In a policy shift announced today, non-permanent U.S. residents will no longer be eligible for mortgages insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD).
The change, detailed in a March 26 letter HUD issued, is effective May 25, 2025.
“The provisions of this [mortgagee letter] apply to all FHA Title II Single-Family forward and Home Equity Conversion Mortgage (HECM) programs,” the HUD letter states.
HUD noted the Trump 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.”
Explaining this coming policy change, HUD pointed out that non-permanent residents are now subject to immigration laws “that can affect their ability to remain legally in the country” — which could ipso facto affect their ability to pay back an FHA-insured mortgage.
“The ability to fulfill long-term financial obligations depends on stable residency and employment,” HUD stated.
What This Means For Mortgage Lenders
According to the new FHA policy, the onus is on the lender: mortgage lenders “must determine the residency status of the borrower based on information provided on the mortgage application and other applicable documentation,” the HUD letter specifies.
The policy also notes a Social Security card “is not sufficient” to prove immigration or work status.
Individuals who may be eligible for FHA-insured loans include:
- U.S. citizens, who must also meet requirements for FHA-insured financing;
- Permanent U.S. residents, who must meet those same FHA requirements and for whom the mortgage file “must include evidence of lawful permanent residence and indicate that the borrower is a lawful permanent resident”; and
- Citizens of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau, for whom the mortgage file “must include evidence of such citizenship” and who must also meet the same FHA-insured financing requirements U.S. citizens do.
The upshot: “If you have a borrower who is not a permanent [resident] and is looking for a home with FHA financing, they need to be under contract and have a case number ordered on or before May 24, 2025, or they will no longer be eligible for financing,” noted Delmar Mortgage Senior Vice President Kelly Hendricks, addressing the updated FHA borrower eligibility requirements.
