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FHA Loans And Work Permits: A Reader Question

Are work permits required for FHA loans when the applicant is a legal permanent resident alien or non-permanent resident alien? A reader asks, “So if a person had a work permit but never renewed it, but has been doing taxes with his/her ss# and is currently working does that mean there not qualify for FHA? Or does the legal status have to be current?”

FHA loan rules in HUD 4000.1 are clear that a borrower is not required to be a U.S. citizen in order to qualify for an FHA mortgage loan. However, legal status is required-those in the United States illegally cannot qualify for an FHA loan. For permanent resident aliens, HUD 4000.1 states:

“A Borrower with lawful permanent resident alien status may be eligible for FHA-insured financing provided the Borrower satisfies the same requirements, terms and conditions as those for U.S. citizens…The mortgage 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.”

For non-permanent resident aliens, FHA loan rules state that eligibility for an FHA loan hinges on the following:

“-the Property will be the Borrowers 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.”

Furthermore, “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 Mortgagee may assume that continuation will be granted.”

However, if no renewal has occurred, HUD 4000.1 instructs the lender, “the Mortgagee must determine the likelihood of renewal based on information from the USCIS.”

For refugees and asylum seekers, the rules are different for one important reason, according to the FHA loan rule book:
“A Borrower residing in the U.S. by virtue of refugee or asylee status granted by the USCIS is automatically eligible to work in this country. The Employment Authorization Document is not required, but documentation substantiating the refugee or asylee status must be obtained.”

The answer to the reader question is that proper documentation of a borrower’s annual income, employment, employment status, and ability to be lawfully employed will be required as a condition of loan approval where applicable. Borrowers who need paperwork or paperwork updates to work permits and other items in order to apply for an FHA mortgage should accomplish that first before approaching a lender in case the process takes longer than anticipated.

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