Section 184 Native American Home Loan
The Section 184 Indian Home Loan Guarantee Program is a home mortgage specifically designed for American Indian and Alaska Native families, Alaska Villages, Tribes, or Tribally Designated Housing Entities. Section 184 loans can be used, both on and off native lands, for new construction, rehabilitation, purchase of an existing home, or refinance.
An Indian or Alaska Native who will occupy the property as a principal residence and who has met the credit and underwriting standards.
- Owner occupied property only
- Must be a member of a federally recognized tribe.
- 2.250% minimum down payment is required and can be gifted or from a down payment assistance. (Call your Tribal office to see if they have a program available)
- Debt to income (All your current debts and new house payment divided by your monthly gross income) cannot exceed 41%. – See notes below
- This program is not based off of credit score, but does require that you do not have any derogatory credit or delinquent credit items. No collections, judgments, bankruptcy or late payments unless there are extenuating circumstances that can be explained in a letter from you. – See notes below
Debt to Income Ratio.
A debt-to-income ratio is used to determine whether the borrower can reasonably be expected to meet the expenses involved in homeownership and provide for the family. While meeting other household obligations, a debt-to-income ratio of no more than 41 percent is generally required to qualify the borrowers. A debt-to-income ratio exceeding 41 percent may be acceptable if significant compensating factors are presented.
Delinquent Credit Items:
- Judgments, Garnishments, or Liens. Any judgments, garnishments, or liens must be paid in full before closing. The borrower must furnish a satisfactory letter of explanation and must have reestablished good credit.
- Bankruptcy. The bankruptcy must have been discharged fully, and the borrower must have reestablished good credit and demonstrated an ability to manage financial affairs. There must be at least two years between the discharge of the bankruptcy and the mortgage application. A shorter elapsed time–but not less than 12 months–is justified if the lender is able to document that extraordinary circumstances caused the bankruptcy (such as an extended illness that was not covered by health insurance) and that the borrower’s current situation is such that the events that led to the bankruptcy are not likely to recur. In all cases, the lender must have sufficient documentation to support the decision that the borrower is credit worthy.
A borrower paying off debts under Chapter 13 of the Bankruptcy Act or making payments through a Consumer Credit Counseling plan may also qualify if:
- One year of the pay-out period has elapsed and performance has been satisfactory; and
- The borrower receives court approval (if Chapter 13) to enter into the mortgage transaction.
- Previous Mortgage Foreclosure. Generally, HUD will not guarantee a mortgage if the borrower has been a defendant in mortgage foreclosure proceedings that were completed within the past three years. However, an exception may be made if the foreclosure was the result of extenuating circumstances that were beyond the control of an owner-occupant borrower and the lender’s underwriting confirms that the borrower has re-established good credit and has demonstrated an ability to manage financial affairs. This exception does not apply if the borrower used the foreclosed property as a second home or for investment purposes.
- Suspensions and Debarment. A borrower suspended, debarred, or otherwise excluded from participation in the Department’s other programs is not eligible for a Section 184 mortgage. The lender must examine HUD’s "Limited Denial of Participation (LDP) List" and the Government-wide General Services Administration’s (GSA’s) "List of Parties Excluded from Federal Procurement or Nonprocurement Programs." If the name of any party to the transaction appears on either list, the application is not eligible for a loan guarantee. (An exception is made when a seller appears on the LDP list and the property being sold is the seller’s principal residence.)
- Delinquent Federal Debts. If the borrower is presently delinquent on any federal debt (e.g., U.S. Department of Veterans Affairs (VA)-guaranteed mortgage, HUD/FHA insured or guaranteed mortgage, HUD Section 312 Rehabilitation loan or Title I loan, federal student loan, Small Business Administration loan, delinquent federal taxes) or has a lien, including taxes, placed against property for a debt owed to the United States, the borrower is not eligible until the delinquent account is brought current, paid, or otherwise satisfied, (e.g., satisfactory repayment plan is made between the borrower and the federal agency owed). Lenders must verify through HUD’s Credit Alert Interactive Voice Response System (CAIVRS) that borrowers are not presently delinquent on any federal debt. To obtain additional information about CAIVRS and a CAIVRS access number, lenders should contact their local HUD Office or the Program ONAP.
