FHA Loans for Non-Residents Plummet to Near Zero After HUD Policy Change
Posted on 10/14/26 at 09:00
The percentage of FHA loans granted to non-permanent residents and individuals without legal immigration status dropped from 6% to nearly zero after the U.S. Department of Housing and Urban Development’s (HUD) decision to eliminate their eligibility in May 2025, according to data released by the agency on October 9, 2026. Secretary Scott Turner said the department prevents individuals without legal status and non-residents from accessing taxpayer-backed programs, and that proportion is now zero.
Why it matters: The data, attributed by HUD to Intercontinental Exchange (ICE), show that the change had a very rapid effect on federally backed mortgage credit. They also indicate that conventional credit has not yet fully offset the decline in FHA loans. For non-permanent resident buyers, access to a mortgage is now more limited.
What Changed
Mortgagee Letter 2025-09, published on March 26, 2025, is mandatory for FHA case numbers assigned since May 25, 2025. It applies to traditional FHA mortgages (Title II, single-family homes) and reverse mortgages (HECM). The rule completely eliminated the section on «non-permanent residents.»
U.S. citizens, legal permanent residents, and citizens of Micronesia, the Marshall Islands, and Palau may qualify. In the case of permanent residents, the file must include evidence of their residency, issued by USCIS. A Social Security card is not enough to prove immigration status or work permit.
According to ICE data reproduced by HUD, non-permanent residents accounted for around 5.8% of FHA purchase originations before the change. Now they are around 0.1%. In the overall market, their share of all types of purchase mortgages fell 2.2 percentage points, from 5.6% to 3.4%.
Where It Stood Out Most
ICE compared the period prior to the policy (from the second quarter of 2024 to the first quarter of 2025) with the period from the fourth quarter of 2025 to date. This is the share of non-permanent residents in FHA purchase originations:
- Salt Lake City: from 26% to 0.15%
- Provo: from 20% to less than 0.5%
- Orlando: from 16.1% to 0.2%
- Lakeland: from 13.6% to 0.16%
- Raleigh: from 11.1% to 0.8%
- Cape Coral and Miami: from around 10% to less than 1%
- San José: from around 10% to 0%
What Options Remain
According to ICE, the volume of non-permanent residents in conventional conforming first-lien loans remained relatively stable. It did not increase by a comparable magnitude to the decline in FHA loans.
Churchill Mortgage specialists, quoted on the HUD page, noted that these buyers now resort to conventional loans, as Fannie Mae and Freddie Mac allow financing for non-permanent residents with legal status. Non-QM loans are another alternative. According to those lenders, some will have to make a larger down payment, improve their credit score, or wait to obtain permanent residency.
Source: HUD, press release hud-no-26-084 and HUD, Mortgagee Letter 2025-09.