Federal Housing Administration ban shifts non-permanent resident mortgage locks from boom to bust

"Earlier in the spring, the Federal Housing Administration (FHA) announced that, starting in late May 2025, H-1B visa holders and other non-permanent residents would be banned from taking out new FHA mortgages. The result? Non-permanent residents-including H-1B visa holders-saw their share of FHA mortgage locks crater from 3.8% in September 2024 to 0.2% in September 2025, according to Optimal Blue. This sharp pullback comes after their share of FHA mortgage locks had spiked between 2020 and 2024."

"Keep in mind that FHA mortgages make up a much smaller share of overall borrowers than, say, GSE conventional borrowers. Indeed, Optimal Blue data reviewed by ResiClub shows that FHA mortgages accounted for 22.0% of total U.S. mortgage-purchase locks in September 2025. Meanwhile, according to the New York Fed, as of June 2025, FHA mortgages represent just 12% of the nation's $12.94 trillion in mortgage debt."

""This squeezes entry-level homebuying in some key housing markets already dealing with weak sales and too much supply," writes Eric Finnigan, president of Demographics Research at John Burns Research and Consulting. As an example of a potentially affected housing market, Finnigan points to Fayetteville, AR-which is where Walmart is headquartered. Walmart HQ has reportedly paused new H-1B hiring in late 2025 after the Trump administration announced it'd impose a $100,000 fee for certain new H-1B applications."

Starting in late May 2025, the Federal Housing Administration barred H-1B visa holders and other non-permanent residents from obtaining new FHA mortgages. As a result, the share of FHA mortgage locks by non-permanent residents fell from 3.8% in September 2024 to 0.2% in September 2025, per Optimal Blue. FHA mortgages accounted for 22.0% of U.S. mortgage-purchase locks in September 2025 but represented just 12% of total mortgage debt as of June 2025, according to the New York Fed. The pullback tightens entry-level homebuying in markets with weak sales and excess supply, including Fayetteville, AR, where Walmart paused new H-1B hiring.

Read at Fast Company