FHA purchase loans to non-permanent residents have nearly vanished since HUD cut them out of the program, according to figures the agency released on Oct. 9. Before the change, non-permanent residents made up about 5.8% of FHA home-purchase loans. Afterward the share fell to about 0.1%, HUD said, citing origination data from Intercontinental Exchange, the mortgage-data company. The numbers show how quickly one eligibility rule can close a federal loan program to a whole class of borrowers, and they raise a question the agency did not answer: where those buyers went.
HUD put the change in Mortgagee Letter 2025-09 and Title I Letter 490, both issued in March 2025. The two letters removed the non-permanent resident category from FHA’s Single Family Title I and Title II programs for case numbers assigned on or after May 25, 2025. HUD Secretary Scott Turner framed the result in political terms: “We are preventing illegals and non-residents from accessing taxpayer-backed programs at the expense of American homebuyers.” The category itself covers people who are lawfully in the country on visas, such as H-1B, L-1 and F-1 holders, according to Steven Glick, a mortgage sales director at HomeAbroad, writing in Scotsman Guide.
Who can still borrow is spelled out in the same mortgagee letter. A borrower with lawful permanent resident status may be eligible for FHA-insured financing, and so may citizens of the Federated States of Micronesia, the Marshall Islands and Palau. The letter also says a Social Security card is not sufficient to prove immigration status, so lenders have to document status rather than lean on a work-authorized Social Security number. Visa holders who relied on that number to qualify are now outside the program.
Every FHA case number assigned on or after May 25, 2025 falls under the rule that removed non-permanent residents from the program.
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What the Intercontinental Exchange numbers show
The data compare Q2 2024 through Q1 2025 with the period afterward across the 100 largest U.S. markets and 33 border markets. In HUD’s release, the sharpest drops came in Salt Lake City, where non-permanent residents went from 26% of FHA purchase originations to 0.15%, and in Provo, from 20% to under 0.5%. Orlando fell from 16.1% to 0.2%, Raleigh from 11.1% to 0.8%, and San Jose from about 10% to 0%. Cape Coral and Miami each dropped from about 10% to under 1%.
Across all mortgage types the decline was smaller. Non-permanent residents accounted for 5.6% of purchase mortgages before the change and 3.4% after, a drop of 2.2 percentage points. Their volume in conventional prime conforming loans, the kind Fannie Mae and Freddie Mac buy, stayed relatively stable and did not rise by enough to offset the FHA decline, the release says. The buyers who disappeared from FHA statistics were not reappearing in conventional ones in equal numbers.
Turner described the result more starkly than the data do. “Today, that share is zero,” he said, while the same release puts the national FHA purchase share at about 0.1%. The gap is small, and a local figure like San Jose’s 0% shows where zero is literally true. A share of 0.1% still works out to roughly one loan in every thousand, and HUD published percentages rather than loan counts, so the number of borrowers behind the shift is not public.
Where visa-holder buyers go instead
Loan officers quoted in the release say the policy made borrowing harder rather than impossible. Michael Brown, a home loan specialist at Churchill Mortgage in Tennessee, said the policy “has definitely had an impact on families that would have qualified before May 2025,” and that some borrowers will have to put more money down, improve their credit scores or wait for permanent-resident status. Isaac Schultz, a Churchill specialist in Michigan, said the policy “does make it far more difficult for the borrower to qualify.” HousingWire, which reported the data on Oct. 8, quoted Schultz as saying that outcome was “the main desired result of the policy change.”
Brown told HousingWire that many of these borrowers are now taking conventional loans, because Fannie Mae and Freddie Mac allow lawful non-permanent residents to borrow. The cost difference is real. Glick wrote in Scotsman Guide in September 2025 that FHA’s down payment was 3.5%, while conventional loans typically need 5% to 20%, with some lenders going to 3% for strong credit, and non-qualified mortgages from private lenders run 20% to 30% down with rates generally one to two percentage points higher. Those figures come from one industry author describing general practice, not any lender’s published terms.
Home prices and what HUD did not claim
HUD’s release also lists median single-family list prices before and after in the same markets. Provo’s range went from $630,000 to $877,400 down to $589,900 to $699,950, and Raleigh’s from $579,900 to $699,000 down to $522,000 to $624,900. Lakeland, where the FHA share fell from 13.6% to 0.16%, barely moved, from $350,000 to $374,999 before to $357,000 to $375,000 after.
The release itself says it is unclear whether the policy affected affordability. The price figures are ranges for different periods, not a measure of what the rule did, and the “after” period for Salt Lake City runs from Q4 2025 to the present rather than from the May 2025 effective date. The agency presented the price data as context for the share drop, not as a result.
Checking FHA status before applying
HUD said in its March 2025 announcement that the policy would be added to a future version of Single Family Housing Policy Handbook 4000.1, the rulebook FHA lenders follow. Lenders apply the mortgagee letter to each file by case number, so the date a case number was assigned, and the documented status of every borrower on the loan, decide whether FHA insurance is available. The agency’s main site at hud.gov hosts HUD’s mortgagee letters.
HUD’s own numbers settle one point and leave another open. The rule did what it was written to do: the non-permanent resident share of FHA purchase loans fell from about 5.8% to about 0.1%. Whether those buyers moved to conventional or non-qualified loans, paid more up front or stopped looking is not in HUD’s release, and the Intercontinental Exchange data show only that conventional volume for the group did not rise enough to make up the FHA decline.
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This article was produced with AI assistance and reviewed by The Money Overview’s editorial team.
