Section 8 Lets Renters Become Homeowners
(October 15, 2004) -- The Homeownership Voucher Program has enabled thousands of low-income Americans to make the transition from renting to owning.
Through the program, recipients of HUD's Section 8 benefits can use the housing vouchers to buy their first home, subsidizing up to 70 percent of their monthly payments and housing expenses--including principal and interest, mortgage insurance, certain maintenance and repairs, and part of the utilities. The tenant-buyer is required to find a property, which does not have to be in the jurisdiction of their local public housing authority, and have it inspected.
Program participants must have an annual income of at least $10,300; must have one member of the household working full time for at least 12 months before the application, except in cases involving elderly and disabled families; and can expect to receive assistance for 15 years if the initial mortgage is 20 years or longer.
Source: Washington Times (10/15/04);
Does anybody have more information on this program? I've said for years that this would be a good thing and I actually have a project in the works that would be an excellent use of such a program. How does it work? What is it called? Everybody I talk to tells me this cannot be done.
http://www.washingtontimes.com/fhg/20041014-011444-1297r.htm
If you use HUD Section 8 housing-choice vouchers, homeownership is not as far away as you might think.
The Homeownership Voucher Program enables first-time home buyers in low-income brackets to purchase a house using the Department of Housing and Urban Development's Section 8 funding to help with the payment and some expenses.
The federal program is administered through local Public Housing Authorities. Find a list at http://www.hud.gov/ offices/pih/pha/contacts/index.htm.
Not all PHAs participate in the program. However, thousands of new homeowners across the country enjoy the benefits of homeownership because of this program.
Housing vouchers can be obtained only by current holders of HUD rental vouchers. So if you want to take advantage of this program, you have to apply via HUD for rental voucher assistance, then follow the process of using that voucher to buy a home.
The voucher can be used to subsidize the monthly payment and housing expenses — the amount it will subsidize is up to 70 percent of such payments, according to the HUD Web site, http://www.hud.gov.
The tenant-buyer must find the house, which must undergo an initial inspection for housing quality standards conducted by the PHA, as well as a standard home inspection. The good news for families living in expensive areas: Unlike with the rental voucher, you don't have to buy a house in the jurisdiction of the PHA.
The program has some other requirements:
• First-time homeowner or cooperative member.
• No family member has owned or had ownership interest in their residence for at least three years.
• Except for cooperative members, no family member has any ownership interest in any residential property.
• There is a minimum income requirement, the current federal minimum wage times 2,000 hours — that's $10,300 annually.
For disabled families, the qualified annual income of the adult family members who will own the home must not be less than the monthly federal Supplemental Security Income benefit for a person living alone, multiplied by 12 (currently $6,768).
These are general guidelines; the local PHA may establish a higher minimum-income requirement. Except in the case of an elderly or disabled family, welfare assistance is not counted in determining whether the family meets the minimum income requirement.
• There is an employment requirement. Except in the case of elderly and disabled families, one or more adults in the family who will own the home must be currently employed and must have been employed on a full-time basis for at least one year before the application.
The PHA may have its own requirements, as well, that must be followed. The family must attend and satisfactorily complete any of the PHA's required pre-assistance homeownership and housing counseling programs.
The homeownership voucher can also be used to help cover monthly expenses, which include:
• Mortgage principal and interest
• Mortgage insurance premium
• Real estate taxes and homeowner's insurance
• Part of the utilities
• Some routine maintenance costs
• Allowable major repairs and replacements
• Principal and interest on debt to finance major repairs and replacements for the home
• Principal and interest on debt to finance costs to make the home accessible for a family member with disabilities if the PHA determines it is needed as a reasonable accommodation.
This won't last forever. Although the voucher program has no time limit for an elderly household or a disabled family, all other families can receive assistance only for 15 years if the initial mortgage is for 20 years or longer.
For all other mortgages, the assistance runs up to 10 years.