If you are a potential homebuyer, Section 184 is a great product - thanks to the low-down payment requirement of 2.25% for loans over $50,000. If your loan amount is under $50,000, your down payment is 1.25%. Also, you don't have to pay a mortgage insurance premium each month. Instead, a one-time, 1% loan guarantee fee can be added to your final loan amount. Hud underwriters are familiar with the unique issues and circumstances that Native Americans face when trying to get a mortgage in Indian Country.
Basics of the Program In 1992, Congress established the Section 184 "Indian Home Loan" program. The program was designed to offer homeownership and housing rehabilitation opportunities fir eligible Native American individuals, families, tribes, and tribally designated housing entities (including Indian Housing Authorities) on their native lands and within an approve Indian area.
Why a Loan Program Specific to Native Americans? Because of the unique status of Indian lands, Native American homeownership is an under-served market. The Section 184 program was designed to improve access to capital Native Americans and provide private funding opportunities for tribal housing agencies.
How Does Section 184 Work? Hud guarantees each mortgage loan made to eligible borrowers. The loan guarantee assures the lender that its investment will be repaid in the event of a foreclosure. The borrower pays a 1% loan guarantee fee at closing, which may be financed in the mortage or paid in cash. The borrower applies for the loan with a participating lender, or works with the tribe and the Bureau of Indian Affairs if leasing tribal land. The lender then evaluates the necessary loan documentation and submits the loan for approval to the HUD Office of Loan Guarantee.
