If you’re a non-permanent resident dreaming of owning a home, or if you’re considering refinancing your current FHA loan, big changes are coming your way. As of May 25th, the Federal Housing Administration (FHA) will stop insuring loans for non-permanent residents. This shift, aligned with prior Trump-era immigration policies, could drastically alter your home financing options—unless you act now.
In this article, we’ll break down what’s happening, why it’s changing, and most importantly—what you can do to stay on track with your homeownership goals.
What’s Changing With FHA Loans?
Starting May 25th, non-permanent residents will no longer be eligible for FHA loans. While you can still close on an FHA loan after that date, your loan must be under contract and have an FHA case number assigned before May 25th to qualify under the current guidelines.
This is not a permanent ban on all loans for non-permanent residents—but it does significantly reduce accessible options, especially for those who rely on FHA’s flexible credit and income requirements.
Why Is the FHA Making This Change?
The FHA insures home loans through the U.S. government. Because of this backing, it’s seen as a federal benefit. With concerns around the risk of loan default tied to deportation, the FHA is tightening its eligibility guidelines.
This change reflects a more restrictive approach to immigration-related benefits and is seen as a risk management move by the federal government.
Who Will Be Most Affected?
Approximately 10 million non-permanent residents in the U.S. may feel the impact of this change. FHA loans are often the go-to option for:
- Buyers with credit scores below 700
- Borrowers with higher debt-to-income ratios
- First-time homebuyers using down payment assistance programs (DPAs)
With FHA loans off the table, many buyers will need to shift to conventional loan options, which often have stricter qualification criteria.
What Are the Alternatives to FHA Loans?
Good news: FHA loans aren’t the only game in town.
✅ Conventional Loans
Fannie Mae and Freddie Mac have not (yet) followed the FHA’s lead on non-permanent resident eligibility. This means:
- First-time homebuyers may qualify with as little as 3% down—if they have a credit score of 700+
- There are conventional DPA programs still available, like Colorado’s CHFA
✅ Non-Agency Lenders
Some non-agency lenders (private institutions) are not making any changes. These lenders may still offer financing for non-permanent residents, but expect:
- Higher down payments (typically 10–15% minimum)
- Possibly higher interest rates
These lenders can be a solid option if you don’t meet conventional guidelines but need to move quickly.
What Should You Do Next?
🏡 If You’re Buying a Home:
- Get pre-approved ASAP if you’re a non-permanent resident planning to use an FHA loan.
- You must be under contract and have a case number issued before May 25th to qualify.
- Act now to lock in lower down payment options and access to FHA’s more lenient requirements.
🔄 If You’re Refinancing:
- Already have an FHA loan but credit below 700?
- Now may be the time to refinance, before you’re no longer eligible.
- Reach out to your loan officer to discuss whether this is the right move.
Credit Score Is Key to Lower Down Payments
If you’re a non-permanent resident and your credit score is close to 700, now is the time to focus on boosting it.
- With a score in the 700s, you can access 3% down options through conventional loans.
- Improving your credit could mean thousands saved in upfront costs.
Don’t Panic—Plan Instead
This policy change is significant, but it doesn’t have to derail your homeownership journey. What matters most is planning ahead and knowing your options.
Key Takeaways:
- FHA loans will not be available to non-permanent residents after May 25th
- You must be under contract with an assigned case number by that date to qualify
- Alternatives include conventional loans and private lenders
- Boost your credit score to access better options
- Refinance now if you already have an FHA loan and won’t qualify for other options soon
Final Thoughts
“There’s a lot of fear out there. This isn’t the end of the road,” says Nathan Jennison, Managing Broker and Owner of Mortgage Architects. “It’s about making intelligent, informed plans so you can still achieve your homeownership goals.”
Whether you’re buying or refinancing, time is of the essence. Connect with your real estate agent and mortgage professional today to map out your strategy.
Frequently Asked Questions: FHA Loan Changes for Non-Permanent Residents
1. What exactly is changing with FHA loans?
As of May 25, 2025, non-permanent residents will no longer be eligible for FHA-insured loans. This includes new home purchases and refinances. To qualify under current guidelines, borrowers must have an FHA case number assigned before May 25th.
2. Can I still close on my FHA loan after May 25th?
Yes—as long as your loan is under contract and your FHA case number has been assigned prior to May 25th, you can still proceed with closing after that date.
3. Why is this policy change happening?
The FHA is aligning with federal immigration policies, aiming to reduce risk associated with loan defaults due to potential deportations. Since FHA loans are backed by the U.S. government, they are viewed as a form of public benefit.
4. Are conventional loans still available for non-permanent residents?
Yes—for now. Fannie Mae and Freddie Mac have not announced similar restrictions, so conventional loans remain an option, especially for borrowers with credit scores of 700 or higher.
5. What other loan options do I have if I’m a non-permanent resident?
Beyond FHA and conventional loans, private or non-agency lenders still offer mortgage products. These typically require:
- 10–15% down payment
- Higher credit scores
- Possibly higher interest rates
6. I already have an FHA loan—should I refinance now?
If you are a non-permanent resident with an FHA loan and don’t anticipate your credit score reaching 700+, it may be wise to refinance now before the policy change takes effect.
7. What if I need down payment assistance?
Most down payment assistance (DPA) programs are tied to FHA loans, but some states (like Colorado’s CHFA) offer conventional-based DPAs that remain available.
8. How do I boost my credit to qualify for a conventional loan?
To reach the 700+ credit score range:
- Pay down high credit card balances
- Make on-time payments
- Avoid opening new credit lines
- Work with a credit advisor if needed
9. I’m not sure which loan type I qualify for—what should I do?
Start by getting pre-approved. A mortgage professional can assess your unique situation and help you identify the best loan type for your goals.
10. Who should I contact to get started before May 25th?
Contact Nathan Jennison and the team at Mortgage Architects as soon as possible. Timing is critical to preserve your FHA eligibility.
