FHA Lending to Non-Permanent Residents Falls After Eligibility Change

Non-permanent residents' share of FHA purchase loans fell from about 5.8% to about 0.1% after HUD removed them from FHA eligibility, according to Intercontinental Exchange origination data reported by HousingWire on Oct. 8. The underlying ICE dataset has not been published, so the figures here are attributed to ICE as reported by HousingWire.

Why this matters: The rule change closed one of the more common low-down-payment paths for lawful non-permanent residents. Lenders and brokers serving these borrowers now steer them to other loan types.

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The policy

HUD issued Mortgagee Letter 2025-09 in March 2025, removing the "non-permanent resident" category from FHA eligibility for Title II single-family programs. HousingWire reports a companion Title I letter was issued at the same time. The change took effect May 25, 2025.

What the ICE data show

Per HousingWire, non-permanent residents accounted for about 5.8% of FHA purchase originations before the change and about 0.1% after. Across all purchase mortgages, their share fell 2.2 percentage points to 3.4%.

Some markets saw larger moves. HousingWire reports that in Salt Lake City, the non-permanent-resident share of FHA purchase loans went from 26% before the change to 0.15% after. Provo went from 20% to under 0.5%, Orlando from 16.1% to 0.2%, Lakeland from 13.6% to 0.16%, and Raleigh from 11.1% to 0.8%.

HousingWire also reports that ICE data show non-permanent-resident volume in conventional prime conforming loans stayed relatively stable, suggesting conventional lending did not fully replace the lost FHA activity.

What the numbers do not prove

The timing lines up with the rule change, and FHA eligibility ended for this group, so a steep drop is expected. But the data do not by themselves show how many would-be buyers were unable to purchase at all, or how much of the shift in total purchase share reflects rates, prices, immigration trends or other factors. HousingWire notes it is unclear whether the declines affected local home prices.

Options borrowers are using

Loan officers quoted by HousingWire said affected borrowers are turning to conventional loans, which Fannie Mae and Freddie Mac permit for lawful non-permanent residents, or to non-QM products. One said some borrowers will need larger down payments, stronger credit, or to wait for permanent-resident status.

Practical takeaway

• Lenders and brokers: confirm residency documentation at prequalification so non-permanent residents are routed to eligible programs early.
• Affected borrowers: ask lenders to compare conventional and non-QM options side by side, including down payment and mortgage insurance.
• Anyone citing these figures: attribute them to ICE data as reported by HousingWire.