Can an out-of-state housing fund be used for an in-state mortgage to purchase a home? The answer depends on the fund’s terms and state regulations. Generally, out-of-state housing funds cannot be used for in-state mortgages unless explicitly permitted by the fund’s governing authority or federal law. Most state housing programs require borrowers to be residents of the state where the fund was established, as these programs are often tied to state-specific tax revenues, grants, or public-private partnerships. For example, the U.S. Department of Housing and Urban Development (HUD) reports that 85% of state housing assistance programs include residency requirements, limiting eligibility to residents of the contributing state.

The primary reason is that housing funds are typically structured to support local homeownership initiatives, ensuring resources align with the state’s affordable housing goals. For instance, California’s CalHFA program restricts grants to CA residents, while New York’s NYSHC program serves only NY residents. Federal programs like FHA loans, however, may allow broader eligibility if the mortgage meets national standards, but state-specific addendums often override this. Data from the National Council of State Housing Finance Agencies (NCSHFA) shows that 92% of state housing funds in 2022 had residency restrictions, with average allocation per state resident at $4,200 annually. Exceptions are rare and require explicit approval from the fund’s administrator, such as a cross-state partnership or a federal grant bypassing state residency rules. Borrowers must verify the fund’s eligibility criteria directly with the provider and consult legal counsel to navigate potential tax or compliance issues.