Lender Asking for 30% Down Because You're on an H-1B? That's an Overlay

Quick answer (updated October 2026): An H1B 30 percent down payment is not a Fannie Mae or Freddie Mac requirement. Both treat lawful non-permanent residents like US citizens, so conventional minimums of 3% to 5% down apply on a one-unit primary home if you qualify. A lender demanding 30% because of your visa is applying its own overlay. Other lenders may not.

Here's a composite of a story we hear constantly, and see versions of on Team Blind: Rahul, an H-1B engineer in Austin, gets pre-approved at a big national bank. The loan officer says non-permanent residents need 30% down. Rahul has 12%. So he starts planning: sell his RSUs at a bad time, borrow from his father's FD in India, maybe pull a HELOC on the family flat in Pune. He's about to restructure his family's finances around one bank's policy.

He doesn't need to. This guide explains what the agency rules actually say about the H-1B down payment requirement, why some lenders still ask for 30%, the payment math on 5% vs. 20% vs. 30%, and how to find a lender without the overlay.

The H-1B down payment requirement under agency rules

Most US mortgages are conventional loans sold to Fannie Mae or Freddie Mac. Their eligibility rules for non-citizens are short:

• Fannie Mae (Selling Guide B2-2-02): non-U.S. citizens who are lawful permanent or non-permanent residents are eligible "under the same terms that are available to U.S. citizens." There's no list of approved visas and no minimum remaining validity. The lender decides documentation and must be satisfied you're legally present.

• Freddie Mac takes the same approach.

"Same terms" includes down payment. If a US citizen with your credit, income and property type can put 5% down, so can you under the agency rule. Conventional minimums depend on the loan:

Property / program (primary residence)	Agency minimum down payment
One-unit, eligible first-time buyers or HomeReady	As little as 3%
One-unit, standard conventional	5%
Two- to four-unit (standard balance) via DU	5%
High-balance two-unit	15%
High-balance three- to four-unit	25%

Nothing in that table changes because your I-797 says H-1B. We explain the "no visa list" point in depth in Fannie Mae has no approved visa list.

Why some lenders ask for an H-1B 30 percent down payment

Because lenders can add their own stricter rules, called overlays. A lender might require 20% or 30% down from non-permanent residents because:

• It plans to keep the loan on its own books rather than sell it.

• Its risk team worries about borrowers leaving the US.

• It has a blanket policy that's simpler than evaluating each visa file.

• You're applying for a product where rules really are different (see below).

Overlays are legal. They're just not universal. One bank's 30% is another lender's 5%.

When a bigger down payment is legitimate

Sometimes a higher down payment has nothing to do with your visa:

• Jumbo loans above your county's conforming limit follow investor rules, not Fannie Mae's. See jumbo loans for visa holders.

• Investment properties carry higher minimums for everyone.

• High-balance multi-unit properties have higher agency minimums (table above).

• Non-warrantable condos often need more down.

• Credit or DTI issues can push a file toward more equity.

Ask the lender directly: "Is the 30% because of my visa, or because of the loan type, property or my credit?" The answer tells you whether shopping will help.

Talk to a loan officer who's seen this before: If a bank told you 30% because of your visa, send us the scenario. Book a free call and we'll show you which lenders apply agency rules as written.

Visa holder 20 percent down vs. 5% vs. 30%: the math

Take a hypothetical $500,000 one-unit primary home:

Down payment	Cash down	Loan amount	P&I, 30-yr at 7.40%*	Mortgage insurance?
3%	$15,000	$485,000	$3,358.04	Yes
5%	$25,000	$475,000	$3,288.80	Yes
20%	$100,000	$400,000	$2,769.52	No
30%	$150,000	$350,000	$2,423.33	No

*Freddie Mac weekly average, Oct 15, 2026 — illustration only, not a quote or offer. Taxes, insurance and mortgage insurance are additional; mortgage insurance cost depends on credit and loan details.

The difference between 5% and 30% down is $125,000 in cash for about $865 less in monthly P&I. A larger down payment isn't wrong; it lowers your payment and avoids mortgage insurance. But it should be your choice, not a condition imposed because of your visa.

