Types of Loans

There are many ways to finance the purchase of your new home. Following are several loan programs to consider, but you are also encouraged to talk to your tribal housing director or the person in charge of local housing programs.

United States Department of Agriculture (USDA)

USDA guaranteed rural housing programs are available to any tribe. To apply for funds using many of the programs described below, a tribe or Tribal Housing Authority should follow the Notice of Funds Availability (NOFA). The NOFA is an annual announcement that funds are available and provides instructions on when and where to apply. The Native American Community Development Corporation (NACDC) can help by working with a tribe to locate the local USDA service office, complete the application, and identity documents that will be requested to process the loan.

• Guaranteed Rural Rental Housing Program, Section 538 – This loan program seeks to increase the supply of affordable, moderate-income rural rental housing by guaranteeing loans that encourage partnerships between the Rural Housing Services, private lenders, and public agencies. The program is for new construction homes, homes that are purchased and fixed-up, repairs, and other work on existing homes or the purchase and improvement of land on which housing will be located.
• Multi-Family Housing Program, Section 515 – The Multi-Family Housing program provides eligible families rental housing that is economically designed and constructed. The program also applies to other facilities in rural areas (communities with fewer than 20,000 people). Eligible applicants such as nonprofit organizations, Limited Profit borrowers, or public bodies, like Housing Authorities, with experience in successfully operating and managing the development can apply.
• Home Repair Loans and Grants, Section 504 – These loans and grants are for paying for repairs and improvements on homes of eligible very-low income (50 percent of county median income or less) families. Grant funds must be used to remove health and safety hazards.
• Guaranteed Home Ownership Loan, Section 502 – This Section 502 program provides low- and moderate-income applicants with financial assistance to buy a house in a rural community. The USDA Rural Development guarantees loans that may not otherwise be made. The loan may be for up to 100 percent of the market value of the home, eliminating the need for a down payment. Interest rates vary based on the lender’s current rates.
• Direct Home Ownership Loans, Section 502 – The Direct Section 502 Housing loan program provides low- and very low-income families with financing to build, buy, repair or refinance homes and building sites that meet local codes and provide affordable housing. An eligible applicant must be without ownership of decent, safe, and sanitary housing and have low or very low income. Loans may be made up to 100 percent of the market value of the home and may be made in partnership with a conventional loan. The interest rate charged to the borrower will be a reduced rate and based on the borrower’s income.

Department of Housing and Urban Development (HUD)

There are many opportunities where NACDC may be able to partner directly with the office of HUD’s Section 184 Program. Between a State HFA and the local consortium, combined efforts are beginning to bring about more housing opportunities for tribes. HUD’s two primary programs are:

• Section 184 Indian Housing Loan Guarantee Program – For a home loan on tribal trust land, the eligible borrower leases the home site from the tribe. The Bureau of Indian Affairs (BIA) and HUD must approve the lease, which creates a leasehold interest; it’s the home and the leasehold interest on the home site that are mortgaged. If a foreclosure takes place, the lender forecloses on the home and leasehold interest, not the tribal land. The ownership of the land remains in trust for the tribe. The Section 184 program is a 100 percent guarantee to a lender and can be used nationally on tribal trust and other types of land in an Indian operating area. The program is designed for new and existing housing and the loan limit can go beyond 150 percent of Federal Housing Authority (FHA) limits, if needed. 
• Title VI Loan Guarantee Program – The Title VI program assists Indian Housing Block Grant (IHBG) recipients who want to finance eligible affordable housing activities but are unable to receive financing without the help of the federal guarantee.

One-Stop

To overcome the barrier of no encumbrance on trust land and increase homeownership in Indian Country, One-Stop created a set of model documents to use with the Federal Mortgage Lending and Fannie Mae programs on trust land. NACDC’s Housing Director can assist a tribe with: Developing their tribal procedures for lien priority, eviction, foreclosure, and a leasing process; developing a residential tribal approved lease; developing criteria specific to a tribe to include in the Memorandum of Understanding between the Tribal Nation and Federal Agency and lender; and working through the checklist necessary for tribal approval. In addition, NACDC can help with identifying the criteria needed in an addendum to the One-Stop Documents.

Fannie Mae

Fannie Mae’s loan programs for individual Native American borrowers are extensive and include:

• Lease-Purchase – Lenders and nonprofit organizations can combine four special mortgage options with Fannie Mae’s community lending mortgage products to create a mortgage tailored to a borrower’s home-buying needs. The Housing Director can work directly with a tribe to develop a mortgage program ideal for tribal members and present it to a local Fannie Mae Partnership Office for approval.
• Community 97 – This is a low down payment mortgage with flexible credit guidelines. The features can be customized and include a minimum contribution of 1 percent or $500, whichever is less for tribal member owned funds and a higher qualifying ratio.
• Community 100 – This is a zero down payment mortgage, designed for borrowers with good credit. The core features can be customized and include the flexibility for closing costs to come from other sources, such as the tribe or a family member.
• Community 100 Plus – This is a more aggressive zero down payment mortgage with flexible credit guidelines for borrowers with limited cash. The core features can be customized to include a minimum contribution of 1 percent or $500, whichever is less from a borrower’s funds, and also may be used with Fannie Mae’s Energy Efficient Mortgage option.
• Community Solutions – This is a suite of flexible mortgage options for low- and moderate-income borrowers. The product is specifically designed for borrowers who are full-time teachers, police officers, firefighters and health-care workers where an Employee Assisted Housing Program is currently available or can be offered.