How the FHA Section 184 Indian Home Loan Works

Home / Blog / How the FHA Section 184 Indian Home Loan Works

How the FHA Section 184 Indian Home Loan Works

When Native Americans in California look to purchase a home, they face several unique challenges. The most common of these problems is an inability to acquire a mortgage for a home built on reservations or tribal land. The FHA 184 Indian Home Loan was established to address this problem and increase access to mortgages and home loans for Native American buyers.

Why Have Native Populations Been Underserved?

A large portion of land in Native American areas is held in trust by the U.S. government, which means the land cannot be mortgaged. This land is protected and is intended to be perpetually available to Native American tribes and individuals. The unique status of Native American lands means that lenders could not seize property or that land as part of a foreclosure action. This has made lenders unwilling to support the purchase of homes on tribal reservations. The FHA 184 Indian Home Loan program is designed to relieve these restrictions.

The FHA 184 Indian Home Loan

The FHA 184 Indian Home Loan program is a home mortgage program designed specifically for the needs of American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities. The mortgage loans made under this program are 100 percent guaranteed by the Office of Loan Guarantee within the Office of Native American Programs of the U.S. Department of Housing and Urban Development (HUD). They offer multiple benefits to borrowers, such as a lower down payment and lower interest rates, and may be less restrictive than comparable FHA loans.

How the FHA 184 Indian Home Loan Works

The FHA 184 Indian Home Loan program is intended to expand residential ownership opportunities by Native Americans while also ensuring that Native lands remain intact.

When a potential purchaser is seeking a loan to build a home on tribal trust land, the buyer collaborates with HUD and the Bureau of Indian Affairs (BIA) to establish the home as a leasehold estate. This converts the property into a leased entity for the term of the mortgage plus 10 years. The BIA and HUD must approve this action. If a home loan in this situation goes into default, the lender can seize only the lease itself and not the land or home.

A home on allotted trust land does not require conversion to a leasehold estate. However, BIA and HUD must still approve the loan applicant. If the lease and asset are subject to liquidation, the lender must first offer to transfer the loan to an eligible member of the tribe, to the tribe itself, or to the Indian Housing Authority. If a foreclosure occurs, the lender cannot sell the land to anyone other than an eligible tribe member, the tribe itself, or the Indian Housing Authority.

Who Qualifies for a FHA 184 Indian Home Loan?

FHA 184 Indian Home loans are available to those who are currently enrolled as a member of a Federally Recognized Tribe, either Native American or Alaskan. Verification of tribal enrollment will usually be required.

Loan experts at Übermortage can assist you with the qualification process and answer any questions about other necessary qualifications, such as credit scores, income guidelines, or down payment requirements.

Benefits of the FHA 184 Indian Home Loan

Borrowers who qualify for a FHA 184 Loan will receive a number of benefits under the program.

  • Low-interest rates: Interest rates on FHA 184 loans are based on market rates, not the borrower’s credit score.
  • Low down payments: Typically, down payments are 2.25 percent on loans over $50,000 and 1.25 percent on loans under $50,000.
  • Manual underwriting: The loan program depends on manual underwriting that ensures all circumstances are covered in the loan process. Automated tools that could reject candidates without explanation are not used.
  • Protections from predatory lending: The program prevents FHA 184 loans from being used for Adjustable Rate Mortgages (ARMs). Further, the program constantly monitors the fees and costs lenders charge to Native American borrowers, ensuring that these costs remain fair and reasonable.

Uses of the FHA 184 Indian Home Loan

FHA 184 loans may have fewer usage restrictions than, for example, other types of FHA loans. Your Übermortage can give you full details. In most cases, a qualified borrower can use a FHA 184 Indian Home Loan for:

  • Purchasing an existing home.
  • Construction of a new home, including homes built on site or manufactured homes on permanent foundations.
  • Renovating an existing home.
  • Purchasing and renovating a home.
  • Refinancing a home.

FHA 184 loans are applicable only to single-family homes (1-4 units). They can only be applied to homes that are used as the borrower's primary place of residence, not for second homes, vacation homes, or investment properties.

A program of homebuyer education is also required for borrowers under this FHA 184.

Übermortage specializes in providing Californians with expert advice on FHA loans and other mortgage assistance designed to help them become homeowners. Contact us today for more information on the FHA 184 Indian Home Loan to see if you qualify. Übermortage can guide you through the qualification and application process, helping to make your home ownership a reality.

71045f1d 7b50 4eff ab3a 0b8e66e14f08 613f1192 2e70 40bc 91be eafbb5cc33f3 76e85d2d cd6c 4b61 a4bb e3549b7a8e1a 557dfa2b 04a3 47be 8302 afe09f6dc15b db543d9c 8355 415f a830 99017b50889f 065e624c 4d5a 48b3 afd8 1c3e40e935d4 61658fdf 19f9 44c8 9ecb 789ab43469d7 5efed9c3 2eba 49a0 ac19 3158f6da545c a62fb40b 7fa6 4309 a2ab fbf80b230be9 cd634ab5 06f6 4892 8dcb be8abb5fd5c0 62fd6174 af31 4112 96d4 ffb695852be1 3a78f3eb 314b 42d0 8fd2 8e0c2c95e095 1eb3b4fc 3a7d 4038 8871 1170be1e75b2 d2192741 ad12 468e 81f9 1f092946a882 41125b11 ae6d 4ebb 8184 b7b82920a0a1 7c867279 c297 461c b026 62e644991bbc 0d796527 50d5 41e7 8fc3 fa13c4f42e84 890bcb70 1ee6 4958 a604 ce6c0a5859f0 504ba7e1 c7e1 46ed b971 7ee039198cb2 713ad417 a696 4bba b0d1 2cde1e4dde0e 56d346b3 9f17 4fd5 8935 c9504c2df6dd f5e15df6 01f5 4508 a1be d3ed9176d954 c0b181df 2c91 4ba8 83a8 7db3a4419910