Another Mortgage Company Targets Home Loans to Undocumented Immigrants

Key Takeaways

• California’s AB 1840 allows undocumented immigrants with ITINs to apply for state home loans starting August 2024.
• Federal FHA loan rules restrict eligibility to citizens and permanent residents since May 2025, excluding nonpermanent residents.
• California Dream for All Program offers interest-free loans covering up to 20% or $150,000 of home prices.

As of July 2025, the landscape for undocumented immigrants seeking home loans in the United States 🇺🇸 is changing quickly, with California leading the way in expanding access while federal rules remain strict. This shift is especially important for thousands of families who have lived, worked, and paid taxes in the country for years but have faced major barriers to homeownership. Here’s a detailed look at what’s happening, why it matters, and how it affects different groups.

Who is affected?
Undocumented immigrants—people living in the United States 🇺🇸 without legal immigration status—are at the center of this issue. Many have jobs, pay taxes using an Individual Taxpayer Identification Number (ITIN), and want to buy homes for their families. However, they often face roadblocks because of their immigration status.

What’s new?
California passed Assembly Bill 1840 (AB 1840) in August 2024, making it clear that undocumented immigrants who pay taxes and meet certain requirements can apply for home loans through the California Dream for All Program. This is a big change from the past, when unclear rules and federal restrictions kept many out of the housing market.

Where is this happening?
The most significant changes are in California, a state known for its large immigrant population and progressive policies. At the same time, the federal government has tightened its rules, making it even harder for undocumented immigrants to get federally backed home loans.

When did this happen?
AB 1840 became law in August 2024. New federal restrictions on FHA loans took effect in May 2025.

Why does it matter?
Homeownership is a key part of building wealth and stability for families. By opening up access to home loans, California is helping more people achieve this dream, while federal rules are moving in the opposite direction.

How does it work?
Let’s break down the details, starting with California’s new approach.

California’s Assembly Bill 1840: Opening Doors for Undocumented Immigrants

Assembly Bill 1840 (AB 1840) is a landmark law that changes who can get help buying a home in California. Before this bill, many undocumented immigrants who paid taxes and met other requirements were still unsure if they could apply for state-backed home loans. The new law removes that confusion.

Key features of AB 1840 and the California Dream for All Program:

• Who can apply?
  • Undocumented immigrants who pay taxes using an ITIN or have a Social Security number
  • Must have valid work authorization or other immigration documents (like a green card or work visa)
  • Must meet Fannie Mae’s lending criteria, which are standard rules for getting a mortgage
• What does the program offer?
  • A shared appreciation loan covering up to 20% of the home’s purchase price or $150,000 (whichever is less)
  • The loan is interest-free. When the home is sold or refinanced, the borrower pays back the original loan plus 20% of any increase in the home’s value
  • The program is paired with a 30-year fixed-rate mortgage from the California Housing Finance Agency (CalHFA)
• How is it funded?
  • The program uses money from mortgage revenue, not taxpayer dollars, making it financially sustainable
• Why is this important?
  • It gives thousands of undocumented immigrants a real chance to buy a home, build equity, and invest in their communities
  • It addresses a long-standing gap where people who contribute to the economy and pay taxes were left out of homeownership programs

According to analysis by VisaVerge.com, this move by California is one of the most inclusive steps taken by any state in the country. It not only helps undocumented immigrants but also sets an example for other states considering similar policies.

Federal Mortgage Lending: Tighter Rules, Fewer Options

While California is opening doors, the federal government is closing them. In May 2025, new rules for Federal Housing Administration (FHA) loans took effect, continuing a trend started under President Trump and kept in place under President Biden.

What changed with FHA loans?

• Who can get an FHA loan now?
  • Only U.S. citizens and permanent residents (green card holders)
  • Nonpermanent residents (like those with work visas, DACA recipients, asylum seekers, and Temporary Protected Status holders) are no longer eligible
  • Undocumented immigrants have never been able to get FHA loans without a Social Security number
• Why does this matter?
  • FHA loans are popular because they require lower down payments and are easier to qualify for, especially for first-time and low-income buyers
  • By limiting access, the federal government has made it much harder for many immigrants to buy homes
• Are there other options?
  • Conventional loans (from private banks) are still available, but they usually require higher credit scores, bigger down payments, and more paperwork
  • These loans are often out of reach for undocumented immigrants and others with limited credit history

Mortgage industry experts say the new federal rules have shrunk the pool of eligible borrowers. Lenders like UpMortgage report that many clients with work permits or temporary status are now turned away, even if they have steady jobs and pay taxes.

The Real-World Challenges for Undocumented Immigrants

Even with new state programs, undocumented immigrants still face many hurdles when trying to buy a home:

1. Identification and Documentation
– Many lack state-issued IDs or Social Security numbers, which are usually required for mortgage applications and property title transfers
– Without legal work authorization, it’s hard to get the documents needed by lenders

2. Tax Documentation
– Lenders want to see tax returns to prove income
– Some undocumented immigrants file taxes using an ITIN, but not all lenders accept this

3. Mortgage and Insurance Barriers
– Most traditional loans require proof of legal status, steady employment, and residency
– Home insurance is also tough to get without legal status, which can stop the home-buying process

4. Higher Costs and Limited Choices
– Without access to FHA loans or state programs, many undocumented immigrants turn to private lenders who may charge higher interest rates and fees
– These loans can be risky and expensive, making it harder to build wealth over time

Stakeholders: Who Supports and Who Opposes?

