As part of recent policy shifts, the United States Department of Agriculture (“USDA”) and the Federal Housing Administration (“FHA”) have both announced the decision to curtail home loan eligibility for non-U.S. citizens.
USDA
On March 18, 2025, the USDA’s Single-Family Housing Guaranteed Loan Program (“SFHGLP”) announced that it has retracted the temporary authority that allowed some non-U.S. citizens with valid social security numbers and work authorization to be eligible to apply for a USDA-guaranteed home loan.
Lenders are responsible for verifying applicants’ documents to determine eligibility and must retain a copy of supporting documentation in the permanent loan file. Eligible applicants must be U.S. citizens or have a specified type of alien status. The USDA has posted a job aid to assist lenders in determining qualifying documentation for each type of eligible alien status.
The temporary authority, previously announced by USDA in April 2022, is no longer valid, effective immediately. USDA Handbook 1-3555, Chapter 8, will be revised to include the updated policies in a future publication.
FHA
FHA announced in Mortgagee Letter (ML) 2025-09 that the agency has updated residency requirements to remove eligibility for non-permanent residents from the Single-Family Housing Policy Handbook 4000.1 (HUD Handbook 4000.1).
Under 24 C.F.R. § 203.33, FHA-approved lenders are required to evaluate a borrower’s ability to sustain long-term financial commitments and lawful residency status. ML 2025-09 cites concerns that non-permanent residents are subject to immigration laws that can affect their ability to remain in the United States, thereby making their long-term financial stability less certain.
Previously, a non-permanent resident, such as someone with a work visa, was eligible for an FHA-insured home loan provided the subject property was a primary residence, they had a Social Security number and were eligible to work in the United States.
Going forward, to be eligible for an FHA-insured loan, all borrowers must now be a U.S. citizen or permanent resident alien. Borrowers must complete the citizenship portion of Section 1a on the Uniform Residential Loan Application and lenders must maintain documentation of eligibility in every loan file. The citizenship status and residency requirements must also be applied to non-credit qualifying streamline refinances which were previously exempt from review.
The revisions to residency requirements announced in ML 2025-09 may be implemented immediately but are mandatory for loans with FHA case numbers assigned on or after May 25, 2025. The revisions apply to all FHA Single-Family Title I and Title II programs.
