HUD 184 Loans
A HUD 184 Loan, also known as the Section 184 Loan Guarantee program, is a loan that is insured by the U.S. Department of Housing and Urban Development (HUD), but it is funded by a HUD 184 particpating lender. This allows the HUD 184 lenders to be willing to make a low down payment loan that they otherwise might not be willing to make. The HUD 184 Loan may be used by members of Federally Recognized Tribes both on or off land owned by the particular Tribe. This makes the HUD 184 loan a great option for many Native American first-time home buyers since the options to finance a home on tribal lands are very limited.
Benefits of a HUD 184 Loan
Here are just a few of the benefits of a HUD 184 Loan:
- Available on or off tribal lands
- Low down payment of just 2.25%
- No income limits
- Don't need to be a first-time homebuyer
- Seller can pay your closing costs
- Lower minimum credit scores
- Compatible with down payment assistance programs
- No monthly mortgage insurance premiums
- Available in all 50 states
Eligibility for a HUD 184 Loan
If you are a member of a Federally Recognized Tribe you may be eligible for the HUD 184 loan. It is often easier to qualify for a HUD 184 Loan than it is to qualify for other types of loans. The HUD 184 loan can work for borrowers with a lower credit score in the mid to low 600's. It is even possible to get a HUD 184 Loan with an alternate credit history if you do not have a traditional credit history. An alternate credit history is made by proving that you have paid other bills such as rent, utilities, and insurance on time over the past 12 months even though that is not showing on your credit report. Lenders will need to make sure that your monthly payments are affordable. They will want to see that your housing and other debt payments are not more than 41% of your gross monthly income (before taxes).
HUD 184 and State Bond
In some states it is possible to get a HUD 184 Loan that is combined with your local Housing Finance Agency's first-time home buyer loan program. Check with the your state housing finance agency to see if you can combine your State Bond loan with the HUD 184 loan.
HUD 184 Fees
In general, the fees on an HUD 184 loan will be about the same as other loan options, but compare multiple lenders to make sure you are getting the best rates and fees. A HUD 184 loan does have an up-front mortgage insurance premium called a 1% Loan Guarantee Fee that you finance as a part of your loan, but it does not have a monthly mortgage insurance premium like FHA. Ask your lender to tell you more about the HUD 184 Loan to see if it is a good option for you.
HUD 184 Lenders
HUD 184 Loans are available from specific lenders who have been approved to offer the program. If you decide the HUD 184 Loan is a good product for you, make sure you select a lender who is approved and experienced with offering the program.