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How to Qualify for HUD 184

Homeownership for Native Americans has been a historically troublesome issue, with their communities remaining underserved for decades due to the reluctance of banks to offer to finance on Trust land. The Federal government, through Congress, instituted the HUD Section 184 Native American Indian Home Loan Guarantee program back in 1992.

Even though the program has successfully served thousands of loan applicants to date, the loan application process still mystifies many. If you’ve been wondering whether or not you qualify for a HUD 184 loan, then you’ve come to the right place. We’re going to take a quick but thorough look into what considerations and requirements you’ll need to have in place to access this facility successfully. Let’s get right into it.

Eligibility Status

The foremost consideration that makes one eligible for a HUD 184 loan is their tribal affiliation. As per their current guidelines, you must be an enrolled member of one of the Federally Recognized American Indian Tribes as outlined in this government report here.

You need not worry if your partner is non-native; as long as one of you is a registered member, you’re good to go.

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The HUD 184 program in the USA is not spread equally across all individual states. While some states have full HUD 184 program approval, some only implement it partially, while some do not offer eligibility at all. You will need to determine whether the state you’re considering is wholly or partially approved, which you can do by consulting the link provided here, which lists all the Section 184 approved counties on a state-by-state basis.

Note that you do not need to be a reservation resident to qualify. You may live anywhere else as long as you’re an enrolled Tribal member.

Loan Purpose

The program is designed to provide cheap, accessible, and exclusive loans to this community for new home construction, purchase, renovation, debt consolidation, cash-out refinancing, rate refinancing, and term refinancing.

You can only have one section 184 loan out at a time, and there are additional specifications for properties that qualify for these loans. Commercial properties are excluded from this facility. You will be able to purchase single-family residential units (1-4 SFR) or HUD-approved condominiums.

Down Payment

For your HUD loan to be approved, you will need to have at least 2.25% of your down payment cost. The exact value will vary according to the size of the loan you're seeking, but you will first need to consult with your Housing Finance Agency or Tribe to arrive at the exact figure you'll need to come up with.

Credit Score

While the HUD Loan program is designed to make access to financing as trouble-free as possible, these exclusive, low down-payment facilities don't let you entirely off the hook. Your credit score, for one thing, should be reasonably healthy (600 or higher) to maximize your chances of qualifying. You can check on your credit score status at no cost here.

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Financial Status

In case you've filed for bankruptcy in the past, you will need to have discharged it fully before you become eligible for a section 184 loan. At least two years will need to have passed after the discharge. You'll also need to demonstrate an ability to handle your finances, which is typically accomplished by showing steady employment history (2 years on average) and a healthy credit score.

Suppose you've experienced a foreclosure or a short sale on a previous property. In that case, you'll need to wait at least three years after the insurance claim has been repaid to the lender before you're eligible for a government loan such as the HUD 184. In cases where the short-sale property had been acquired under the HUD 184 program, you'll remain permanently ineligible for a new loan.

Debt Profile

Another important aspect of your finances to be considered will be how much debt you currently have. This is important as it will impact your ability to keep up with your payments. Try and work off any car loans, student loans, or credit card debt affecting your monthly debt ratio for better chances of approval.

Loan Limits

There are specific parameters you will need to work within as you consider making a loan application. Should you have a property or project in mind and a projected budget you will need to make it work, you'll need to determine whether you fall within the accepted loan limits for the state you're considering.

In general terms, loan limits are maxed out at 150% of the median HUD 184 price for the county in question, or $417,000, whichever will be applicable. You can take a closer look at the loan limits on a state-by-state basis here.

Final Thoughts

The HUD Loan program is geared to help you achieve your dreams of homeownership. Even should you feel that you fall short of some of the requirements we've outlined above, you might still have healthy chances of having your application approved.

This is because these loans are manually underwritten, which gives lenders the freedom to carry out what are known as common sense loan approvals. Don't hesitate to approach an accredited lender and state your circumstances. They'll guide you along the path to achieving your dreams of homeownership.

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