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.
CONTACTS:
Bob Burton I 512.370.2869 I rburton@winstead.com
Bob Burton is a Shareholder and Department Head at Winstead, where he leads the firm’s Real Estate Development, Real Estate Finance, and Public Finance practice areas. He has significant experience advising clients on mixed-use developments, master-planned communities, and complex community governance structures. Bob counsels national homebuilders and real estate developers on all aspects of residential, commercial, and mixed-use projects, including land acquisition, entitlement, project structuring, marketing, and regulatory compliance. His work spans large-scale master-planned communities, urban and suburban mixed-use developments, resort and second-home communities, and multifaceted condominium projects across the country.
Will Smith I 512.370.2893 I wsmith@winstead.com
Will Smith is a member of Winstead’s Real Estate Development & Investments Practice Group. Will’s practice focuses on real estate, with an emphasis on the planning, development, risk management, administration, and marketing of single-family, townhome, condominium, commercial, and mixed-use projects, as well as resorts, clubs, and fractional ownership structures. Will also works with developers and builders on Interstate Land Sales Act (ILSA) compliance and registration and compliance with secondary mortgage market (FHA, VA, FNMA, etc.) requirements.
