FHA Is Off the Table for Visa Holders. Here Are the Best Alternatives in 2026

Quick answer (updated October 2026): The best FHA alternative for H-1B buyers is usually a conventional loan. Fannie Mae allows 3% down for first-time buyers (or HomeReady within income limits), 5% down on many primary homes, and 5% down on 2-4 unit primary residences. Piggyback loans and some down payment assistance programs can also work, depending on lender and location.

If you're on an H-1B, L-1, O-1, TN, OPT or EAD, FHA isn't an option anymore. HUD removed non-permanent residents from FHA eligibility for case numbers assigned on or after May 25, 2025, and on October 9, 2026, HUD reaffirmed the policy and reported that the FHA purchase share going to non-permanent residents fell from about 5.8% to about 0.1%.

That sounds like a closed door. It isn't. For most visa-holder borrowers we work with, conventional financing was already the better fit: lower down payment options than many people realize, mortgage insurance that can come off, and agency rules that treat non-permanent residents the same as citizens. This guide compares the realistic options side by side.

Why FHA closed to visa holders

HUD Mortgagee Letter 2025-09 (March 26, 2025) removed non-permanent resident eligibility for FHA. Green card holders remain eligible, as do citizens of the Federated States of Micronesia, the Marshall Islands and Palau. Everyone else on a temporary status, including H-1B, L-1, O-1, TN, F-1/OPT and EAD-only holders, is out. The background is in the FHA non-permanent resident rule change.

Conventional loans are different. Fannie Mae's Selling Guide (B2-2-02) makes non-permanent residents eligible "under the same terms that are available to U.S. citizens," and Freddie Mac takes the same approach. So every option below is open to visa holders at the agency level. Individual lenders may add overlays.

FHA alternative for H-1B buyers: comparison table

Option	Minimum down	Who it fits	Mortgage insurance	Watch out for
Conventional 97 (Fannie standard)	3%	At least one first-time homebuyer; 1-unit primary	Yes, until removable	Homeownership education if all occupants are first-time buyers
HomeReady	3%	Income at or below 80% of area median; first-time buyer not required	Yes; Fannie waives loan-level price adjustments	Income limit; 1-unit for 97%
Standard conventional	5%	Most primary-home buyers	Yes, until removable	Score and DTI drive pricing
2-4 unit primary (Fannie/Freddie)	5%	House hackers buying a duplex to fourplex they'll live in	Yes	High-balance limits: 85% 2-unit, 75% 3-4 unit at Fannie
Piggyback (80/10/10 or similar)	Often 10%	Buyers avoiding PMI or a jumbo loan	No on the first lien	Second-lien rate and terms vary by lender
Down payment assistance	Varies	Depends on program	Varies	Many programs limit eligibility by status; check rules

Conventional 97 for H-1B buyers: 3% down

Fannie Mae's standard 97% loan-to-value option requires at least one borrower to be a first-time homebuyer. It's for one-unit principal residences, including eligible condos and PUDs, run through Desktop Underwriter, with fixed rates up to 30 years. If every occupying borrower is a first-time buyer, at least one has to complete homeownership education.

HomeReady offers 97% too, without the first-time buyer requirement, but your income must be at or below 80% of the area median. Many tech households earn too much for HomeReady in Bay Area or Seattle census tracts; some single-income households in other metros qualify. Check our HomeReady 3% down income limits guide. Freddie Mac offers comparable low-down-payment programs.

Low down payment H-1B math

Here's a hypothetical $400,000 purchase at different down payments.

Down payment	Loan amount	Principal & interest (30-yr, 7.40%)
3% ($12,000)	$388,000	$2,686.43
5% ($20,000)	$380,000	$2,631.04
10% ($40,000)	$360,000	$2,492.57
20% ($80,000)	$320,000	$2,215.62

Freddie Mac weekly average, Oct 15, 2026; illustration only, not a quote or offer. Taxes, insurance, HOA and mortgage insurance (on less than 20% down) are extra.

The difference between 3% and 5% down is only about $55 a month in principal and interest here. For a visa holder, keeping that extra $8,000 in reserves can be worth more than the lower payment.

Talk to a loan officer who's seen this before: Not sure whether 3%, 5% or a piggyback structure fits your budget? We'll run a rate-and-payment scenario at today's pricing across our 150+ wholesale lenders, with mortgage insurance included. Book a call or start your application.

5% down on a duplex, triplex or fourplex

This is the most underused option for desi buyers. Fannie Mae allows up to 95% LTV (5% down) on 2-4 unit primary residences through DU, under its eligibility matrix dated August 5, 2026. Freddie Mac also allows 95% on 2-4 unit primary homes. High-balance loans have lower limits (85% for 2-unit and 75% for 3-4 unit at Fannie).

Say Sanjay and Priyanka, a hypothetical H-1B couple in Houston, buy a $640,000 duplex with 5% down, live in one side and rent the other.

