Benefits of the HUD 184 Loan Guarantee Program
Did you know that if you're Native American or Alaskan Native you have a great Benefit out there that will help you buy a home?? Read on......
| |||||||
- Eligible borrowers include American Indians, Alaska Natives, Tribes, Indian Housing Authorities and Regional or Village Corporations formed under the Alaska Native Claims Settlement Act
- Available every where in Alaska including tribal trust, individual allotted trust or fee simple land
- 100% guarantee to the lender in the event of a foreclosure and claim.
- Low down payment of 2.25% based on the lower of the appraised value or cost to acquire the home. Down payment of 1.25% for loans less than $50,000.
- The maximum loan in Alaska, subject to appraised value and down payment requirements, is:
- One Family $ 544,185
- Two Family $ 696,673
- Three Family $ 842,116
- Four Family $1,046,544
- Loans may be assumed by an eligible creditworthy borrower
- 1% guarantee fee at closing. There is no monthly premium for a Section184 loan guarantee and the guarantee fee can be financed with the mortgage loan. This is the lowest cost government guarantee or conventional mortgage insurance program available.
- Loan can be used for new construction, rehabilitation, purchase of an existing house and refinancing including “cash out” refinancing.
- One qualifying ratio: 41% total debt to gross income ratio, which can be exceeded with compensating factors.
- Construction can be financed with a Single Close loan that provides permanent guaranteed financing before construction begins. Monthly mortgage payments begin after closing which can be financed during construction. At closing the amount allocated for construction or rehabilitation plus a 10% contingency and up to 6 months mortgage payments are placed in an escrow account and are drawn down as the work is satisfactorily completed.
- Strong secondary market through Alaska Housing Finance Corporation, Fannie Mae, Freddie Mac, Federal Home Loan Bank, Ginnie Mae, etc.
- No limits on gifts to the borrower to assist with the down payment or other loan costs
- No income limits
Web Site: www.hud.gov/offices/pih/ih/homeownership/184
For
more information contact:
Alaska 184 Coordinator: Greg Stuckey,
(907) 677-9861
Why Section 184 Program Loans?
The
Section 184 Loan Guarantee Program is a mortgage program only available to
Native Americans. Congress created the
program to increase Native American homeownership by reducing loan costs. The Section 184 program is often the best
mortgage loan available to Native Americans because it requires a low down
payment of 2.25% and the lowest mortgage loan guarantee cost available. The guarantee fee is a one-time cost of 1% of
the loan. The guarantee fee can be
financed and there is no monthly mortgage insurance. Section 184 loans also offers more
flexibility regarding property and credit standards to make mortgage financing
available to more Native Americans.
How to Qualify for a Section 184 Loan?
The
borrower must show they have sufficient income to pay back the loan. This is determined by the ratio of the borrower’s debt to
income. Under the Section 184 program,
total monthly debts, including the costs for the planned mortgage loan,
typically cannot exceed 41% of the gross monthly income.
The
borrower must show they have a good history of meeting their financial
obligations. This is based on the borrower's
credit report. See below for more info
about credit reports.
The
property being purchased must meet loan standards. The lender will send an appraiser to verify the condition
and value of the property to be purchased with the loan. Site control must also be established for the
lot.
The
borrower must provide documentation of membership in a federally recognized
Indian tribe or corporation formed pursuant to the Alaska Native Claims
Settlement Act. The
tribe/corporation makes the determination of membership and how membership is
documented. Typically the tribe/corporation
issues a membership card to its members.
A copy of the membership card is provided to the lender to verify
eligibility as a Section 184 borrower.
What is the Interest Rate for a Section 184 Program Loan?
The lender determines the interest rate for a Section 184
loan based on the prevailing interest rate in the market. A lender may also offer special financing for
qualified borrowers such as first time homebuyers. Only fixed interest rates are available
under the Section 184 program. Fixed
rate loans lock in debt service payments for the term of the loan regardless of
changes in the market. This protects
borrowers from unpredictable changes.
TIPS For Borrowers:
Save
money! You will need cash for the loan. Savings also demonstrate your capacity to be
a successful borrower
Do
not enter into new debt! The more you own, the less
you can borrow to buy a house.
