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President Donald Trump’s recent executive order rescinding diversity, equity, and inclusion (DEI) programs has had significant repercussions in various sectors, including lending, as it comes to Hispanic homeownership. The latest repercussion was last week when the Department of Housing and Urban Development (HUD) announced that it would no longer extend Federal Housing Administration (FHA) loans to borrowers who are not permanent residents.
The new guidance applies to Title I property improvements and manufactured housing loans, in addition to Title II programs on purchase, refinancing and reverse loans. It will be implemented by HUD Secretary Scott Turner, who posted on social media that with the new directive the Trump administration “put an end to illegals receiving FHA home loans.”
The restriction has the potential to upend not only the FHA program, but the broader housing market. That’s because Hispanics make up 30% of all FHA borrowers and accounted for a shocking 97.5% of U.S. population growth between 2022 and 2023. It is unknown what percentage of Hispanic FHA borrowers are non-permanent residents as that data is not available.
Regardless, the numbers are striking. The number of Hispanic owner households has risen by 131% since 2000. Despite being just 15.2% of overall households, Hispanics account for 43.3% of net household formation growth and 35% of net homeownership growth.
National Association of Hispanic Real Estate Professionals (NAHREP) CEO Gary Acosta previously told HousingWire that he’s heard lenders say that the new guidance will likely have a negative impact on their business, but that the larger impact is unclear.
“[…] Republicans have historically been the party of what I describe as the ownership society,” he said. “Homeownership is a critical component of that […] so to me, this is contrary to that.”
Hispanic homeownership has consistently lagged behind other ethnicities. Since 2000, their ownership rate has ranged from 45.4% to 49.7%, with the former coming after the 2008 financial crisis and the latter being in the runup to it. It currently sits at 49%.
By comparison, the white homeownership rate has ranged between 70% and 77%, and the Asian American rate has risen from 54% in 2015 to 63% now. Hispanics passed African Americans in 2004 and is currently above the 46% black homeownership rate.
FHA’s directive could also impact the housing market in the future because, as a whole, Hispanics are younger than the rest of the American population. Baby Boomers make up 23% of the non-Hispanic population compared to 11% for Hispanics. Conversely, Hispanics account for 27% of Gen Z, while non-Hispanics make up 19% of the younger generation.
Given low birth rates among the white households, the severity of Trump’s immigration crackdown will heavily impact population growth for the rest of the century. According to an analysis by Brookings Metro, low immigration would lead to a 4.3% decline in population, while no immigration would tank the population by 32.2%.
Other Trump policies will have an impact on Hispanic homeownership as well. Many economists agree that the new tariff will drive up inflation, which would damage household budgets and thus people’s ability to afford a home.
Despite the all the drama and uncertainty, Acosta believes Hispanics can weather the storm.
“It may sound a little bit Pollyanna-ish, but we survived without it for a long time and will survive again without it,” he said. “But it is a setback and I don’t want to minimize that.”
