Lack of immigration status and not having a robust credit history are not necessarily obstacles to becoming a homeowner
Properly preparing to buy a house not only facilitates the process of becoming a homeowner but also protects you from financial risks and ensures that the investment you make is the right one.
Lizette Carretero, director of financial wellness at The Resurrection Project (TRP), shares that through their Full Circle Homes initiative, they offer free financial education, personalized counseling, planning, and guidance before, during, and after the purchase of a property to ensure a smooth acquisition of a home.
"During the home-buying journey, we provide financial education that is highly recommended, and we give [each participant] a certification that requires eight hours of education. In this program, we talk about how to create financial stability, develop habits to focus on saving, and reduce debts to be ready for when someone makes a purchase," explained Carretero. In this counseling, each person receives an individual analysis of their home-buying project and also information about refinancing assistance, property tax appeals, property maintenance, and how to continue planning to sustain that investment in the long term.
In this context, the home-buying process can take between two to four years, which is why The Resurrection Project recommends that those interested in preparing to buy a home attend one of their free sessions.
TRP Lending (The Resurrection Project Loans)
The Resurrection Project, an organization that has been supporting Chicago's Latino community for decades, focuses on making the home-buying process accessible to everyone, regardless of their immigration status. Forty percent of the families assisted by The Resurrection Project have an ITIN (Individual Taxpayer Identification Number, an identification for individuals who do not have a Social Security number), and for this reason, the organization also works with banking institutions that offer loans to individuals with ITINs.
As a certified Community Development Financial Institution (CDFI), The Resurrection Project is committed to providing high-quality financial services and resources that increase the number of homeowners in the community. They also advocate for more assistance to individuals with ITINs to help them access mortgage loans.
Consequently, at the end of 2023, The Resurrection Project finalized a collaboration with a bank that allows them to offer loans to individuals with ITINs. Carretero explained, "Heartland Bank and Trust Company offers 80% of the loan, and TRP Lending [The Resurrection Project's lending program] provides 17% of the loan. This gives someone with an ITIN the opportunity to buy with just a 3% down payment." This year, The Resurrection Project issued 15 loans to individuals with ITINs under this program and anticipates securing more capital to generate more financing for people with ITINs by 2025.
Did you know that you don't need a Social Security Number to buy a house?
"To buy a house, you don't need a Social Security number," Carretero asserted. More institutions are now offering loans to people with ITINs. Typically, to obtain a mortgage with an ITIN, a credit score of 640 or higher is required to access favorable interest rates. Depending on the financial institution and market conditions, financial institutions may offer loans with a slightly higher interest rate to finance individuals with ITINs.
Today, more affordable financing products are available, where the initial payment for ITIN loans can range from 3% to 10%. More than three years ago, a down payment of 10% or 20% was required for ITIN loans. According to data shared by banks with The Resurrection Project, "ITIN loans have a low foreclosure rate. The success comes from the fact that the down payment is larger, and the family has made a bigger investment... so the risks aren't as high, even though they are undocumented," added Carretero. Another option that individuals with ITINs can take advantage of is down payment assistance through local programs, private funds, or state resources. To qualify, requirements such as credit and property type, among others, need to be met.
An example of a mortgage for individuals with ITINs in Illinois is Midland States Bank's plan, a program that offers loans for first-time homebuyers and ITIN clients. It offers a low down payment of 5%, plus closing costs, doesn't require credit but asks for three alternative credit checks (bills paid for 12 months or more without reporting late or missed payments), and requires 1 to 6 months of reserve payments. The interest rate is determined based on the client's credit score; the better the score, the better the interest rate. The market interest rate for ITIN loans in August 2024 ranged between 7.125% and 10%. By comparison, the average general interest rate for 30-year loans was around 6.5% in August 2024.
Midland States Bank emphasized that it all depends on the client's credit score. For ITIN clients, Midland States Bank offers down payment assistance if buyers fall within the income limits set by HUD (U.S. Department of Housing and Urban Development) and grants of up to $10,000 from the Federal Home Loan Bank of Chicago program, which channels this support through participating financial institutions. The Illinois Housing Development Authority (IHDA) also offers grants for home purchases in Illinois through participating financial institutions, providing up to $10,000 in assistance for home purchases.
