Native American Direct: Providing Homeownership Opportunities in Indian Country

American Indian Guy

The Veteran Affairs helps Native American Veterans in their homeownership plans through the Native American Veteran Direct Loan (NADL). Beginning in 1992, this program as guaranteed financing for their homes on Federal Trust Lands.

The NADL Program is known to be a zero down payment loan and does not require any private mortgage insurance. Also, it is relatively easy to qualify for this program. To make it more convenient, the VA has a dedicated officer to assist borrowers in whatever part of the loan process they may be. That means, from inquiring about the loan to the closing, someone will be there to help you along the way.

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Where Can I Use It?

This particular loan can be used in a myriad of ways. The funds can be used to buy a house, or build one. It can also be used for home improvements and repairs. If you already are funded through NADL, you can refinance through the same program to reduce the interest rate on your current loan.

However, you cannot use this financing on any property. It has to be on Federal Trust Land. A Memorandum of Understanding (MOU) is required by law. To obtain it, the tribal government must sign this memorandum with the Veteran Affairs Secretary. You can call your local VA representative to learn more about the MOU and why it is important in order to get an NADL.

How Much Financing Do I Get? How Much Will It Cost Me?

One great advantage about the NADL is that the Department of Veterans Affairs is the one providing the loan. You can have as much as $424,100 of financing, as this is also the maximum loan limit for the program. In some areas that are considered high-cost, the loan limit can be higher.

As previously mentioned, the program does not require a down payment. However, there is a funding fee that must be paid on the closing. This should not cause alarm or discouragement, though. The funding fee is minimal, at just 1.25 percent for a home purchase. For a refinance with a current VA loan, it is only at 0.50 percent.

The interest rate is at 4 percent. However, this can be adjusted depending on the current housing market situation. Market trends can affect this interest rate, it can be lower or higher than 4 percent. But before such changes can apply, VA evaluates if these adjustments should be warranted. The NADL is a fixed-rate 30-year mortgage loan, so whatever interest rate you sign on a closing, it will stay the same unless you refinance.


How Do I Qualify?

Just like any other VA home loan, a veteran must furnish a Certificate of Eligibility and must also have available entitlement.  The home has to be occupied as the primary residence of the borrower. The property has to be in a trust land duly recognized by the Federal government. A credit evaluation must also be done to establish the credit risk of the borrower. Income verification is also needed to evaluate if the borrower is capable of repaying the loan and still have enough for other obligations and expenses.

Learn more about the Native American Direct Loan and how this can help you begin your homeownership journey. By talking to a VA officer, you may also be able to check if your tribe has an existing MOU with the Department of Veteran Affairs. Get matched with a lender today.

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