FHA Loans For Indian Reservations and Other Restricted Lands

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A family who purchases a home under this program can apply for financing through a FHA approved lending institution such as a savings and loan, bank, or a mortgage company. The borrower must meet standard FHA credit qualifications in order to qualify. An eligible party can produce a gift for the down payment. An eligible borrower can receive approximately ninety-seven percent financing. Closing cost can be covered by a gift, financed; secondary financing or grant; or paid by the seller without reduction in value.


You may build a home, buy an existing home (including a mobile home or manufactured home that meets certain requirements outlined by FHA) under this program. The home must meet the property standards required by FHA including electrical systems, sewer and water. FHA will send an appraiser to determine the value of the home and see if it meets the property standards for insurance, prior to approving the loan. The plans will need to be approved by FHA, for construction of a new home.

Contact a loan officer at a FHA approved mortgage company or financial institution to find out if you qualify for the FHA Section 248 program. Be prepared to answer questions about how much you want to borrow and your income. The loan officer will help you meet all the requirements for obtaining a loan and will tell you how much you can borrow if you qualify.

If you plan a lease for the land on an existing home or plan to build a home, you will have to think about a site lease. You may be able to lease a home site on tribal land or get an assignment from your tribe if you don't presently have a lot. Your tribe may have its own policies for assigning or leasing land, so talk to your tribal officials. The loan on the property must have a FHA approved lease in the borrower's name. The program can't operate without the tribe's active participation, even though the tribe is not a party to the mortgage.

Before FHA will insure mortgages on the reservation, there are four other program requirements that must be satisfied by the tribe. The tribe must:

1) Certify to FHA that it has adopted eviction procedures and will enforce them. The most important part is to name the court that will have jurisdiction over any cases filed on the reservation.

2) Permit FHA representatives access to the tribal lands for the purpose of servicing the property in case of eviction.

3) Agree to use the prescribed lease form.

4) Enact an ordinance (where a tribal government's court has jurisdiction to hear foreclosures) so that FHA-held mortgage and FHA-insured mortgage can be assured a first lien or providing that state law shall determine the priority of liens against the property.

The tribe sends the documents to the FHA Homeownership Center that serves the reservation when these requirements have been completed. FHA will review the documents and notify the tribe if they are acceptable and mortgages can be insured under the Section 248 program.

The tribe must approve the next buyer in the event the home is resold. If the family loses the home through foreclosure because they failed to make their payments, FHA will attempt to resell the home to a qualified Indian family, with tribal approval. The tribe may suggest a renter for the home, or it may buy the home itself if a buyer is not found,.

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Although all information has been written in good faith and reviewed, please email us at [email protected] to report any inaccuracies.