Understanding the Indian Home Loan Guarantee Program

The Indian Home Loan guarantee program is a program that is administered by the FHA in order to provide home loans for Native Americans. This program has several benefits for those that can qualify. Here are the basics of the Indian Home Loan guarantee program and how it could potentially help you.

Indian Home Loan Guarantee Program

With this program, Native Americans are able to get guaranteed home loans as long as they meet certain qualifications. This program helps individuals that are unable to get financing through other avenues. This makes it much easier for Native Americans to get the money that they need to purchase a home. With this loan program, you are still going to work through traditional lenders. However, the loans are going to be guaranteed by the FHA and, in turn, the Federal government. Because of this, lenders are more willing to work with individuals that have bad credit or low incomes. 

Property Requirements

In order to qualify for this program, the property that you are purchasing is going to have to meet certain requirements. One of the most important requirement is that the property has to be your primary place of residence. This cannot be used for vacation homes or rental property. Another qualification is that the house has to be located in a tribal trust, individual allotted trust, or fee simple land. The price of the house has to be below 150% of the maximum FHA loan amount in that county. When determining the amount of money that can be borrowed, the lender is going to look at the loan to value ratio as well as the debt to income ratio of the borrower. The loan amount is going to be based on the amount of money that you could reasonably be expected to afford.

Benefits

Working with this loan program is going to provide you with a few different benefits. Perhaps the biggest benefit is that it is a lot easier to get approved with this loan program than if you were to work with a traditional loan program. You can get approved with this program even if you have bad credit or a relatively small income. This may not be the case with other loan options.

Another big benefit of using the Indian Home Loan guarantee program is that you are not going to have to come up with a large amount of cash for a down payment on a house. In most cases, you are only going to have to come up with 2.25% of the purchase price. This is much more affordable than a lot of the other loan programs that are in the market.

When you work with this loan program, you are also going to be able to avoid paying private mortgage insurance. Private mortgage insurance typically adds between $50 and $100 a month to a mortgage payment, and you can completely avoid this expense.

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