Non-Permanent Residents will no longer be eligible for FHA mortgages beginning on 5/25/2025

[ShanetheMortgageMan]

I understand that people may have strong views about this one way or another, but please save any political discussion for another forum. 

A new mortgagee letter was issued by HUD today, eliminating the ability for non-permanent residents to qualify for FHA mortgages - this means that only U.S. Citizens and Permanent Residents ("Green Card Holders" is the common term).  Mortgagee letters are official guidance from HUD about FHA loan programs, as HUD administers the FHA mortgage program. 

This change is effective for new FHA case #'s issued beginning on 5/25/2025.  https://www.hud.gov/sites/default/files/OCHCO/documents/2025-09hsgml.pdf has the full text, but the important verbiage is:

The U.S. Department of Housing and Urban Development (HUD) is updating its residency requirements for Borrower eligibility for FHA insured Mortgages. This update aligns FHA’s requirements with recent executive actions that emphasize the prioritization of federal resources to protect the financial interests of American citizens and ensure the integrity of government-insured loan programs

The Administration has reaffirmed its commitment to safeguarding economic opportunities for U.S. citizens and lawful Permanent Residents while ensuring that federal benefits, including access to FHA-insured Mortgages, are reserved for individuals who hold lawful Permanent Resident status. Currently, non-permanent residents are subject to immigration laws that can affect their ability to remain legally in the country. This uncertainty poses a challenge for FHA as the ability to fulfill long-term financial obligations depends on stable residency and employment. Under 24 C.F.R. § 203.33, HUD requires Mortgagees to evaluate a Borrower's ability to sustain long-term financial commitments, and no statute or regulations address noncitizen eligibility for FHA-insured loans. In the past, FHA’s residency requirements have required Mortgagees to document the Borrower’s lawful residency status demonstrating longterm financial stability and eligibility for federal programs. FHA does not retain citizenship or residency data from the loan application and therefore does not maintain information on the number of non-permanent residents who have received FHA-insured loans under past policies.

This update ensures that FHA’s mortgage insurance programs are administered in accordance with Administration priorities while fulfilling its mission of providing access to homeownership.

This ML removes the Non-permanent Residents sections in its entirety, eliminating eligibility for non-permanent resident Borrowers.

So if you are here in the U.S. on a visa and have an EAD document, you are still currently eligible but you will need to have your FHA case # obtained prior to 5/25/2025.  If you are refinancing, then the FHA case # can be obtained as soon as credit has been checked.  If you are purchasing, then the FHA case # can only be obtained after you have an accepted offer.  

This does not impact existing FHA mortgages, only new FHA mortgages that have their case #'s issued beginning on 5/25/2025.  There is also a special carve out for citizens of Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau - citizens from those countries will still remain eligible for FHA mortgages after 5/25/2025. 

Fannie Mae and Freddie Mac conventional financing programs have not changed in this regard, but I wouldn't be surprised if they amend their guidelines in the near future. 

USDA financing updated their guidelines last week to exclude non-permanent residents from being eligible. 

VA does not have any guidelines that prohibit a non-permanent resident from obtaining financing, as long as they are otherwise eligible for a VA mortgage.  In my discussions with a few different employees at VA Regional Loan Centers today they did not anticipate any changes.  So, with VA financing, you can be a U.S. Citizen, a Permanent Resident or Non-Permanent Resident and still be eligible.

Beginning on 5/25/2025, non-permanent residents wishing to obtain a mortgage will need to utilize conventional financing from Fannie Mae, Freddie Mac, or Non-QM loan programs or VA mortgages.