FHA Tightens the Rules: Non-Permanent Residents No Longer Eligible for FHA Loans

FHA loan access denied: A new policy change bars non-permanent residents from eligibility starting May 25, 2025.

In a major policy shift, the Federal Housing Administration (FHA) has updated its residency requirements, narrowing the eligibility for FHA-insured loans. Effective for case numbers assigned on or after May 25, 2025, this change eliminates eligibility for non-permanent residents, limiting FHA financing to U.S. citizens, lawful permanent residents, and select citizens from specific Pacific Island nations. Here’s what that means for buyers, lenders, and real estate professionals.

🏠 What Changed?

According to Mortgagee Letter 2025-09, FHA has:

✅ Eliminated eligibility for non-permanent residents.✅ Updated documentation requirements for permanent residents and Pacific Island citizens.✅ Revised sections of the FHA Single Family Housing Policy Handbook (HUD Handbook 4000.1) to reflect these changes.✅ Aligned its policies with recent federal executive priorities, focused on protecting long-term financial stability and government-backed loan integrity.

📌 Who Is Still Eligible?

The following groups can still access FHA-insured mortgage products:

• U.S. Citizens

• Lawful Permanent Residents (must provide USCIS documentation)

• Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau

These individuals are subject to the same underwriting requirements as U.S. citizens, and their mortgage files must include proof of eligibility and updated documentation via the Uniform Residential Loan Application (URLA) or Reverse Loan Application (RLARM), depending on the product.

❌ Who No Longer Qualifies?

Non-permanent residents—those holding temporary visas or uncertain immigration status—are no longer eligible for FHA-insured loans under any Title II Single Family programs, including:

• Forward Mortgages

• Home Equity Conversion Mortgages (HECM) (aka reverse mortgages)

• Streamline Refinances, even in non-credit qualifying situations

🔍 Why the Change?

The stated rationale is that non-permanent residency carries immigration-related uncertainties that may compromise a borrower’s long-term ability to meet mortgage obligations. Since FHA-insured loans are long-term federal commitments, HUD has determined that stable and lawful residency is a necessary criterion to safeguard taxpayer resources and program integrity.

The policy also reflects broader federal priorities to reserve government benefits for U.S. citizens and lawful permanent residents, as emphasized in recent executive actions.

💼 Implications for Real Estate Pros and Lenders

If you're a real estate broker, loan officer, or housing counselor, you need to:

• Review all applications carefully for updated residency documentation.

• Educate potential borrowers—especially those with unclear immigration statuses—on their financing options.

• Update internal checklists and loan application review processes by the May 25, 2025 effective date.

Lenders must also remove previously applicable underwriting procedures for non-permanent residents from their internal policies.

📅 Effective Date

The new residency rules must be applied to all FHA case numbers assigned on or after May 25, 2025. Early adoption is allowed but not mandatory prior to that date.

📝 Final Thoughts

This shift could significantly affect many aspiring homeowners who previously qualified under non-permanent resident guidelines. It’s more important than ever for real estate professionals and housing counselors to stay updated, clarify borrower qualifications early in the process, and assist clients in finding the most suitable financing paths.

For more information, visit the official NAR Update on Residency Changes or read Mortgagee Letter 2025-09.

Meriden’s Housing Market Could Get a Boost From This 10-Lot Proposal

A wide view of the open lot at 175 Bee Street in Meriden, CT — the proposed site for a 10-lot residential subdivision.

A developer has proposed a new 10-lot residential subdivision at 196 Bee Street in Meriden, CT — a project that could bring a welcome infusion of new housing to a city navigating tight inventory and shifting buyer demand.

The nearly 4-acre site, currently a grassy parcel featuring a basketball court and sloping terrain near I-91, would be divided into 10 single-family home lots. The plan is currently under review by the city’s Planning Department.

While relatively modest in scale, this kind of infill development plays an increasingly vital role in meeting local housing needs — especially in cities like Meriden, where developable land is limited but demand for homeownership remains strong.

