The U.S. Department of Housing and Urban Development announced the Biden-Harris administration aims to save Native American homebuyers an average of $500 in the first year on mortgage payments through fee reductions.

The Department of Housing and Urban Development's Office of Native American Programs reported upfront loan guarantee cost and the annual loan guarantee fee levied to purchasers who get a Section 184 Indian Home loan have been reduced, according to a June 8 news release.

“For this country to truly succeed, all Americans must have access to opportunity. That means expanding access to wealth-building and home ownership," HUS Secretary Marcia L. Fudge said in the release. "Today, we are building on the steps we’ve taken to make homeownership more affordable, and HUD is acting to ensure people feel comfortable purchasing a home as they build toward their future. As we reduce housing costs for Native American families with Section 184 loans, we continue our work to address longstanding disparities in homeownership."

For homebuyers looking for a Section 184 guaranteed loan, the upfront loan guarantee charge will be cut from 1.50% to 1.000% and the annual loan guarantee fee from 0.250% to 0.000%, the release reported. In addition to saving borrowers money, the lower fees might make it possible for more people to be approved for a mortgage.

A Section 184 borrower purchasing a $194,000 house will save roughly $500 this year and up to $6,800 during the course of the loan, due to the fee reductions, the release said. An estimated 3,000 Native American families might save $1.5 million as a result of the reduction overall in the first year alone.

This move supports the Biden-Harris administration's objective of making homeownership more cheap and accessible for families across the country, especially in Tribal communities where Section 184 guaranteed loans have served as a pillar for homeownership access, according to the release.

The Dear Lender Letter, 2023-05, offers instructions to lenders on how to put the fee reductions that were announced in the Federal Register May 4 into effect, the release said. Starting July 1, the reduced fees will be applied to all new Section 184-guaranteed loans. 

Loans closed before the effective date that were insured by Section 184 will not be subject to the fee reductions, according to the release.