Eligible borrowers may use the guarantee program for the:
- Acquisition of existing housing
- Rehabilitation of existing housing
- Acquisition and rehabilitation of existing housing
- Construction of new housing unit/s
Loan guarantees for commercial structures are not eligible under the Section 184 program.
The term of the loan may not exceed 30 years.
Interest rates established by the lender must reflect current market rates and cannot be adjustable.
Maximum mortgage amounts are set based on an established loan-to-value ratio and the borrower’s debt to income ratio, and, in no case, can these mortgage amounts exceed 150 percent of the FHA (HUD’s Federal Housing Administration) mortgage limit established for the locality.
Application Information Needed:
- Name/s to be on loan (If you use middle initial, please add)
- Current Address and how long rented/owned (please specify). Need two year residence history. If rented, please provide land lord information as a 2 yr verification of rent will need to be obtained.
- Monthly Mortgage or Rental Payment
- Home Phone Number
- Cell Phone Number
- Years of School Completed
- Married, Domestic Partnership, Unmarried, Separated,– Please specify
- Number of Dependents and ages if any
- Child Support/Alimony – List amount/s and who it is paid to and/or through
(In order to get an approval, we must pull credit for the lender. This will be added to your closing costs. If you do not go through with the loan or it is denied, you will be invoiced for the credit report amount.) Red flags on credit and what lenders will not allow: Bankruptcy within 2 years, open collections or disputes, and unsatisfied judgments or liens. If you know you have any of these, please note. PLEASE CALL WITH THIS INFO UNLESS FAXING.
Are you self employed? (a borrower with ownership interest in a business of 25 percent or more is considered self-employed for mortgage loan underwriting purposes)
Name of Employer (If retired, please note who you retired from and how many years retired)
Phone number for HR or who would directly fill out a verification of employment
Type of business
Years on job (if less than 2 years need same info for past employer and start/end date)
Monthly GROSS income:
If self employed, please indicate and will need last two years of tax returns with all schedules to take an average of 24 months income minus deductions from schedule C.
If using bonus, tips or overtime income, the income is calculated separate from gross base salary. Must have at least two years and will need full two years of taxes all schedules.
Tribal Distributions, VA Benefits, Notes Receivable, Alimony/Child Support, Social Security Income, Retirement accts - type and approx. balance
- List any Stocks/Bonds/CD's – Company held with/Amount/s in Account
- Bank Information
- Name of Bank, Type of Account and Account Number/s
- Balances kept in Accounts. Lenders will want to see 2 months bank statements. The latest statement showing you currently have the amount in your account that is listed on application.
- Vehicles - year, make, model, approx. values, and lender for each vehicle
Declaration Questions: Answer yes or no
- Are there any outstanding judgments against you?
- Have you been declared bankrupts within the past 7 years?
- Have you had property foreclosed upon or given title or deed in lieu thereof within the past 7 years?
- Have you been obligated on any loan resulting in foreclosure, transfer of title in lieu thereof, or judgment?
- Are you presently delinquent or in default on any federal debt other than a loan, mortgage, financial obligation bond, or loan guarantee?
- Are you obligated to pay alimony child support or separate maintenance?
- Is any part of the down payment borrowed?
- Are you a co-maker or endorser on a note?
- Are you a US Citizen?
- Are you a Permanent Resident Alien?
- Do you intend to occupy the property as your primary residence?
- Have you had ownership interest in a property in the last three years?
- What type of property did you own? Primary Residence Second Home Investment Property
- How did you hold title to home? Solely With Spouse Other
Building relationships with our clients to provide successful home ownerships.
What if I have not established credit?
We can use what is called “Non Traditional Credit” or Alternative Credit. For those borrowers who choose not to use credit or have not yet established credit, the lender is permitted to develop a credit history from other means such as rent payment history, utility payment records, auto insurance, etc.
What is the minimum amount down?
2.250% - This can be your own funds, gifted from family member, or down payment assistance from Tribe.
Can I have a co-borrower that is not a Native American?
Can I have a Non-Occupying borrower as a co-signer?
Yes, as long as the main borrower is Native American.
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