January 9, 2018
Is United States citizenship a requirement to be considered for an FHA mortgage? The answer may surprise you, but the FHA loan program is designed for a certain amount of flexibility, and the rules in this area are no exception.
The rules governing this issue can be found in HUD 4000.1, the FHA loan handbook, which instructs the lender to request specific documentation including a potential borrower’s Social Security Number. According to page 131 of the handbook, “Each Borrower must provide evidence of their valid SSN to the Mortgagee.”
FHA Loan Rules For Citizenship And Home Loan Approval
According to HUD 4000.1, citizenship is not a prerequisite for FHA mortgage loan approval. However, borrowers will have to provide paperwork showing their status as either resident aliens or non-resident aliens.
FHA Loan Rules On Proving Work or Immigration Status
The required documentation must be provided (see below) but in no case is a non-resident permitted to use a Social Security Number as a replacement for the required documents.
FHA Loans For Lawful Resident Aliens
HUD 4000.1 instructs the lender, “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 required documents should be submitted either as part of the loan application or collected by the lender as part of the approval process; these include “evidence of the permanent residency and indicate that the Borrower is a lawful permanent resident alien”
The U.S. Citizenship and Immigration Services (part of the Department of Homeland Security) provides evidence of lawful residency status. How and when this information should be collected or submitted will depend on lender standards, state law, federal regulations, etc.
FHA Loans For Non-Permanent Resident Aliens
FHA loan rules state that FHA loan applicants who are non-permanent resident aliens “may be eligible” for FHA- insured financing if they meet the following conditions:
-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.
Further rules in this area include, but may not be limited to a requirement for an Employment Authorization Document in order to authenticate 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. If there are no prior renewals, the Mortgagee must determine the likelihood of renewal based on information from the USCIS.”
Applicants staying in the U.S. “by virtue of refugee or asylee status granted by the USCIS” are automatically eligible to work in the USA, and the Employment Authorization Document is not required, “but documentation substantiating the refugee or asylee status must be obtained”.
Speak to your loan officer if you are unsure how these rules may affect your transaction.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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