By Larissa Runkle
Apr 6, 2022

(Getty Images)

In today’s aggressive housing market, it’s crucial to get a leg up on the competition and to take advantage of all options available when it comes to financial aid. For Native American homebuyers, there are several lending programs to help secure financing and land a mortgage with affordable interest rates. These mortgages are specifically designed for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities.

We spoke to finance experts for the details on three top homebuying programs available exclusively for members of federally recognized tribes.

Section 184 Indian Home Loan Guarantee Program

Section 184 is a federal home mortgage program that allows qualifying applicants to obtain loans for properties both off and on native lands.

Eligible properties include new-construction homes, fixer-uppers (known as “rehabilitation” in loan terms), and existing homes. Funds can also be used to refinance an existing home.

“Section 184 makes it easy for Native Americans to purchase homes without going through the complicated paperwork,” says Adam Garcia, CEO of The Stock Dork. “And it reassures lenders that their investment will give favorable returns in the case of a foreclosure.

“Also, the U.S. Department of Housing and Urban Development watches over the financing options and makes sure that the applicant meets all the terms and conditions,” adds Garcia.

Using a Section 184 loan offers the following advantages:

  • Low down payment: Buyers pay 2.25% down on loans over $50,000 and 1.25% on loans under $50,000.
  • Low interest rates: The loan’s rate is based on market rates instead of an applicant’s credit score.
  • Manual underwriting: The loan takes a hands-on approach to underwriting and approval as opposed to automated decision-making tools, which can disqualify some buyers.
  • Protection from predatory lending: The program keeps track of the fees that approved lenders can charge Native borrowers. (Section 184 loans cannot be used for adjustable-rate mortgages.)

How to qualify: To apply for a loan through Section 184, you’ll need to be part of a federally recognized tribe and be in the process of buying a home that will be your primary residence.

Native American Direct Loan

For those who have served in the military, the Native American Direct Loan program offers a low-interest, 30-year fixed-rate mortgage. Some benefits of NADL include no required down payment, no required private mortgage insurance, and limited closing costs.

“Through NADL, the eligible candidates can get loans on affordable terms to purchase a house or finance current home loans,” says Alex Williams, chief financial officer of FindThisBest. “NADL loans can also be used to reconstruct a house.”

Note that these loans are intended for buyers who intend to live in the home they plan to buy, build, or improve instead of renting the house out for profit.

How to qualify: Besides proving membership in a federally recognized tribe, you’ll need a valid VA home loan Certificate of Eligibility to qualify for this program. In addition, you’ll have to meet NADL’s credit standards to prove that you earn enough to cover mortgage payments and the associated costs of owning a home.

Native American Homeownership Initiative

First-time homebuyers can look into the Native American Homeownership Initiative, a grant program run by the Federal Home Loan Bank of Des Moines and its partner banks. This program is designed specifically for first-time homebuyers from the American Indian, Native Hawaiian, or Alaska Native communities. Since 1995, the FHLBDM has helped over 20,000 families secure financing for their homes.

“According to this program, eligible individuals get $15,000 for a down payment and closing cost assistance,” says Jessica Chase, loan and finance expert at Premier Title Loans. “Additionally, it also improves the loan-to-value ratio for mortgages.”

An LTV ratio is how much you borrow from your lender, divided by the home’s purchase price, which is then expressed as a percentage. Translation: You won’t necessarily need to make the standard 20% down payment (which equates to an 80% LTV ratio) on your loan if you receive help from NAHI.

How to qualify: Once you complete an application, you’ll also need to meet the program’s income requirements and take a buyer education class.

The bottom line

This list is by no means exhaustive when it comes to available financial aid programs—especially for first-time homebuyers. In addition to these national programs, you may also qualify for specific state programs and local aid programs through your bank.

“Several Native American–owned banks such as Bank of Cherokee County and AllNations Bank provide different programs for tribe members,” says Chase.

For more information on what homeowner assistance programs you might qualify for, consider contacting one of the HUD’s free counseling service agencies.