Stay
current with existing payments! Make sure you pay
all your bills on time. Any late
payments will show up on your credit report and may disqualify you as a
borrower. If you can, pay extra on loan
payments to reduce your debt and interest expense.
Get a free copy of your credit report and clear up any
issues! The credit report shows your
debt payment history and tells the lender if you are a good borrower. So review your credit report to see if it is
accurate. If credit problems are
reflected in your credit report, contact the lender and try to resolve the problem
so you have a clean record when you go to get your house loan. You can get a free copy of your credit report
at www.annualcreditreport.com.
How to Get a Loan?
You apply directly with an
approved lender for a Section 184 Program loan.
The lender will obtain a copy of your credit report and coordinate with
HUD and a property appraiser to prepare the loan package for processing. The interest rate for the loan is based on
the current market rate.
Lenders
must be approved for the Section 184 Program.
A complete list of approved lenders is on the Section 184 Program
website. A link to this website is
provided below. Contact the Section 184
Program Coordinator for more information about lenders and loan originators
that are active in the Section 184 Program in your area.
- To apply for a loan you will be asked to complete the Uniform Residential Loan Application that discloses detailed information about income, expenses, debts, and assets of the borrower
- You will also be asked to provide the following documentation:
- W-2s for the past two years
- Current pay statement
- Last Federal Income Tax Return
- Current Bank Statements
- Membership verification of a federally recognized Indian tribe or ANCSA Corporation
Information for Homebuyers:
H Link to Section 184 Program website:
H Link to homebuyer resources on the HUD
website:
H Link to credit counseling:
H Link to free workshops for homebuyers
provided by the Alaska Housing
Finance Corporation
Uses
for a Section 184 Program Loan
Section 184 Program loans may be
used to purchase, rehabilitate, construct and refinance housing of one to four
units.
How Much Can I Borrow?
The maximum Section 184 Program
loan is the lowest of the following:
- The maximum loan limit currently set in Alaska as:
o One Family $544,185
o Two
Family $696,673
o Three
Family $842,116
o Four
Family $1,046,544
- Appraised value of the
property less the down payment
- Actual cost of the
property less the down payment
- The amount the borrower
can afford to repay
How Much Can I Afford to Borrow?
Under
the Section 184 program total monthly debts, including the costs for the
planned mortgage loan, typically do not exceed 41% of your gross monthly
income. To estimate the monthly payment
you qualify for use the following formula:
Step 1 - Determine your monthly
gross income _______________
Step 2 - Multiply by 41% _______________
Step 3 - Determine current monthly
debt payments
and subtract _______________
Step 4 - The remainder is the
estimated monthly
payment you can afford for the mortgage
loan _______________
Payments
for the mortgage loans will include property insurance, property tax as well as
the loan payment. The loan payment will
include repayment of the amount borrowed at the interest rate and term of your
loan.
Loan
calculators are available on the Internet that make it easy to determine how
much you can borrow and the effect of various interest rates and loan terms.
If you
do not have access to the Internet, use the following formula to estimate how
much you can borrow at 5% interest for 30 years.
Step A – Start with the amount from
Step 4 above ________________
Step B - Estimate the monthly cost
of property tax
& property insurance ________________
Step C - Subtract to determine funds
available to
Pay the monthly debt
service ________________
Step D – Divide by 5.37 ________________
Step E – Multiply by 1000 to estimate
the amount
of the loan you can
afford based on your
current income and
current debt _________________
Why a Loan Guarantee?
Unless the borrower is making a
down payment of 20% or more, the lender will require the borrower to have a
loan guarantee, mortgage insurance or both.
The Section 184 program offers the lowest cost loan guarantee fee
available on the market today. The
Section 184 guarantee fee is a one-time cost of 1% and there is no monthly
mortgage insurance. The guarantee fee
can be included in the mortgage loan. The low cost of the Section 184 guarantee
and the low down payment requirement of 2.25% are the primary financial
advantages of the program.
Who are the Approved Section 184 Lenders in Alaska?
- Alaska USA Federal Credit Union*
* Direct
Guarantee Lender
Direct Guarantee Lenders are authorized to process
Section 184 loans without prior HUD approval.
Apply for a HUD 184 Loan Today
Comments
Post a Comment