What that $125,000 does if you keep it

For a visa holder, liquidity has real value:

• Job-loss buffer. If you're laid off, the 60-day grace period (as of October 2026; a proposed rule would eliminate it but isn't final) is short. Cash covers payments while you find a new sponsor.

• Reserves. Lenders like to see months of payments in the bank.

• Flexibility. If you leave the US, you can rent the house out without being cash-strapped.

Mortgage insurance on a conventional loan isn't permanent. It can be removed as you build equity; see how to remove PMI on a conventional loan.

What about FHA with 3.5% down?

Not for H-1B holders. Since HUD Mortgagee Letter 2025-09 (case numbers on or after May 25, 2025), non-permanent residents including H-1B, L-1, O-1, TN, F-1/OPT and EAD-only holders are not eligible for FHA. HUD reaffirmed this in October 2026. Conventional with 3% to 5% down is the main low-down-payment path; see FHA alternatives for visa holders.

How to find a lender without the 30% overlay

1. Ask the right question. "Do you follow Fannie Mae B2-2-02 for non-permanent residents without additional down payment requirements?"

2. Get it in writing. Ask for the minimum down payment for your exact scenario before you pay for an appraisal.

3. Compare more than one lender. A broker who works with many wholesale lenders can check overlays across them at once.

4. Have your documents ready. Valid I-797, I-94, passport, two years of W-2s, recent pay stubs and asset statements.

5. Don't restructure family finances first. Don't sell RSUs, borrow from relatives or pull equity from property in India until you know what you actually need.

Red flag	What it usually means
"Non-permanent residents need 30% down" with no reason	Visa overlay
"You need 3 years left on your visa"	Overlay; agencies have no minimum validity
"We only lend to green card holders"	Lender policy, not agency rule
"Jumbo needs 20% down"	Investor rule tied to loan size, not necessarily your visa

What the rules actually say

• Fannie Mae Selling Guide B2-2-02 (07/28/2015): lawful permanent and non-permanent residents are eligible "under the same terms that are available to U.S. citizens"; no visa list or minimum remaining validity. Freddie Mac's guide takes the same approach.

• Fannie Mae Eligibility Matrix (Aug 5, 2026): two- to four-unit primary residences up to 95% LTV via DU; high-balance lower (85% two-unit, 75% three- to four-unit).

• HUD Mortgagee Letter 2025-09: non-permanent residents ineligible for FHA for case numbers on/after May 25, 2025; reaffirmed Oct 9, 2026.

• USCIS proposed rule (Sept 11, 2026): would eliminate the 60-day grace period; not final as of October 2026.

Frequently Asked Questions

Q: Do H-1B holders need 30% down to buy a house?
A: No. Fannie Mae and Freddie Mac treat lawful non-permanent residents like US citizens, so standard conventional minimums apply, as low as 3% to 5% on a one-unit primary home for qualified buyers. A 30% requirement is a lender's own overlay or tied to a different loan type.

Q: What is the minimum down payment for a non-permanent resident?
A: On a conventional one-unit primary home, the same as a citizen: as little as 3% for eligible first-time buyers or HomeReady, and 5% otherwise, subject to credit and income. Jumbo and investment loans have higher minimums for everyone.

Q: Is it legal for a lender to ask visa holders for more down payment?
A: Lenders can set overlays stricter than agency rules, as long as they comply with fair lending laws. That's why shopping matters: another lender may follow the agency guidelines without the extra requirement.

Q: Should I put 20% down anyway to avoid PMI?
A: It's a tradeoff. Twenty percent down removes mortgage insurance and lowers your payment, but ties up cash that could be your emergency fund if your job or status changes. Many visa holders keep more liquid and remove PMI later as equity builds.

Q: Can I use FHA with 3.5% down on an H-1B?
A: No. As of October 2026, H-1B and other non-permanent residents are not eligible for FHA after HUD's 2025 rule change. Conventional loans with 3% to 5% down are the main low-down-payment alternative.

Get a side-by-side overlay comparison in 15 minutes

If a lender told you 30% down because of your visa, bring that quote, your I-797, last two W-2s and your asset statements. We'll run a side-by-side lender overlay comparison across our 150+ wholesale relationships and show you the actual minimum down payment for your scenario, with the monthly payment at each level. We work with H-1B and L-1 borrowers every week and are licensed nationwide. 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.