Native American Direct Loan

The Native American Direct Loan (NADL) Program helps eligible Native American Veterans finance the purchase, construction, or improvement of homes on Federal Trust Land, or to reduce the interest rate on such a VA loan.

NADL Facts

• Eligible Native American Veterans can use these direct loans to simultaneously purchase and improve a home or to refinance another VA direct loan made under NADL to lower the interest rate.
• These loans are only available if a memorandum of understanding exists between the tribal organization and VA.
• Veterans who are not Native American, but who are married to Native American non-Veterans, may be eligible for a direct loan under this program. To be eligible, the qualified non-Native American Veteran and the Native American spouse must reside on Federal Trust Land.

Eligibility

VA direct home loans are available to eligible Native American Veterans who wish to purchase or construct a home on trust lands.

To obtain a NADL, the law requires that:

1. The applicant must be an eligible Native American Veteran who has available entitlement.
2. The tribal organization or other appropriate Native American group must be participating in the VA direct loan program. The tribal organization must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs, which spells out the conditions under which the program will operate on its trust lands.
3. The loan must be to purchase, construct, or improve a home on Native American trust land. Individually allotted land is considered trust land for this purpose.
4. The Veteran must occupy the property as his or her home; a loan for rental or investment purposes is not permitted.
5. The Veteran must be a satisfactory credit risk.
6. The income of the Veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the other costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.
7. All prospective applicants are encouraged to first contact either their local housing authority or VA to discuss their financial situation and obtain a general idea of whether or not they might qualify for a home loan.

In addition to the requirements above, the Servicemember or Veteran must meet certain military service requirements.

Application Process

1. Ensure that your tribal organization or other appropriate Native American group is participating in the VA direct loan program. The tribal organization must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs, which includes the conditions governing its participation in the program.
2. Apply for a Certificate of Eligibility (COE)
3. Decide on a home to buy and sign a purchase agreement or a contract with the builder to build the home. Make sure to include a provision in the contract that makes the contract void if you are unable to obtain a VA direct loan.
4. Contact either your local housing authority or VA to apply for the loan. An appraisal of the property will be ordered, and you will be asked to provide information needed to verify your income and credit history.
5. Close the loan and move into your new home.

Loan Fees

Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan's cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.

You do not have to pay the fee if you are a:

• Veteran receiving VA compensation for a service-connected disability, OR
• Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
• Surviving spouse of a Veteran who died in service or from a service-connected disability.

The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. See Loan Fees for more information about loan costs.