HUD Section 184 Process
The HUD Section 184 Process for the HUD Section 184 Home loan for Native Americans to purchase program was created by the federal government to encourage the private market to help this underserved community. The Department of Housing and Urban Development (HUD) does this by providing loan guarantees to private lenders who loan money to Native American citizens to purchase or refinance homes in the contiguous United States.
Here is a general outline of HUD Section 184 Process to purchase a home using the government insured HUD Section 184 Native American Mortgage program.
HUD Section 184 Process
Step 1: Get Prequalified for your home loan
- Contact Today Lending at 918-582-7283 or Apply Now! for HUD Section 184. A section 184 loan officer will contact you to discuss your goals and develop a loan that will fit HUD Section 184 Process. He will ask you what total monthly home payment will fit your budget, and how much of a down payment you want to make. The minimum down payment for section 184 is 2.25% of the purchase price for loans over $50,000 and 1.25% down for loans under $50,000. You can make a larger down payment if you want. Many Tribes offer Down Payment Assistance too. We will consult with your Tribal Housing Authority to see if you qualify for it. Your down payment can also be a Gift from a family member. One of the great advantages of the Section 184 loan is that no monthly mortgage insurance is required. For example, an FHA loan for $150,000 will have mortgage insurance of $154.94 per month, for the entire life of the loan. As a Native American, or spouse you can buy an $184,000 home for the same payment. Native American Loans increase your purchasing power so you get more home for less money. That is a big reason why our customers love the American Indian loan program.
- The loan officer will check your credit report. There is no minimum credit score requirement but you do have to have a clean file so you can’t have any 30 day late payments in the last 12 months or recent unpaid collections. Small medical collections or other minor credit dings usually are not a problem.
- We will need you to send some documents. It is pretty easy stuff.
- Certificate of Degree of Indian Blood card.
- Tribal Enrollment card.
- Driver’s licenses for all borrowers
- Social Security cards for all borrowers.
- Last 2 Years of Income tax returns with W-2’s and 1099’s, etc.
- Last 2 month of bank statements with all pages.
- One month of pay stub for all borrowers.
- If all of your documents look good, you will be Preapproved and ready for the next step!
Step 2: Start shopping for your new home.
If you don’t have a realtor, we can help you find a good one. We recommend that you have a realtor who represents you only. You want someone who will be loyal to you and not to the seller at the same time.
Frame built homes, most Condominiums and some Doublewides are eligible for Native American loans.
The home generally has to be in pretty good shape, so no peeling paint, or visible wood rot is allowed and if the hot water tank is in the garage, it has to be 18 inches above the floor to prevent accidental fires.
If you find a foreclosure or other home that is not quite move in ready, we have Purchase Rehab feature that will allow you to finance and make repairs after closing. Ask your loan officer for details.
Doublewides are eligible if they have the correct kind of foundation; concrete runners with steel tie downs. You must pay for a structural engineers report to verify the foundation is correct. The cost of the report varies. Please have your realtor consult the County property tax records. If the doublewide has ever had an FHA loan on it, then it will probably have the correct foundation. It is also a good idea to crawl under the home check it yourself before you pay for the structural engineer report.
The doublewide must have been built after 1978 and it must be in the original location where it was installed directly from the factory. If the home has been moved from the original location, it will not qualify for a Section 184 loan. Brand new doublewides are eligible but we will need to consult with the dealer about the process. Please provide us with the dealer’s name and phone number if you want a brand new doublewide.
This is very important: Call your loan officer to discuss the terms BEFORE you make an offer on any home. He will update your file with current interest rates and closing costs based upon the proposed purchase price and estimate your monthly payment and down payment requirement. Our estimates are very accurate.
The seller can pay up to 6% of the purchase price for your closing costs but you have to ask for this in the initial offer. This allows you to keep more money in your pocket for moving expenses or little improvements.
Do you want a Home Warranty? Those cost about $400 – $500. If the major appliances, furnace and AC unit are old, then a home warranty could be a good deal for you.
Once this is worked out, your loan officer will prepare your Preapproval letter and it will exactly match your offer. This shows you are serious about doing business.
You and the realtors will negotiate the purchase terms: Price, closing date, amount of closing costs paid by the seller, any repairs and other details. It takes about 30-40 days to close a standard purchase. Then you will sign a contract and pay an Earnest Money deposit on the contract. It is usually $500 to $1,000.
Step 3: Inspections and Underwriting.
Now that you have a contract, it is time to have the home inspected. A termite inspection is always required for HUD Section 184. Those cost about $100. We strongly recommend an Electrical, Mechanical and Plumbing systems Inspection also. Those about $300 to $500 and often include the termite inspection too. A structural inspection will be required for doublewide. Those cost about $250 to $500. Ask your realtor who she recommends for inspections.
After the inspection, if any repairs need to be made, these will be arranged by the realtors. If you are buying a home that is For Sale By Owner, your loan officer will help you with this.
At the same time you are doing inspections, our HUD Section 184 underwriter will review the loan file to make sure all of the information is accurate. Then she will assign an appraiser to go out to see the home and verify that it meets minimum property standards and that the market supports the purchase price.
Next the section 184 underwriter will then give us a list of documents she needs to approve the loan. These are called, “Loan Conditions.” This is usually a more recent paystub and bank statement with proof the Earnest Money check has been processed by the bank, clear title to home including title insurance and some other items. We will call you to discuss this and gather the documents.
Step 4: Closing
The big day is here! After we the get Final HUD Section 184 Process for the loan, the Settlement Statement and final loan documents will be prepared. We will review these with you to make sure everything is correct. After you are satisfied, you will send money to the title company. This is done by wire transfer from your bank account or cashiers check. You will have the utilities activated in your name and do a final walk through of the home to ma
ke sure everything is still acceptable. The last step is to go to the title company and sign papers for about an hour.
Congratulations Section 184 Loans borrowers, you are now a Home Owner!
Is it really this easy? Yes, if you have a good lender like Today Lending.
We work very hard in the beginning to make the process as smooth as possible. Of course, sometimes unexpected things happen. All of our loan officers have at least 10 years of experience so we have already seen and solved more problems that we can count.