Indian Home Loan Guarantee Program (Section 184)

A Section 184 loan is designed to provide Native American and Alaskan families with opportunities towards homeownership and an increased access to capital. Provided by the United States Department of Housing and Urban Development (HUD), this program insures mortgage loans in order to remove all risk to the lender regarding default or foreclosure. This loan program also offers numerous benefits to borrowers, including low interest rates, low down payments and protection from predatory lending.

To qualify for a Section 184, an individual or tribe must meet specific eligibility requirements, as well as select a home that meets dwelling-related requirements. Additionally, this program is only available in certain areas throughout the United States. By reviewing 184 loan eligibility requirements, a potential borrower will be better prepared for the application process as well as gain the ability to determine whether they may qualify for the program.

What is a Section 184 loan?

A Section 184 loan is part of the Indian Home Loan Guarantee Program, which was designed to provide mortgages to Native Americans who qualify. Established in 1992 by the United States Department of Housing and Urban Development, the program facilitates homeownership and increases access to capital in Native American communities. Through this program, qualifying individuals can obtain a home with flexible underwriting and low down payments. The loans can be used towards the purchase of a few properties, both on and off tribal lands.

Like with all HUD programs and insured mortgages, the 184 loan is not provided directly through the HUD. Instead, the HUD works with approved lenders and guarantees the loan in order to help more families and tribes qualify for a home.

Therefore, Section 184 loan credit requirements and other key qualifications for a mortgage are often far lower than that of conventional loans as the lender does not experience a risk of default or foreclosure.

How HUD Section 184 Works

A Section 184 loan is guaranteed by the HUD in order to reassure private lenders and influence these lenders in offering better rates to potential buyers who qualify in order to increase approval odds throughout the United States. If a mortgage is defaulted on and will go into foreclosure, the HUD will pay the lender in full for the property, which is how the lender is not at any risk to approve the loan.

By providing Section 184, the HUD encourages lenders to serve Native communities as well as aids in the increased marketability and value of Native assets while strengthening a community’s financial standing.

However, it is important to learn about what type of homes and properties are eligible for this program, as well review eligibility requirements that a borrower or tribe must meet in order to qualify for the program.

When considering a Section 184 loan, it is also important to understand that the borrower pays for the HUD guarantee, not the lender. An upfront guarantee fee will be required at closing and, additionally, there is an annual guarantee fee that will be included within the mortgage.

How a Section 184 Loan Can Be Used

A Section 184 loan can be used towards the purchase of numerous properties, including:

  • The purchase of an existing home.
  • The construction of a new home, such as a site-built or manufactured home on a permanent foundation.
  • The rehabilitation of a home, including weatherization upgrades.
  • The purchase and rehabilitation of a home.
  • The refinancing of a home.

Section 184 is limited to single family homes that are between one and four units that is used as a primary residence, like other single-family housing loan programs.

Section 184 Loan Requirements for Borrowers

Before searching for Section 184 lenders, it is important to review eligibility requirements that borrowers and tribes must meet in order to qualify for the program. To be potentially eligible for the program, you must be one of the following:

  • A Native American or Alaskan that is a member of a federally recognized tribe.
  • A federally recognized Indian tribe.
  • A Tribally designated housing entity.
  • An Indian Housing Authority.

When considering Section 184, it is also important to be aware of eligibility requirements that are specific to tribes participating in the program. A tribe that is interested in this HUD mortgage program must have the following as part of their Tribal Laws:

  • Tribal Court Jurisdiction over Real Property.
  • Defined Eligible Area.
  • Foreclosure Procedures.
  • Eviction Procedures.
  • Leasing Procedures.
  • Tribal Trust and/or Allotted Trust Land Leases.
  • Provision Showing HUD 184 Guaranteed Loan as first lien priority.
  • Provision granting HUD and/or private lenders access to tribal lands for the purpose of servicing guaranteed properties.

Eligible Areas for Native American Housing Loans

Section 184 loans are available within most of the United States. However, this type of mortgage is not available in every state, and some states only provide partial approvals. Therefore, it is important to review the states and areas throughout the nation in which a loan may be applied for as the program has grown to include areas beyond tribal trust land.

To view a complete list of Section 184 approval areas, review our free and informative guide.

Why You Should Consider a Native American Mortgage

A Section 184 loan provides numerous benefits to qualifying applicants, so it is worth looking at the advantages gained from this program in order to make an informed decision regarding an application. With this program, you can expect benefits such as:

  • Low down payment options.
  • Attractive Section 184 loan rates with lower interest rates that are not based upon credit scores.
  • Manual underwriting.
  • A growing national network of approved lenders.
  • Protection from predatory lending.

How to Apply for a Section 184 Loan

A Section 184 loan, like HUD mortgage programs, is not provided directly from the HUD. Instead, qualifying applicants will need to submit an application with an HUD approved lender. As stated previously, it is easier to qualify for this loan in comparison to other types of loans and qualifying applicants can generally obtain very attractive mortgage terms and rates.

To review a complete list of Section 184 lenders, download our comprehensive guide.