HUD Section 184 Loan FAQ for Homebuyers
Have questions about HUD Section 184 loans? This FAQ guide explains how the Section 184 Indian Home Loan Guarantee Program works for Native American homebuyers, including eligibility, tribal trust land, approved lending areas, loan uses, refinance options, construction financing, borrowing limits, and application next steps.
1st Tribal Lending specializes in Section 184 and 184A lending for Native American borrowers, Tribes, and tribal communities. Use the answers below to better understand your options and learn when to connect with a Section 184 loan specialist.
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A large portion of Indian Country is held in Trust by the United States Government for specific Tribes or individuals belonging to Native American Tribes. This land is specifically protected for Native Americans. And, because of the lands legal status as a trust, it is difficult to secure mortgage loans for those on the land. For example:
- Land held in trust for a Tribe cannot be mortgaged
- Land held in trust for an individual must receive approval of the Bureau of Indian Affairs (BIA) before a lien is placed on the property to secure a loan.
The government made these regulations to prevent private seizure of Native American lands, which would occur if a private lender was to foreclose on a home owner of tribal land. Because of the difficulty in securing leverage against a loan (also known as a lien), private lenders were unwilling to grant home loans and mortgages to Native Americans. This made it difficult to build and maintain homes on reservation land. Creating Section 184 gives private lenders the insurance they need to proceed with mortgage loans.
Section 184 works in two distinct ways. If the land is on tribal trust land, the eligible buyer works with BIA and HUD to set up the home as a leasehold estate. This effectively turns the property into a leased entity for the duration of the mortgage plus 10 years. Before this can happen it must be first be approved by the BIA and the Housing and Urban Development (HUD). It is this lease, and not the land itself, which the lender can seize if the loan is defaulted on.
If however, the home is on allotted trust land, held by an individual, there’s no need for a leasehold estate. However, once again both BIA and HUD must approve the loan applicant, and the home itself can be seized in foreclosure. Before that happens however, to better protect the tribes, certain regulations have been put in place around a Section 184 Home Loan:
- The lender can only pursue liquidation of the lease and asset only after offering to transfer the loan to an eligible tribe member, the tribe, or Indian Housing Authority.
- In event of foreclosure, the lender cannot sell the land to anyone other than an eligible tribe member, the tribe, or the Indian Housing Authority.
These regulations make sure the tribe’s land stays intact, and the tribe has the ability to repurchase foreclosed property. So, lenders and tribes rights are both protected.
No, tribes may also designate areas where their tribal members live off reservation to be included in the Section 184 loan program.
Get more information in Section 184 Eligible Areas
The Section 184 Home Loan Guarantee is synonymous with home ownership on Tribal land. The latest study on Section 184 Loan Guarantees documented over 28,000 Section 184 loans made, with a total value over $4.7 billion to various individuals, Tribes, and TDHEs.
- The purchase of a new home
- The construction of a new home
- Renovating an existing home
- The purchase and subsequent renovation of an existing home
- Refinancing a home
Furthermore, Section 184 loans can only be used for single (1-4 units) primary residences. They cannot be used for secondary homes or investment purposes.
This is because Section 184 was specifically designed to help increase home ownership within Native communities. These regulations were created to help target that specific goal and have thus far helped thousands across 37 states.
Start prequalification if you are buying, building, renovating, or refinancing a primary residence.
A Tribe, in order to participate, needs to have the following systems in place:
- Eviction Processes
- Foreclosure Processes
- A system in place to ensure the enforcement of these processes
- Systems allowing access to tribal lands by HUD and/or private lenders
- Acknowledge that if eviction/foreclosure procedures aren’t enforced, the HUD will cease to guarantee loans.
Speak with a Section 184 loan specialist about participation in the HUD 184 Loan program.
Section 184 loan limits are based upon where you live. Check with us to find out the loan limit for where you live. Your personal loan amount will also be determined by your current income and current debts.