US witnesses a transition in the political landscape. The home loans for DACA recipients in Houston, TX are available, but FHA loans are off the list. So, how do you prepare for a house loan? What are the necessary things you should keep in mind? Let’s go through the tips and prepare.
Check whether you are financially stable
Purchasing is a house is an emotional process irrespective of your citizenship status. Of course, the stress of not being accepted is real. Look at the important factors and go for a thorough inspection. If critical problems arise during this stage, you can fix them accordingly.
If you are a DACA recipient and a first-time homeowner, check whether you are ready in the first place. Go over your credit scores and take a close look at your debt-to-income ratio. Before purchasing a home, gather knowledge of the buying process. Once you are ready with the budget and know how you can afford it, things will seem clearer.
Figure out a budget
If you are eagerly waiting for getting approval, check whether you can afford a big loan. The debt-to-income ratio is one thing to look at, and it plays an integral role in the mortgage application process. DTI indicates a percentage of income which you spend every month for paying your debts.
Lenders have different rules about DTI. First, take a long look at your expenditure. If you do not spend more than 28% of your income, you are on the safe side. Then accumulate the home loan and other debts. Make sure the total amount does not exceed 36% of the income. Discuss with the lenders and find answers for your pre-qualification process. Having gone through your budget can save you from unpleasant surprises and help you determine the budget as well. If the DTI ratio is low, work on it carefully. It holds utmost importance for qualifying for the DACA loan and achieving homeownership eventually.
Knowing whether you are emotionally and financially prepared for the home loan is often overlooked by many new borrowers. It definitely requires time and effort to understand and figure out. Ask yourself whether you can afford a home with this level of preparation. A simple budget is necessary, but having extra money helps on the way. As you are a DACA recipient, ask your lender which options you have left.