Loan officer Elizabeth Galan, who works for UMortgage in Cincinnati, has had to pivot her business strategy in 2025.
Galan focuses on serving Hispanic borrowers — about 80% of her clients — in cities like Cincinnati and Dayton, Ohio, as well as northern Kentucky. Many of them hold non-permanent resident status, meaning they live in the U.S. under a work visa, for example. Recent immigration policies adopted by the Trump administration have directly affected her clients, forcing her to adapt quickly.
“I am very active in the Hispanic community, so I’m starting one of the first BNI (Business Network International) groups in Cincinnati to help having a bilingual business network channel to connect with more professionals in the area,” Galan said. “I’ve also been partnering up with immigration attorneys to educate the consumer.”
When she spoke with HousingWire in late September, Galan had 12 clients under contract — 90% of them Hispanic and about half residents. Despite the challenges, she said her business is growing due to her new approach.
New immigration policies have banned non-permanent residents from some government-backed loan programs, altered borrower behaviors and reduced appetite for nonqualified mortgages (non-QMs). The changes have forced LOs and lenders to shift strategies.
In March, the Federal Housing Administration (FHA) issued new guidance limiting loan eligibility to U.S. citizens and permanent residents, aligning with President Donald Trump’s broader policy agenda. The FHA cited immigration-related uncertainty as a key factor, saying non-permanent residents face potential legal and residency risks that could affect loan repayment.
The ban has pushed LOs to convert clients to conventional loans, which typically require higher credit scores.
The FHA program traditionally serves first-time homebuyers, allowing down payments as low as 3.5% and accepting credit scores down to the 500 range (with a 580 minimum for the lowest down payment). It also offers more flexible debt-to-income ratios and competitive interest rates.
“At least 70% of my clients were getting FHA loans,” Galan said. “Now, we have to convert them to conventional loans and help them get higher credit scores. Technically, conventional loans can be financed with a 620 credit score, however, the rate and PMI are atrocious. That means a client that might be able to afford a $200,000 home might only be able to qualify for $150,000. We have to work to get them in a higher credit tier.”
Slowdown in non-QM, ITIN lending
Lenders and LOs have also reported a decline in ITIN (Individual Taxpayer Identification Number) loans, a type of non-QM product often held by private investors.
“Are we watching what’s happening with visas and immigration status on the ITINs? We’re paying attention to that, just so that we don’t originate a loan today and yesterday there was a change. You sort of got to play by those rules,” said Marc Halpern, CEO of Foundation Mortgage. “Is foreign national borrower lending off? Yes, it’s off from where it certainly was.”
Foundation Mortgage specializes in non-QM wholesale lending, operating in about 30 states. Based in South Florida, Halpern said many of his clients are Latin American and European investors who prefer to hold real estate in the U.S.
“We did strong volume from 2017 to 2023 for foreign nationals, mainly for short-term rentals,” Halpern said. “That market is certainly off its highs, but people are still buying.”
Despite new immigration policies, sources said that non-QM products remain available and underwriting guidelines have not changed. ITIN borrowers typically put 20% down and pay rates that are 1 to 1.5 percentage points higher than conventional borrowers.
“You’d also be surprised about how much money these people save,” Galan said. “These buyers are very qualified — they usually have more money than those that actually have a work permit or a Social Security number.”
In the secondary market, a report from credit rating agency KBRA found that noncitizen borrower exposure has increased two and a half times over the past five years in private-label residential mortgage-backed securities.
“There are no federal laws prohibiting mortgage lending to noncitizens, and core regulations — such as the Ability-to-Repay (ATR) rule and fair lending laws — apply regardless of immigration status,” the report states. “While a few states restrict property ownership for certain foreign nationals, homeownership and foreclosure processes for noncitizens is generally the same as for U.S. citizens, with no legal barrier to lien enforcement.”
Default rates for foreign nationals are 4.6%, compared to 1.7% for U.S. citizens. This reflects a much lower owner-occupancy rate of 13.1%, reliance on foreign income and limited credit history, according to the study.
Exposure to ITIN loans remains minimal and confined to nonprime transactions, KBRA noted.
“Although performance has been positive to date — with virtually no defaults or losses — the dataset is very limited, warranting continued observation in today’s shifting political environment,” the report said.
