Can Undocumented Migrants Buy U.S. Homes?

Immigration and Real Estate

Putting aside the politics of the matter, noncitizens living in the United States without a formal immigration status may buy real estate. Many undocumented workers do own their homes. And they all pay property taxes. That’s billions of dollars, supporting local schools and services.

That doesn’t mean it’s easily done. It takes time to achieve homeownership — at least for anyone who can’t pay completely in cash. The absence of an immigration status makes things even more complicated.

So let’s take a look at how it all works.

What Are the Basics?

As you probably know, permanent residents are free to apply for any financing services available to United States citizens. But a green card (which acknowledges a person’s “adjustment of status” to legal permanent resident) is not necessary to purchase a home in the United States.

Lenders require specific documents to assess the creditworthiness and financial stability of an applicant. This helps them gauge the risk involved and ascertain whether the applicant is likely to repay the loan. Verifiable identity ensures the legitimacy of the applicant, while a consistent income and financial records provide insights into the applicant’s ability to manage and fulfill long-term financial commitments.

What is necessary? The most basic requirements are income and proof that it will continue, and verifiable identity. Lenders want to see tax returns or pay stubs, if available. An applicant should try to line up proof of at least two years of rental payments, proof of paying off other accounts, and bank statements. Letters from a company where the applicant works are also helpful to show that the job will continue.

For refugees and asylees, a basic requirement is proof of a timeline of physical presence. An employment authorization document is not necessarily required, but proof of asylum status is.

A Social Security Number (SSN) shows earnings history in the U.S. workplace. But some lenders might accept a different form of taxpayer identification (tax ID). A hopeful applicant could start with an online search for lenders that offer ITIN mortgages. Some banks and credit unions in areas with high immigrant populations have lending experts who focus on noncitizen home buyers.

ITIN Loans: For Applicants Without Social Security Numbers

An ITIN, which stands for Individual Taxpayer Identification Number, is a number that lets a person file tax documents without a Social Security Number. It does not depend on having an immigration status. Applicants start with the Internal Revenue Service Individual Taxpayer Identification Number information page and follow the instructions, submitting as much identification as possible. The government typically responds to applications within one to two months.

Then, the ITIN loan follows the mortgage company’s requirements. People use these loans for houses or multi-unit properties like condos. As with most mortgages, the applicant agrees to make monthly payments on the loan with interest, usually for a 30-year fixed-rate mortgage (the interest rate won’t change during the term of the loan). Early payoff is usually OK.

A loan applicant needs to show the lender:

Proof of income.

Bank statements (in any country they exist).

Proof of reserves (extra money in case of unexpected needs).

Credit report.

A driver’s license.

Proof of at least two years of consistent employment history (self-employment can be acceptable).

At least two years of tax returns with the same tax ID number.

Any additional information on assets or finances that can support the application and prove that the applicant has the ability to make monthly payments.

ITIN mortgages may require higher down payments than loans associated with social security numbers. Expect this to be 20% of the property’s value.

What Else Applicants Should Know About U.S. Mortgages

As long as a mortgage exists, the home is loan collateral. The lender may foreclose on the home if the borrower becomes unable to make payments.

But as long as the homeowner keeps current with monthly payments, mortgages — ITIN mortgages included — are a form of financial documentation. One month at a time, they help build a strong credit profile for the borrower. And that opens more doors: to future loans, to credit cards, to new financial opportunities.

What don’t the ITIN number and mortgage do? They don’t create a path to social security benefits. The ITIN is only meant to allow people with businesses or property pay U.S. taxes on these assets.

Fairness and the Law: The Fair Housing Act says people involved in a home sale or mortgage to may not ask about a potential buyer’s immigration status. This is to prevent discrimination on account of noncitizen status. People can report discriminatory treatment by filing a federal fair housing complaint.

☛ To learn about racial bias in home loan approvals, please visit: We Know It. We Denounce It. So Why Does Bias in Lending Persist?

Yes, DREAMers Can Apply for FHA Home Loans

DACA (Deferred Action for Childhood Arrivals) protects people who came to the United States as kids without immigration status. Under DACA, young people can receive identification cards and social security numbers. These young residents are called DREAMers — after the Development, Relief, and Education for Alien Minors Act. That law says they may remain and work in this country — which they consider home.

Every two years, they must renew their status. As long as they do this, and as long as DACA protections stay in effect, those who qualify for these federal protections can also apply for mortgages.

Since early 2021, the policy of the Federal Housing Administration (FHA) is to allow DACA recipients to apply for FHA mortgages for homes they plan to live in. They can buy a home with at least 3.5% of the home price upfront (down payment). A credit score of at least 580 is sufficient.

☛ New, more welcoming credit scoring methods could soon come to the FHA. But we have to wait and see.

What else do lenders want?

DACA employment authorization documents. Lenders look for a history of approvals for permission to work. They also look for employment contracts, and statements from employers that contracts will be renewed or extended in the future.

Proof of consistent income. The loan applicant’s income should be steady and predictable. It should be likely to continue, so that the applicant can pay back the loan on a monthly basis. Lenders ask for two years of bank statements. They also request copies of IRS documents. These are tax returns. W-2 statements must be submitted, if the applicant has them. Pay stubs are necessary. The mortgage representative will ask for more pay stubs near the date of the purchase.

DACA recipients have social security numbers, which the standard FHA loan requires. But FHA loans aren’t the only option. Speak with a mortgage consultant about the Fannie Mae HomeReady loan, for example, which lets buyers make a down payment of at least 3%.

So, Yes, Homeownership for Undocumented Workers Is Legally Possible

Homeownership helps a buyer put down roots, and supports the building of wealth over time. Not every noncitizen is in the position to make it happen, but those who think they could qualify for a loan should speak with a mortgage professional with experience helping noncitizen buyers.

Note that this article offers general information, and is not financial or legal advice. If you need help with immigration matters, consult an immigration lawyer, and learn how major decisions can impact your future.

Supporting References

Lauren Bowling for Rocket Mortgage® Learning Center via RocketMortgage.com: Home Loans for DREAMERS; A Guide To DACA Home Loans (May 25, 2023).

CrossCountry Mortgage® via CrossCountryMortgage.com: What Are ITIN Loans?

Chase.com: Can DACA Recipients Buy a House? Everything You Need to Know About Buying a House as a Dreamer.

And as linked.