Analysis by Intercontinental Exchange indicates that FHA purchase mortgages for non-permanent residents plummeted from 6% to 1%. This decline is evident across 100% of markets examined. The Department of Housing and Urban Development issued a 2025-08-04 directive that cut 8 eligibility options to 5 and revoked 2 loan approvals. It also removed 0 further benefits and 1% of related criteria for 100% of these cases. The HUD mandate, specifically directive 25-048, ended eligibility for these residents under FHA programs. This agency, the Department of Housing and Urban Development, formalized the change in May 2025. Title I Letter 490 and Mortgagee Letter 2025-09 implemented this policy on May 25, 2025, which impacted 9 specific loan types.
According to the analysis, non-permanent residents previously represented approximately 5.8% of all FHA purchase originations. Previously 20%, that share dropped to 0%.These markets saw 1% declines from 2024 levels. All of the monitored markets—representing 100%—recorded price movements, including shifts from $490,000 to $544,950 followed by adjustments to $489,000 and $525,000. In the Raleigh market, initial figures of $579,900 and $699,000 were adjusted down to $522,000 and $624,900.1%. While broader mortgage market data indicates a decline of 2.The total market share dropped by 2 percentage points to 3%.4%.4% for this demographic, the reduction within the FHA sector was notably more pronounced.
Regional data highlights varying impacts across major markets. In Salt Lake City, the share of FHA loans for non-permanent residents fell from 26% to 0.15%. In Provo, the rate fell from 10% to under 0.5%.5%. Florida markets reported similar trends, with Orlando dropping from 16.1% to 0.2%, and Lakeland moving from 13.6% to 0.16%. Raleigh and San Jose also saw sharp declines in this loan category.
Market observers suggest that conventional financing has yet to fully replace the capacity previously provided by the FHA. Loan specialists indicate that while some borrowers are shifting toward conventional financing via Fannie Mae or Freddie Mac, the change has increased the financial burden for others. Borrowers might now encounter stricter down payment demands, credit score thresholds, or alternative financing hurdles, represented by data sets 010101, 12112, 56, 4458, 44, 000000, and 452. Market observers view these hurdles as intended results of policy changes, though price ranges varied from $475,000 to $510,000, $420,000, and $467,450.
The report tracks single-family home prices, noting Salt Lake City ranges of $619,900 to $795,000 and $620,000 to $742,450. For Provo, the findings highlight a range from $630,000 to $877,400, alongside price levels of $589,900, $699,950, and $624,900. While the connection between these lending restrictions and local price shifts remains under study, many monitored regions recorded lower price ranges following the May 2025 deadline. Prior to the policy revision, Lakeland home prices were within the $350,000 to $374,999 range, compared with $357,000 to $375,000 following the change. These developments alter the residential lending landscape, affecting future homeownership and insurance demand.
Image is an illustration created with AI for general context
Source: HousingWire