Barriers to Obtaining a Mortgage for People with ITIN
The Resurrection Project has noted that the lack of access to credit is one of the biggest barriers to obtaining a mortgage, especially for those with an ITIN. It can take up to two years for them to establish a credit history with their ITIN. Carretero explains, "What they don't have is credit because they're buying everything with cash, thinking that having no debt will look better when they go to buy a house. Unfortunately, you need a credit history to demonstrate that you can pay off debts."
A way to build a credit history can include making timely payments for rent, utilities, cell phone, and car insurance. This shows responsibility in payments, and some institutions may consider this alternative credit when granting a mortgage.
Another point The Resurrection Project provides is that when it comes to buying a house, savings are not necessarily an issue for families with an ITIN. "Families have between $20,000, $30,000, or $50,000 in savings," Carretero said. And while they have money, they don't have credit. It's common for many people to keep money at home, as many Latino families still mistrust keeping their money in financial institutions.
Another obstacle is the monthly car payment. The average of these payments hovers around $700, and these debts limit people's ability to qualify for a home loan. "If you're considering buying a car or a house, buy the house first because that will impact what you can qualify for," Carretero recommended.
Available Assistance for Clients with Social Security Numbers and DACA
Although mortgage interest rates remain high, people have come to accept that housing costs continue to rise. "With DACA... there are more options, more subsidy help for those families," Carretero added. People with Deferred Action for Childhood Arrivals (DACA) can access any conventional loan as long as their DACA permit doesn't expire within the next six months and they can meet the financing requirements.
Currently, people with Social Security numbers and DACA beneficiaries can take advantage of various assistance programs when buying property, according to The Resurrection Project. These include:
All these programs have their own clauses. Some assistance is forgivable, meaning nothing has to be repaid as long as the client meets the requirements.
The Resurrection Project indicates that in markets like Chicago, many banks that hadn't lent to minorities or low-income people for years now offer a portfolio designed with 3% down payment products and no PMI (Private Mortgage Insurance). Such loans have restrictions like the person's income and the property's location, among other requirements. This result was achieved thanks to the federal Community Reinvestment Act, designed to encourage commercial banks and savings associations to help meet the needs of all segments of their communities, including low- and moderate-income neighborhoods.
Ongoing Preparation for Homeowners with the Resurrection Project
The Resurrection Project not only assists people with education on the buying process but also helps them get approved for a mortgage and connects them with a real estate agent. All the assistance offered by TRP is free: "Everything in the counseling and preparation process is free. When they're in the process of searching for a house and hire a real estate agent, there will be a fee, and the same goes for initiating a loan for the transaction, but preparing for it doesn't come with a cost," Carretero explained.
To buy a house, one must make changes and sacrifices, and these don't end after purchasing the property. That's why The Resurrection Project offers post-purchase guidance, where they help homeowners plan long-term, organize their retirement, project their future, be ready for unexpected expenses, and afford property maintenance. "The families we're seeing in the foreclosure process right now are facing rising property taxes or need to replace the roof, and there aren't enough subsidies or help. People don't plan for those kinds of transactions," Carretero shared. The Resurrection Project works not only on monthly budgets but also on yearly ones to help people change their habits, teaching them to save.
Another solution The Resurrection Project is proposing to make homes more energy-efficient is to educate families to opt for solar panels, switch from gas to electric appliances, or install energy-efficient windows. These changes will save homeowners money. At TRP, they've noticed the drastic increase in home insurance prices, and climate change is affecting properties not equipped for severe weather fluctuations. That's another expense that can impact homeowners.
The Resurrection Project Focuses on Immigrants
"The immigrant has been aggressively targeted in recent years. Who will advocate for families? Organizations like us that are dedicated to advancing Latino access and really the goal is to close the wealth gap," Carretero asserted. This is why The Resurrection Project is focused on immigrants and, in addition to housing services, they also help people with legal clinics to adjust their status in this country.
Building wealth requires financial stability, and buying a home is one of the first steps. It's also necessary to invest in other options and plan for retirement. "A home is still the foundation for building wealth in the United States," Carretero insisted. Homeownership has always been one of the Resurrection Project's biggest initiatives, as the organization was founded on the idea of promoting homeownership, with the notion that creating homeowners produces stable communities.
"Latino families are a huge market. Not just banks, but all kinds of companies are trying to figure out how to sell us products. We're consumers for their products. Latinos are positioning themselves financially. We've contributed for many years, and they're seeing that we're good clients," concluded Carretero, director of Financial Well-being at The Resurrection Project.
Families with ITIN Numbers Buying Homes? It's Possible!
