Homes Loans for Native American Borrowers

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  • Native Americans can rent land from their tribe to secure their reservation.
  • There are a few loan options that allow borrowers to secure a home equity loan, including a section 184 loan.
  • Native American home buyers should work with their tribe to understand the loan options available to them.

If you are looking to buy or build a home on a Native American reservation, you may run into some obstacles. Securing property in these areas is difficult due to the structure of land ownership. But Native American homeowners hoping to secure their reservation have options.

Why is it difficult to secure an American reservation?

Due to the legal status of Native American reservations and other tribal lands, it is often difficult to obtain insurance in these areas.

Normally, when you get a mortgage, the loan is secured against the property you are buying. This includes the house and the land it lives on. But tribal lands are held by the US government for tribes or individuals, and that land is not secure.

However, this does not mean that it is impossible to get a mortgage on a secured land. In trust land owned by a tribe, the home buyer can lease the land to their tribe, and the house and lease can be mortgaged but not the land itself.

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Section 184 mortgage

Section 184 loans are guaranteed by the US Department of Housing and Urban Development’s Office of Native American Programs. These loans are specifically designed to help Native Americans and Alaska Natives achieve home ownership at home and abroad.

To qualify for a Section 184 loan, you must be a Native American or Alaska Native borrower and a member of a federally recognized tribe. Native Hawaiians can get insurance through the Section 184A program.

Section 184 loans require a down payment of 2.25% for loans over $50,000 and 1.25% for loans under $50,000. You need to pay a one-time fee equal to 1.5% of the loan amount, and 0.25% per year on the mortgage insurance until you reach 22% in your home.

These loans are not available anywhere in the United States. You can get a section 184 loan anywhere in the following states: Alaska, Arizona, California, Colorado, Florida, Idaho, Indiana, Kansas, Maine, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Mexico , North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Utah, Washington and Wisconsin.

Some states only have partial approval, meaning that section 184 loans are only available in certain areas. States with partial approval: Alabama, Connecticut, Iowa, Illinois, Louisiana, Missouri, Mississippi, Nebraska, New York, Rhode Island, Texas, Virginia, and Wyoming.

If you are in a qualifying area and are interested in a section 184 loan, you will need to work with a participating lender.

Native American Direct Loan

The US Department of Veterans Affairs offers US citizen direct loans to veterans who are US citizens or whose spouses are US citizens.

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These loans work the same way as VA loans, with a few exceptions.

With an NADL loan, you can buy, build, or improve a home on secured land. These loans come directly from the VA, meaning you won’t have to work with a private lender to get a loan that’s guaranteed by the VA, like you would with a regular VA loan. With NADL loans, the VA is the lender.

NADL loans require no down payment or collateral, and they come with low interest rates. You will pay a lower refinancing fee than a regular VA loan. Financing costs for NADL loans are 1.25% for mortgage purchases, and 0.5% for financing.

Other types of loans for Native American and Alaska Native home buyers

Section 184 mortgages and direct US mortgage loans are easy options for those looking to buy a home in secured land. But they are not necessarily your only options.

conventional loans

It may be possible to get a conventional home equity loan, depending on where you live, but it can be very difficult.

Fannie Mae, one of the oldest buyers of conventional mortgages, says it has agreements with a few tribes to guarantee loans on their land. These tribes include the Bay Mills Indian Community and the Sault Ste. Marie Tribe in Michigan, and the Pueblo of Acoma and Pueblo of Santa Ana in New Mexico.

However, Fannie Mae does not originate loans, so you need to find a lender who is willing to create a secured mortgage and is knowledgeable about the process.

FHA loan

FHA-backed loans made with secured real estate are called Section 248. These loans work the same as regular FHA loans.

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With a Section 248 loan, you don’t have to pay a down payment. You will receive an annual premium, which is based on the loan term, loan amount and how much you owe. This can be between 0.45% and 1.05% of the annual loan amount.

To qualify for an FHA Section 248 loan, you need a credit score of at least 580.

USDA loan

The United States Department of Agriculture guarantees loans from private lenders and offers direct loans to low- to moderate-income borrowers in rural areas.

USDA secured loans allow for 0% down payments and come with fees and costs. To qualify, you need to be in an area that the USDA defines as rural. You can use the eligibility map to see if your area is eligible.

USDA Direct Loans are 0% down loans for low-income borrowers who do not have a “decent, safe and clean home.” With this program, you will receive down payment assistance to lower your monthly payments.

Work with your tribe to determine what you can afford

Before you start considering your loan options and shopping for a lender, it’s important to find out what kind of agreements your tribe has with the agencies that provide secured land loans. If your tribe does not have such an agreement, you may not be able to secure their land.

For NADL loans, for example, your tribe needs to have a Memorandum of Understanding with the Department of Veterans Affairs that explains how the program works.


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