🏘️ What’s Around: A Look at the Bee Street Area

The proposed site sits just northeast of downtown Meriden, in a residential pocket that blends quiet neighborhood streets with quick access to major transit corridors. Bee Street itself is just a few minutes from the Meriden Green, a revitalized urban park with walking trails and event space, and just minutes from the I-91 and I-691 junction, making it a convenient hub for commuters heading toward Hartford, New Haven, or beyond.

Nearby amenities include:

• Schools: Within short driving distance to Israel Putnam School and Maloney High School.

• Shopping: Close to the Westfield Meriden Mall, Stop & Shop, and local restaurants.

• Transit: Meriden Train Station is less than 2 miles away, offering Amtrak and CT Rail options.

This location could appeal to buyers seeking suburban space with urban access — particularly first-time buyers or families looking for new construction at a manageable scale.

🛠️ Understanding the Approval Process

Before ground can be broken, the proposal must navigate Meriden’s site plan approval process, which often includes:

• A review by planning and zoning officials

• Public hearings where neighbors can express support or concerns

• Potential feedback on issues like traffic flow, lot grading, and stormwater management

Because the project is a subdivision of more than a few lots, it could also trigger environmental impact reviews and requirements around sidewalk connectivity or road improvements. This process can take several months depending on feedback and revisions.

🌇 What Might Residents Say?

New developments, even relatively small ones, can spark a mix of reactions from the community.

Supporters may welcome the new homes as a positive sign of investment in the area — boosting local tax revenue and adding energy to the neighborhood. With many homeowners sitting on older properties, new construction can also help elevate surrounding home values over time.

Concerns may center on:

• Increased traffic on Bee Street

• Impact on school enrollment

• Loss of green space or changes in the neighborhood’s character

These are common considerations in most infill projects, and developers are often asked to make adjustments (e.g., lot size, buffering, traffic calming) to address them.

🔑 What This Means for Buyers & Sellers

If you're a homebuyer, this project may offer a rare opportunity to buy new construction in an established neighborhood — without the sprawl or commute of more distant subdivisions.

If you're a homeowner nearby, the marketability and value of your property could benefit from thoughtful new development — especially if it attracts motivated buyers to the area.

Thinking of buying or selling in Meriden or the surrounding towns? 📞 Contact us today to explore your options, get a property valuation, or join our priority list for new listings. We know the Meriden market inside and out — and we’d love to help you move forward with confidence.

Homebuyers Turn to Wall Street to Fund Main Street

From Wall Street to Main Street: More homebuyers are cashing in stocks to make their move into real estate.

A recent Redfin survey reveals that 1 in 5 prospective homebuyers (20%) plan to sell stocks to help fund their down payment—highlighting just how closely tied the housing market is to stock market performance.

This financial strategy is even more common among current homeowners: 13% say they’ve sold stocks to cover a down payment, while 10% have used stock sales to afford their monthly mortgage payments. On the rental side, only 6% of renters reported selling stocks to cover rent, underscoring the more substantial financial maneuvers required for homeownership.

The data also highlights growing concern over stock market volatility, particularly among buyers aged 50 and up. Many are hesitant to enter the housing market amid fears of declining stock portfolios. This uncertainty has been amplified by recent economic events—such as newly introduced tariff policies under President Trump—which have sparked significant market fluctuations.

Chen Zhao, Redfin’s economic research lead, explained the dual impact of these market swings: “Falling stock prices directly reduce the funds available for down payments, which could cool homebuying demand. But the volatility might also drive some to view real estate as a more stable investment, actually increasing interest in buying a home.”

Zhao also noted that a struggling stock market could lead to lower mortgage rates, which might help balance affordability challenges.

In the hierarchy of down payment strategies, selling stocks ranks third, following:

• Saving directly from paychecks (48%)

• Taking on a second job (29%)

Other notable funding methods include selling another home (16%) and using an inheritance (11%).

As housing affordability remains a pressing concern, these findings demonstrate the creative—and sometimes risky—financial moves today’s buyers are making to achieve homeownership.

📊 Read the full survey from Redfin here: Redfin Survey - April 2025

Thinking about buying or selling a home in the next 12 months?📩 Contact us below to start planning your move with a team who understands today’s market and the strategies that work. Let’s make your real estate goals a reality!