FHA announces Updates to the Borrowers Residency Requirements for FHA insured financing

The U.S. Department of Housing and Urban Development (HUD) is updating its residency requirements for Borrower eligibility for FHA-insured Mortgages beginning with FHA case numbers assigned on or after May 25, 2025. According to Mortgagee Letter #2025-09, the changes include removing certain non-permanent residents and adding Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau to the eligible borrowers' guidelines.

The Lender must determine the residency status of the Borrower based on information provided on the mortgage application and other applicable

documentation. A Social Security card is not sufficient to prove immigration or work status. To be eligible for FHA-insured financing in accordance with the requirements, the borrowers must have lawful permanent resident status as a permanent resident alien or US Citizens. Borrowers that are known as "Dreamers" or non-permanent residents, will no longer be eligible for FHA financing. Conventional loans with FNMA & FreddieMac backing are expected to revise their guidelines accordingly as well.

What does this mean for borrowers that do not have permanent residency in the US? These would be home buyers have until May 24, 2025 to be eligible under current FHA guidelines and will be eligible for financing up to this date. So, all homebuyers that fit these criteria, have an opportunity to still buy a home until this point.

There will still be available financing for buyers with ITIN or Non-permanent residency through other types of programs.

For more info, reach out to me for more details @ dawn@franklinlc.com

For the Mortgagee letter with updates, click link here: Revisions to Residency Requirements