The US Department of Housing and Urban Development (HUD) has recently revised its residency requirements for Federal Housing Administration (FHA) loans, effectively removing eligibility for “non-permanent residents” (NPRs) to receive FHA-backed mortgages.
The FHA loan program, which helps low-income and subprime borrowers secure home loans with as little as a 3.5% down payment, traditionally offers government-backed insurance that protects lenders in case of borrower default.
However, under the new rule change, NPRs, including those on employment-based H-1B visas, are no longer eligible for FHA insurance.
This policy shift, announced in March and enacted on May 25, was part of an effort to prioritise economic opportunities for US citizens and lawful permanent residents, as stated in an executive order under the Trump administration.
Data from John Burns Research & Consulting (JBREC) shows that NPRs accounted for less than 1% of FHA loan volume in June, down dramatically from over 6% in April.
By July and August, that figure had dropped to virtually zero, the lowest level since JBREC began tracking the data in 2018.
In 2024, NPRs made up about 4% of FHA loan volume nationally, with some markets, particularly in Florida, seeing higher concentrations.
As a result of the new policy, many NPRs are now unable to access FHA-backed loans and must turn to conventional mortgage options.
These loans come with stricter criteria, such as higher credit score requirements, proof of US-based income, and a solid employment history, criteria that many NPRs struggle to meet, even though they are legally employed and contribute to the economy.
“The reason FHA loans to NPRs have dropped is simply because they’re not buying homes anymore,” wrote Alex Thomas, a researcher at JBREC on X. This marks a major change in the housing landscape, especially in areas with large populations of H-1B visa holders, such as Seattle, Dallas, and the Bay Area.
‘They shouldn’t have been allowed at first place’
Netizens also posted their comments on the post. A user noted, “THEY NEVER SHOULD HAVE BEEN ALLOWED.”
Another claimed, “I can’t buy a large farmland property in India and I have an OCI. Why are Indians and Chinese allowed to buy whatever they want here?.”
“I can’t buy a large farmland property in India and I have an OCI. Why are Indians and Chinese allowed to buy whatever they want here?,” wrote a user.
“As an H-1B, I support it. H1B don’t need this FHA loans. We here can directly buy GC and then all cash houses. Why bother with loans at all,” explained a netizen.
“How many H-1Bs actually use FHA? Isn’t there an income limit? I’m guessing most homebuyers won’t qualify anyway,” questioned a user.
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