FHA Tightens Buyer Eligibility: What You Need to Know About the New Residency Rules

​The Federal Housing Administration (FHA) has announced a major change that will directly impact homebuyers—and the professionals who serve them. Starting May 25, 2025, only U.S. citizens and lawful permanent residents will qualify for FHA-insured mortgages. This update eliminates eligibility for non-permanent residents, including those with work visas and DACA recipients.

HUD made the announcement through Mortgagee Letter 2025-09, explaining that the change supports recent executive actions that prioritize federal benefits for U.S. citizens and long-term residents. The goal: to ensure government-backed loans go to borrowers with stable, reliable immigration status and long-term ability to repay.

For builders and agents, this shift could affect buyer pipelines, especially in markets with a high percentage of immigrant or international clients. Non-permanent residents—previously eligible under certain conditions—will no longer be able to use FHA financing, regardless of employment history or credit strength.

HUD now requires lenders to verify the borrower’s immigration status using documentation from U.S. Citizenship and Immigration Services (USCIS). A Social Security card alone is no longer enough to confirm eligibility. FHA also reminded lenders that citizens of Micronesia, the Marshall Islands, and Palau remain eligible under long-standing international agreements.

HousingWire reports that industry professionals expect this policy change to tighten the pool of FHA-qualified buyers, potentially pushing some toward conventional loan products—or out of the market altogether.

At NorthStar Mortgage Advisors, we’ve got you covered. While FHA may be closing the door on non-permanent resident borrowers, we offer a variety of alternative loan programs tailored specifically for non-resident clients—including ITIN loans, DSCR products, and flexible non-QM financing options. Our team is experienced in navigating complex borrower profiles and can help agents and builders keep deals alive, even when traditional loan paths are no longer an option. Reach out to a loan officer to get more details.