Do borrowers have to be U.S. citizens to qualify for FHA financing?

U.S. citizenship is not required for eligibility. The lender must determine the residency status of the borrower based on information provided on the application and other applicable documentation. In no case is a Social Security card sufficient to prove immigration or work status.

A borrower with lawful permanent resident alien status may be eligible provided the borrower satisfies the same requirements, terms and conditions as those for U.S. citizens. The file must include evidence of the permanent residency and indicate that the borrower is a lawful permanent resident alien on the URLA.

The U.S. Citizenship and Immigration Services (USCIS) within the Department of Homeland Security provides evidence of lawful, permanent residency status.

A borrower who is a non-permanent resident alien may be eligible provided:

  •       the property will be the borrower’s principal residence;
  •       the borrower has a valid SSN, except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD;
  •       the borrower is eligible to work in the United States, as evidenced by the Employment Authorization Document issued by the USCIS; and
  •       the borrower satisfies the same requirements, terms and conditions as those for U.S. citizens.

The Employment Authorization Document is required to substantiate work status. If the Employment Authorization Document will expire within one year and a prior history of residency status renewals exists, the lender may assume that continuation will be granted. If there are no prior renewals, the lender must determine the likelihood of renewal based on information from the USCIS.

A borrower residing in the U.S. by virtue of refugee or asylee status granted by the USCIS is automatically eligible Cosigners are liable for the debt and therefore, must sign the Note. Cosigners do not hold an ownership interest in the subject property and therefore, do not sign the security instrument.

Non-occupying co-borrowers or cosigners must either be United States (U.S.) citizens or have a principal residence in the U.S.

A party who has a financial interest in the mortgage transaction, such as the seller, builder or real estate agent, may not be a co-borrower or a cosigner. Exceptions may be granted when the party with the financial interest is a family member.

For additional information see Handbook 4000.1 II.A.1.b.ii.(A) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh