The U.S. Department of Veterans Affairs (VA) recently announced that it will lower the VA’s Native American Direct Loan (NADL) program interest rate from 6 percent to 2.5 percent in an effort to make housing loans more affordable for Native military veterans.
The program provides direct loans to Native veterans and veterans who are married to Native non-veterans to help with the purchase, construction or renovation of a home on trust land. It also allows qualifying veterans to get into the housing market with no down payments, limited closing costs, and no monthly mortgage insurance costs.
The program is separate from the broader VA loan program that is available to all veterans. Native veterans who aren’t buying a home on federal trust lands can still receive typical VA-backed home loans, just not direct NADL loans at the lower rate.
The new rate will apply to NADL loans closed on or after March 13, which will lock in the 2.5 percent interest rate for the life of the loan. NADL borrowers who currently have an interest rate of 3.5 percent or higher can refinance at the lower rate, according to the VA.
The 2.5 percent interest rate will be available for a maximum of 24 months after it went into effect, the VA said. The VA must have a Memorandum of Understanding in place with the borrower’s tribal government to provide a loan through the NADL program, and the borrower must meet the VA’s credit and income standards.
A 2022 report found that the NADL program was severely underutilized, with just 89 loans originated in the continental U.S. from 2012 to 2021. That translates to about 1 percent of the estimated 70,000 eligible beneficiaries. According to the report, a lack of sufficient staff at the VA and ineffective communication efforts with relevant communities attributed to the low rates.
The program was more successful outside the continental U.S., with 91 loans originated in the program in Hawaii alone during the same period. Across the country, 180 loan program originations took place between 2012 and 2021.
Native people often face difficulty when accessing credit on tribal lands. According to a 2021 report, tribal lands can be “credit deserts” that lack access to capital that could allow more Native people to become homeowners. This can be further complicated by the fact that much of the land in tribal areas is held in a trust, which can make it difficult for traditional mortgages to be secured on both the home itself and the land it sits on, according to the report.
Sen. Jon Tester (D-Mont.) is sponsoring the Native American Direct Loan Improvement Act, which would also better market the NADL program and allow existing mortgages on the same property to be refinanced as an NADL loan. Native veterans interested in the NADL program, and the new interest rate can send an email to [email protected] or call 888-349-7541.
I wish to purchase a home on tribal land being a member of a federally recognized tribe in Oklahoma. I served in the army from 1984 to 1987 and have my certificate of eligibility from the service. I’m willing to use it towards the loan for purchase. Please help in advising to accomplish this.
need help with my Department Hawaiian Home Land property is in my name would like to refinance and build but I have a FHA loan with a balance of about 164,000 with a interest rate of 3.25 percent
would like to refinance with NADL