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The Title VI Loan Guarantee Program is authorized by the Native American Housing Assistance and Self Determination Act of 1996, as amended (25 U.S.C. 4101 et seq.), (NAHASDA), in accordance with the Code of Federal Regulations at 24 CFR Part 1000. A guarantee by HUD, made under Title VI of NAHASDA guarantees repayment of 95 percent of the unpaid principal and interest due on the notes or other obligations guaranteed.
The Title VI Loan Guarantee program allows recipients of Indian Housing Block Grant Funds to use current and future fund allocations as a means of leverage to obtain HUD guaranteed financing. As a borrower, tribes, Alaska Native Villages or TDHEs (with tribe approval) will collaborate with an approved lender to prepare and submit required documents for HUD review. Once approved, HUD will provide the lender with the loan guarantee and the borrower can start the intended project. Obtaining a Title VI guaranteed loan permits borrowers to develop their project at today's cost; avoiding the need to save funds over several years and incurring the risk of potential cost increases.
Proceeds from a Title VI guaranteed loan may be used to:
- Create new housing
- Rehabilitate housing
- Build infrastructure
- Construct community facilities
- Acquire land to be used for housing
- Prepare architectural & engineering plans
- Fund financing costs
The maximum loan amount HUD will guarantee and that a tribe/TDHE can borrow is approximately five times the need portion of the annual IHBG allocation. There is no minimum loan size. Click here. to view an example of how leveraging increases the borrowers loan amount.
A tribe/TDHE must repay its Title VI loan. However, the repayments may be stretched to 20 years. As the amortization period increases, the annual debt service payments decrease. If a tribe/TDHE fails to repay the debt and a default is declared, HUD will make the loan payments to the lender. HUD will then seek reimbursement from the borrower’s pledged funds. Click here to view an example of a repayment schedule.
Eligibility and Benefits
Title VI loans provide a financing mechanism for borrowers to pledge current and future IHBG allocation for the construction of affordable housing and related activities at today’s costs. The Title VI Loan Guarantee can promote flexible financing terms and also be used to leverage additional funds from other sources. Because HUD guarantees the loan, borrowers are not required to use land as collateral.
Eligible borrowers include; Tribes, Alaska Native Villages, and their tribally designated housing entities that are Indian Housing Block Grant (IHBG) recipients. Borrowers must also demonstrate administrative and financial capacity.
Lenders benefit from administering Title VI loans because HUD guarantees payment of 95% of the outstanding principal and interest in the event of default, thereby limiting lender risk, reducing costs, increased loan marketability, improved opportunities to market financial services and credit towards meeting community reinvestment goals.
Eligible lenders include those supervised, approved, regulated, or insured by any agency of the United States or approved by the Secretary of HUD.
Applying for a Title VI Guaranteed Loan
The Title VI program uses a team approach with regular conference calls to help ensure project success by providing technical assistance, answering questions, and coordinating the various parties to keep the project on schedule. The main participants include:
- Tribe or tribally designated housing entity (TDHE)- plans and implements the project.
- Lender- assists with application, performs underwriting and servicing and distributes loan proceeds to the borrower.
- ONAP's Office of Loan Guarantee- callaborates with area office staff to review the Title VI application package, provides a preliminary letter of acceptance, issues the firm committment and loan guarantee.
Although every project is different, HUD has developed a general checklist for the Title VI Loan Guarantee application process. For more information, visit the Loan Application website.
The maximum loan amount is five times the annual need portion of the tribe’s or TDHE’s annual Indian Housing Block Grant (IHBG) and the repayment period is up to 20-years.
HQ Office of Loan Guarantee
Office Loan Guarantee
451 Seventh Street, S.W.
Washington, DC 20410
Northern Plains Office
Southern Plains Office
Eastern Woodlands Office
Program Contacts by Area Office and State
Resources and Related Information
Statute and Code of Federal Regulations
Low-Income Housing Tax Credit Program(LIHTC)
Title VI Program Related Information