The U.S. Department of Housing and Urban Development (HUD) has issued Mortgagee Letter 2025-09, which updates the residency requirements for borrowers seeking Federal Housing Authority (FHA) insured financing. These changes take effect on May 25, 2025, and require that the borrower be a U.S. citizen or a lawful permanent resident to qualify for FHA-insured mortgages.
Under the new rules, non-permanent residents no longer qualify, while lawful permanent residents must provide acceptable documentation, such as U.S. Citizenship and Immigration (USCIS) records, as part of the loan application to prove their lawful status. A social security card alone is not enough to prove immigration or work status. The streamlined refinance procedures also reflect these changes by removing references to non-permanent resident status, which means borrowers who want to refinance their FHA loans must meet the same requirements.
Overall, this shift by HUD may reduce the number of borrowers who can secure FHA loans in areas with substantial non-permanent resident populations, and it may influence both demand and supply in local real estate markets.
