Did the bank deny your loan application because of your DACA status? Many borrowers have been recently facing this problem for various factors. First of all, borrowers willing to apply for FHA loans are barred from the loan programs. The HUD does not confer a lawful status to the DACA recipients – this is the reason behind not being able to get an FHA loan. This should not put a hold on your dream, there are multiple options left in the market.
The home loans for DACA recipients in Houston, TX are possible, but you will have to work with limited financing. As long as you are a legal resident of the country, you can apply for the DACA loan. Make sure you have the necessary documents with you. An experienced DACA lender generally asks for a social security number, income documents, and expired EAD card. In case you are worried about finding a reliable DACA lender, do not. But you should remember to read the online reviews before hiring.
Even though the hiring process goes in a hassle-free way, there are few things you should look after. Let’s have a look at the tips which you need to remember before preparing finances for a DACA house loan.
Choose a Mortgage which Suits Your Financial Condition
Even though you are ineligible for an FHA loan, do not lose your hope yet. It is still possible to pick an affordable DACA loan. Before you finalize your decision, read the fine print of the house loan. Purchasing a home is a responsibility, and you should look for ways to unlock benefits. So, you should check whether the mortgage makes sense for your financial condition. If you are going to apply for a fixed-rate mortgage, you will have to pay off a high rate initially. On the other hand, an adjustable-rate mortgage has low-interest rates. Though it has a lower interest rate, the sudden spike in loan rate will leave you perplexed. If you cannot commit to a loan immediately, you should consider the situation later.
Keep the Debt-to-Income Ratio Low
By now, you have assumed Dreamers face initial hiccups while looking for the ideal loan or applying for it. However, the struggle does not end when the lender reviews your loan application. To sort the problem, in the beginning, you should look at the DTI ratio. Your debt obligations refer to the fact whether you will not default on the loan. Start with reviewing debt obligations and compare it to your income. If your debt obligation is lower than the monthly income, it is a good sign. FHA loans allow a high debt ratio; however, this is not a choice for DACA recipients. Conventional loans demand a low debt ratio. Needless to say, you should pay down the outstanding balance.
In the end, learn about your credit situation. The DACA loans do not require a crazy good mortgage credit score, but a decent score is acceptable. Have a candid conversation with your lender and find out the areas on which you should work more.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.