Homeownership is a significant challenge in many Native American communities. According to Census data, about 50% of Native American households own their homes compared to the national average of 65%. For those working in affordable housing on tribal lands, understanding the available mortgage financing options and how they pair with modern manufactured homes can help bridge this gap and support sustainable homeownership within these communities.
Manufactured homes offer a cost-effective and flexible solution but financing them can often be a hurdle. To address this, several mortgage products are specifically designed to meet the needs of Native American homebuyers interested in purchasing a new factory-built home. These programs offer various benefits, such as lower down payments, access to housing counseling, and eligibility for down payment assistance, making them valuable tools for increasing homeownership rates on tribal lands.
Why Manufactured Housing?
Today’s manufactured homes are skillfully crafted in specialized home-building facilities under the supervision of industry professionals. Building these homes in a factory allows for greater quality control and provides a faster, more cost-effective housing option compared to site-built homes.
These homes are constructed using many of the same materials as site-built homes and include advanced energy-efficient features. ENERGY STAR®-certified manufactured homes come with appliances and high-performance comfort systems that can help homeowners save up to 30% on monthly utilities.
Mortgage Options for Native Americans
Several tailored financing programs are designed specifically to address the unique needs of homeownership on tribal lands. Each program offers distinct benefits and requirements covering a variety of situations.
HeritageOne℠ Mortgage | Freddie Mac
The HeritageOne mortgage product is a financing solution specifically designed for members of federally recognized Native American tribes living in tribal areas. It provides borrowers with access to conventional financing for homes located within eligible Native American tribes’ tribal areas.
- Homebuyer Benefits: HeritageOne loans have down payments as low as 3%, do not have income limits, and can be combined with homebuyer programs like down payment assistance.
- Program Requirements: To qualify, at least one borrower must be a member of a federally recognized tribe, and the home must be in the tribal area of an eligible Native American tribe. First-time buyers must complete a homebuyer education course and can do so through Freddie Mac’s free homeownership education course, CreditSmart® Homebuyer U.
- Eligible Properties: Loans can be used to purchase manufactured homes, a 1–4-unit primary residence, a condo, a planned unit development, or a property with an ADU. They can’t be used to purchase a second home.
Section 184 Indian Housing Loan Guarantee Program | HUD
The Section 184 Indian Home Loan Guarantee Program is a home mortgage product specifically designed for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities.
- Homebuyer Benefits: Applicants benefit from down payments under 3%, an interest rate based on the market, not the applicant’s credit rating, and hands-on underwriting experience.
- Program Requirements: Section 184 loans can only be used by approved lenders in approved counties. The loan can be used to purchase a home, rehabilitate or refinance an existing home, or make weatherization updates.
- Eligible Properties: Section 184 loans can only be used for single-family homes, including manufactured homes on a permanent foundation. The home must be used as a primary residence.
Section 502 Direct Loan Program | USDA
This loan program assists low—and very low-income applicants in obtaining decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase their repayment ability.
- Homebuyer Benefits: There is typically no down payment required, and this loan program is a type of subsidy that temporarily reduces the mortgage. Funds can be used to build, repair, renovate, or relocate a home or to purchase and prepare sites, including providing water and waste treatment equipment.
- Program Requirements: Only properties in an eligible rural area qualify for this program and applicants must meet income eligibility for a direct loan.
- Eligible Properties: Properties must be used as the buyer’s primary residence and can’t have a market value in excess of the applicable area loan limit.
Veteran’s Affairs Native American Direct Loan (NADL) Program | VA
If a veteran or their spouse is Native American, the VA’s Native American Direct Loan (NADL) program can provide a loan to buy, build, or improve a home on federal trust land. The loan may also be used to refinance an existing NADL and reduce the interest rate.
- Homebuyer Benefits: TheNADL program provides low-interest loans with no down payment required in most cases, no private mortgage insurance, and limited closing costs.
- Program Requirements: The buyer’s tribal government must have a Memorandum of Understanding (MOU) with the VA and the buyer must have a VA home loan Certificate of Eligibility. Buyers must be a Native American veteran or a non–Native American veteran married to a Native American. The buyer must meet minimum credit and financial requirements and live in the home being bought, built, or improved through the NADL program.
- Eligible Properties: VA loans can be used for the purchase of a variety of home types including manufactured homes, condos, single-family homes, and more.
Native American Homeownership Initiative (NAHI) | Federal Home Loan Bank (FHLB) Des Moines, IA
The Native American Homeownership Initiative is a down payment and closing cost assistance program offered by FHLB Des Moines to qualifying Native American, Native Alaskan and Native Hawaiian homebuyers through member financial institutions.
- Homebuyer Benefits: Eligible households may receive $25,000 for down payment and closing cost assistance.
- Program Requirements: The NAHI program is available to qualifying Native American, Native Alaskan or Native Hawaiian home buyers earning up to 80% of the area median income for the location of the residence being purchased. At least one member of the household must be listed on the mortgage as a first-time homebuyer and must complete a financial literacy program prior to closing. Only current members of the bank may submit applications and reservations of funds.
- Eligible Properties: NAHI grants may be used to purchase single-family homes, manufactured homes, condominiums and other types of residences. The home you purchase must be used for your primary residence. The home purchased must be located within the FHLB Des Moines district.
Take Action
Mortgage financing options are available to help make homeownership more attainable for Native Americans. When these options are used to purchase a new manufactured home, they provide a path to sustainable homeownership that can help close the homeownership gap on tribal lands.
Those involved in developing affordable housing on tribal land should acquaint themselves with the available options to better understand their benefits and requirements. Despite their differences, each financing option provides secure opportunities for homeownership, which can lead to the potential for building generational wealth.
Learn more about why manufactured homes are a great homeownership option here.