The Ayala family dreamed of owning a home in the United States. Like many families, they rented for 12 years. They couldn't wait any longer to buy a house, so they decided to seek advice. They enrolled in free classes offered by The Resurrection Project, which, according to the Ayala family, were highly recommended and informative, as they serve as a guide, especially for those intending to buy a home.
Through the free services offered by The Resurrection Project, the future homeowner received financial evaluation counseling with an advisor. "My surprise was that I had a good credit score, and I said, 'Oh!' I didn't know that. Then she told me, 'Look, if you're interested in buying a house, with this credit score, banks can lend to you if you have income, if you've filed your taxes for the past two years, if you have a little money for the down payment, and if not, we can look for assistance for the down payment,'" shared Mrs. Ayala.
A good credit history not only makes it easier to obtain a mortgage loan but can also influence interest rates and loan terms. Several years ago, during a visit to her bank, Mrs. Ayala was offered a credit card. She commented, "In our culture, we don't think about working with credit; we like to pay for things upfront, and you get what you're buying and pay it off, no debts. Our mindset, our culture, isn't like that." Although she initially resisted using this credit option, over time, it helped her build a good credit score.
With their good credit score, the Ayala family started comparing what different banks offered and realized that "most banks ask for a 20% down payment from people with ITIN numbers, which is a barrier to buying a house. Not having the down payment is a barrier and doesn't allow you to move forward," the mother of the family shared. It was through the mortgage loans offered by The Resurrection Project that the Ayala family was able to qualify to buy with ITIN, providing only a 3% down payment. They were one of the 15 ITIN loans offered by The Resurrection Project in 2024. They are happy with their loan's interest rate, their bank secured them some financial aid, and as of the time of writing, they were waiting to find out if they would qualify for assistance from the City of Chicago.
The Resurrection Project also assisted the Ayala family with a real estate agent and connected them with Chicago Housing Trust. This organization expands access to housing, fosters stable residential communities, and works to ensure long-term affordability in Chicago. It also provides opportunities and resources so that homes become affordable assets for those seeking homeownership. Through one of Chicago Housing Trust's programs, the Ayala family found a property that suited their needs and possibilities: a new four-bedroom condominium located near their daughters' schools, close to their workplaces, and at an affordable price. They submitted a purchase offer, which was accepted, and they are waiting to close on their condominium.
Ayala said about Chicago Housing Trust, "It's a City program where they build homes and offer them at affordable prices. You qualify based on your income, and since my husband's and my income isn't very high and we're a family of four, we were eligible, so we submitted an application to buy a property through them, and fortunately, we were selected to buy a condo." The Ayala family's original idea was to buy a house; however, "the price of housing, of homes, is exorbitant, and prices keep going up. We would have loved to buy a house because we have two little girls, and we would have loved to have a backyard, more space, but for now, this is what we can buy: a condo," the interviewee explained.
Empowering the Community: The Resurrection Project and Its Housing Workshops
Many questions arise during the home-buying process, but the education offered by The Resurrection Project empowers people with valuable information to answer those questions. For example, is it better to rent or buy? "I realized that by buying a property, maybe more money will be coming out of your pocket, but in the end, you'll have savings in that property you're paying for, and in the future, you can pass it on to your children. Your children can then buy their own house, and they'll have two, and the next generation might have three. You can't achieve that if you rent all your life. Here, I found the answer I'd been needing, so it's better to buy than to rent," shared Ayala, who attended the homebuying workshops offered by The Resurrection Project.
Why is owning property still a good investment? "It's likely that if the country faces a recession or special situation, you can't deny that home prices could fall. But the real estate market is the one that recovers the fastest. Even if prices drop for a certain number of years, they will eventually rise again. When you want to sell it, even if you haven't finished paying it off, you'll recover part of your money. Or, if you want to leave it as an inheritance, you'll build generational wealth," responded the interviewee.
After her experience as a homebuyer, Ayala has recommendations for people with ITIN numbers. "If you're someone who already has an ITIN number, start building credit. If you don't know how to build credit, contact The Resurrection Project. They'll help you until you achieve a solid, high credit score. Credit will open many doors for you. Take the homebuying classes, which can be in Spanish, and are free, and see what the homebuying process involves -- you'll realize it's not impossible. File your taxes, stay in your job with steady income, and build credit."
resurrectionproject.org/es/full-circle-homes-one-stop-shop-to-homeownership/
www.cookcountyil.gov/service/down-payment-assistance-pilot-program
Department of Housing and Urban Development (HUD)