With FHA loans off the table, non-permanent residents (NPRs) must now turn to conventional mortgages, which require higher credit scores
Thousands of skilled immigrants living in the United States on H-1B visas have found their path to homeownership abruptly blocked, following a recent federal policy shift that cut off access to Federal Housing Administration (FHA) loans.
The move, enacted through a March 26 letter from the Department of Housing and Urban Development (HUD), took effect May 25 and has already reshaped housing opportunities for non-permanent residents (NPRs) across the country.
According to John Burns Research & Consulting (JBREC), FHA-backed mortgages for NPRs—including H-1B holders—have “dropped to near-zero following a rule change in May,” Alex Thomas, a JBREC housing analyst, wrote on X.
“NPRs made up ~4 percent of FHA loan volume nationally in 2024; more in some markets, especially in Florida.” By July and August, the share of FHA loans going to NPRs had effectively hit zero, the lowest since JBREC began tracking the data in 2018.
The HUD letter stated the change was “in line with President Donald Trump’s commitment to safeguarding economic opportunities for US citizens and lawful permanent residents,” and that “federal benefits, including access to FHA-insured mortgages, are reserved for individuals who hold lawful permanent resident status.”
The impact is especially acute for younger and first-time homebuyers in regions where NPRs were a market force. Eric Finnigan, another JBREC analyst, flagged that the policy is squeezing “entry-level homebuying in some key housing markets already dealing with weak sales & too much supply.”
FHA banned lending to H-1B visa holders and other non-permanent residents in May.
— Eric Finnigan (@EricFinnigan) October 14, 2025
This squeezes entry-level homebuying in some key housing markets already dealing with weak sales & too much supply.
(Of the 10 local markets most affected, 6 of them are in 2 states) https://t.co/fx4ErFD7Ep
The National Association of Mortgage Brokers (NAMB) previously warned of a potential market contraction due to a smaller eligible borrower pool, saying it could slow homebuying activity and affect home values.
It also cautioned that removing reliable borrowers from the pipeline could lead to less diversified portfolios and increased concentration risk for lenders.
With FHA loans off the table, NPRs must now turn to conventional mortgages, which require higher credit scores, US-based income, and documented employment history—criteria that many legal immigrant workers struggle to meet, despite steady employment and economic contributions.
For H-1B holders, the new restrictions add to existing hurdles: they are limited to working for their sponsoring employer, barred from side gigs or real estate income, and face strict employment rules. The result is a chilling effect on immigrant homeownership and a potential talent drain for US businesses.
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