July 22, 2024

Are Only U.S. Citizens Eligible For FHA Loans? Facts vs. Myths

During my discussions with loan applicants, there seems to be a common misperception that only U.S. citizens are eligible for FHA mortgage financing.  I can recall a long list of second hand stories from people who “heard about” illegal immigrants receiving FHA financing using forged and fraudulent documents.

Although it is certainly possible that some FHA loans were approved for ineligible borrowers based on fraudulent documentation, the number of such cases are probably minimal.  FHA eligibility and documentation guidelines regarding citizenship and immigration status are in place to ensure that underwriters and lenders approve only eligible borrowers.

It is a total myth that only U.S. citizens are eligible for FHA financing.  Conceptually, it would make very little sense for the United States, essentially a nation of immigrants, to deny mortgage financing to lawful U.S. residents based on a lack of formal citizenship.

Although U.S. citizenship is not a requirement for FHA mortgage eligibility, the FHA does have different documentation requirements based on a person’s immigration status as detailed below.

  1. FHA lenders must determine the residency status of all applicants based on applicable documentation and from the information provided by the borrower on the loan application.
  2. Borrowers with lawful permanent resident alien status are eligible for FHA financing under the same terms and conditions as U.S. citizens.  Applicants who are lawful permanent residents must state this on the loan application and provide evidence of permanent residency.   Lawful permanent residents can obtain proof of their immigration status by contacting the U.S. Citizenship and Immigration Services (USCIS) which operates under the Department of Homeland Security.
  3. Non-permanent resident aliens are also eligible for FHA mortgage financing but only if the borrower has a valid Social Security Number and is eligible to work in the United States.  In addition, the home being purchased must become the borrower’s principal residence.  A Social Security card is not proof that a non-permanent resident is allowed to work in the U.S. – work eligibility must be obtained from the USCIS.
  4. Any mortgage applicant who is not a U.S. citizen and does not have lawful residency in the United States is not eligible for FHA mortgage financing.