Item	Amount
Loan (95% LTV)	$608,000
Principal & interest (30-yr, 7.40%)	$4,209.67/month

Illustration only, not a quote or offer; taxes, insurance and mortgage insurance extra.

Rent from the second unit may be usable to help qualify, subject to lender rules and documentation. See buying a fourplex with 5% down for the details.

Piggyback loans: avoid PMI or a jumbo

A piggyback pairs a first mortgage at 80% LTV with a second loan (often a HELOC or fixed second) for part of the down payment. Common structures are 80/10/10 or 80/15/5. You avoid mortgage insurance on the first lien, and in pricier markets it can keep the first mortgage under the 2026 conforming limit of $832,750 (up to $1,249,125 in high-cost areas).

The catch: the second loan usually carries a different rate and terms, and fewer lenders offer it to visa holders. Compare the blended cost with PMI before choosing. Our 80/10/10 piggyback guide shows how.

Down payment assistance for visa holders

Down payment assistance comes from states, counties, cities and some lenders. Eligibility rules vary widely, and some programs require US citizenship or permanent residency, especially those tied to federal funds. USDA guaranteed loans, for example, require citizenship, non-citizen national status or "qualified alien" status since March 18, 2025, so non-permanent residents aren't eligible. Always read the program's own status requirement before counting on it.

Mortgage insurance is temporary on conventional loans

On conventional loans, PMI can be removed once you reach enough equity under the servicer and investor rules. Paying down the loan or a rise in value can get you there. That's a major advantage over many FHA structures. Read how to remove PMI on a conventional loan.

What the rules actually say

• HUD Mortgagee Letter 2025-09 (March 26, 2025; case numbers on or after May 25, 2025): non-permanent residents no longer FHA-eligible; HUD release No. 26-084 (Oct 9, 2026) reaffirmed and reported the share dropping from ~5.8% to ~0.1%.

• Fannie Mae Selling Guide B2-2-02: non-permanent residents eligible on the same terms as US citizens.

• Fannie Mae 97% LTV options (as of October 2026): standard 97% requires at least one first-time homebuyer; HomeReady requires income at or below 80% of AMI; 1-unit principal residences.

• Fannie Mae Eligibility Matrix (Aug 5, 2026): up to 95% LTV on 2-4 unit primary residences via DU; high-balance 85% (2-unit) / 75% (3-4 unit).

Frequently Asked Questions

Q: Can H-1B holders still get an FHA loan?
A: No. Since HUD Mortgagee Letter 2025-09, for case numbers on or after May 25, 2025, FHA is limited to US citizens, permanent residents and certain Compact citizens. HUD reaffirmed this in October 2026. H-1B, L-1, O-1, TN, OPT and EAD-only holders need conventional or other non-FHA financing.

Q: Can a visa holder buy a house with 3% down?
A: Yes, through a conventional loan if a lender allows it. Fannie Mae's standard 97% option needs at least one first-time homebuyer; HomeReady needs income at or below 80% of area median. Fannie applies these on the same terms as for citizens. Some lenders overlay higher down payments for visa holders.

Q: What's the best FHA alternative for H-1B with a lower credit score?
A: Conventional through Desktop Underwriter. Fannie no longer sets a minimum credit score for DU casefiles on or after November 16, 2025, though many lenders still require 620. Lower scores cost more in pricing and mortgage insurance, so a larger down payment or extra reserves can help.

Q: Can I use down payment assistance on an H-1B?
A: Sometimes. Each program sets its own eligibility, and some require citizenship or permanent residency, especially those using federal funds. Check the program's status requirement first, then confirm the lender can pair it with a conventional first mortgage.

Q: Is 5% down on a duplex really possible for visa holders?
A: Yes. Fannie Mae and Freddie Mac allow up to 95% LTV on 2-4 unit primary residences, with lower limits for high-balance loans. You must live in one unit. Lender overlays vary, so compare a few before writing an offer.

Build your post-FHA game plan

Losing FHA didn't take away your path to homeownership; it moved it to conventional, where the rules already treat you like a citizen. We'll run a rate-and-payment scenario at today's pricing comparing 3%, 5%, 2-4 unit and piggyback structures, with mortgage insurance and reserves included, across our 150+ wholesale lenders. We work with visa holders every week and are licensed nationwide. Have your I-797 or EAD, recent paystubs, savings balances and target price ready. Book a free 15-minute call at /contact, start your application at /apply, or call 713-366-4668.

Masala Loans is a brand of Matador Lending, LLC (NMLS #2072896). Written by Apurva Sanghavi, President, NMLS #227127. Equal Housing Opportunity. This article is general education, not tax, legal or immigration advice — consult a qualified CPA, attorney or immigration lawyer for your situation. Program availability, rates and terms vary by lender and borrower and are subject to change; not a commitment to lend.