California Lawmakers and Housing Officials
– Strongly support expanding homeownership to undocumented immigrants who pay taxes and contribute to the economy
– See it as a matter of fairness and economic equity

Federal Authorities
– Continue to restrict access to federally backed loans for undocumented immigrants
– Say these rules protect the integrity of government programs and ensure resources go to citizens and permanent residents

Mortgage Industry
– Recognizes the shrinking pool of eligible borrowers due to federal rules
– Some lenders are exploring new products for people with ITINs, but these are not yet widely available

Immigrant Advocacy Groups
– Applaud California’s approach and push for similar changes in other states and at the federal level
– Provide guidance and support for undocumented immigrants trying to buy homes

Background: How Did We Get Here?

Undocumented immigrants have always been able to own property in the United States 🇺🇸, but getting a mortgage has been a different story. For years, most lenders required a Social Security number and proof of legal status. Some local programs and private lenders have offered loans to people with ITINs, but these were rare and often came with higher costs.

Federal policies have changed over time. Under President Biden, some nonpermanent residents could get FHA loans, but this ended in 2025. Now, only citizens and green card holders can qualify for these popular loans.

California’s new law is a direct response to these federal restrictions. By making it clear that undocumented immigrants who pay taxes and meet other requirements can apply for state-backed loans, California is filling a gap left by federal policy.

What’s Next? The Future of Home Loans for Undocumented Immigrants

California and Other States
– California is likely to keep expanding programs like the California Dream for All Program
– Other progressive states may follow, especially those with large immigrant populations

Federal Policy
– No signs of change in federal rules for FHA loans in 2025
– Advocacy groups continue to push for reforms, but progress is slow

Mortgage Industry
– Some lenders may create new products for people with ITINs or alternative documentation
– These products could help fill the gap left by federal restrictions, but may come with higher costs

Practical Steps for Undocumented Immigrants in California

If you’re an undocumented immigrant in California and want to buy a home, here’s what you can do:

1. Check Your Eligibility
   • Make sure you have an ITIN or Social Security number
   • Gather proof of employment authorization or other immigration documents
   • Review Fannie Mae’s lending criteria to see if you qualify
2. Learn About the California Dream for All Program
   • Visit the California Housing Finance Agency (CalHFA) website for details on the program, eligibility, and how to apply
3. Prepare Your Documents
   • Collect recent tax returns, proof of income, and identification documents
   • Be ready to show you pay taxes and have steady income
4. Work with a Trusted Lender
   • Find a lender who participates in the California Dream for All Program and has experience working with ITIN holders
5. Get Legal and Financial Advice
   • Talk to an immigration lawyer or housing counselor to understand your rights and responsibilities
6. Consider Home Insurance Early
   • Start looking for home insurance providers who accept ITINs and work with immigrants

Comparing California and Federal Mortgage Access

Here’s a quick summary of how things stand in 2025:

Official Resources

• California Housing Finance Agency (CalHFA):
  For full details on the California Dream for All Program, eligibility, and application steps, visit the official CalHFA Dream for All page.

• Federal Housing Administration (FHA):
  For the latest on FHA loan eligibility and policy updates, see the U.S. Department of Housing and Urban Development FHA page.

Takeaways for Immigrants, Lenders, and Policymakers

• Undocumented immigrants in California now have a clear path to homeownership through the California Dream for All Program, thanks to AB 1840.
• Federal restrictions remain tight, making it hard for undocumented immigrants to get FHA loans or other federally backed mortgages.
• Lenders and advocacy groups are working to create more options, but challenges remain, especially outside California.
• Other states may look to California as a model for expanding access to home loans for undocumented immigrants.

For undocumented immigrants, the dream of owning a home is becoming more possible in California, even as federal rules remain strict. By staying informed, gathering the right documents, and seeking help from trusted sources, more families can take steps toward homeownership and greater financial security.

Learn Today

Undocumented Immigrants → People living in the U.S. without legal immigration status, often paying taxes with an ITIN.
Assembly Bill 1840 → California law enabling undocumented immigrants with valid documents to apply for state-backed home loans.
California Dream for All Program → A state program offering interest-free shared appreciation loans to eligible homebuyers in California.
FHA Loans → Federal Housing Administration loans requiring citizenship or permanent residency for eligibility after May 2025.
Individual Taxpayer Identification Number (ITIN) → A tax processing number issued to people who must pay taxes but don’t qualify for SSNs.

This Article in a Nutshell

California’s Assembly Bill 1840 expands home loan access to undocumented immigrants with ITINs through the California Dream for All Program. Meanwhile, federal FHA loan rules tightened in May 2025, limiting loans to citizens and permanent residents only, creating a split landscape for homeownership access in the U.S.
— By VisaVerge.com