- Participants in the Section 8 voucher program may be able to convert their rental assistance to mortgage assistance through a homeownership program.
- Instead of getting help with your rent each month, the program will cover part of your monthly mortgage payment.
- Not all public housing agencies offer a Section 8 homeownership option.
If you are a Section 8 participant, you may be able to use your Housing Assistance Voucher to become a homeowner and begin building equity.
The housing choice voucher program, commonly referred to as Section 8, pays a portion of participants’ rent each month. This program, overseen by the US Department of Housing and Urban Development (HUD), helps low-income, elderly and disabled people afford rental housing.
But participants are not necessarily limited to being tenants. Some Section 8 programs also allow them to use their vouchers to pay a mortgage.
What is the Article 8 Home Ownership Program?
The Section 8 Homeownership Program, also known as the Homeownership Program with Housing Choice Voucher, allows current Section 8 participants to convert their rental voucher into a homeownership voucher. home ownership.
Instead of paying part of the participant’s rent each month, the public housing agency that runs the program will pay part of their monthly mortgage payment. Typically, homeowners will pay around 30% of their monthly income and the program will cover the rest.
Not all public housing agencies that offer Section 8 assistance offer a homeownership program. You will need to contact the agency where you have your voucher to find out if they offer a home ownership option.
Article 8 Home Ownership Program Eligibility Criteria
HUD has some basic requirements for this program, and public housing agencies that offer it often have their own additional rules.
To qualify for the Section 8 Home Ownership Program, you will need to meet these seven requirements:
- Be a current Section 8 Housing Choice Voucher participant
- Have an income of at least $14,500 per year (although local agencies may require more)
- Be a first-time home buyer as defined by HUD (meaning you cannot have owned a home in the past three years)
- Work at least 30 hours per week and have been employed for at least one year, unless you are elderly or disabled
- Engage in homebuyer education and counseling
- Have no previous defaults on a mortgage while receiving Section 8 homeownership assistance
- Follow your public housing agency’s rules for the program, which may include a minimum credit score or savings balance
Even if you qualify, there is no guarantee that you will be successful in finding and buying a home. It is important to have realistic expectations and to be prepared. If you know things like your
or in cash for a
will be obstacles, start working on it in advance.
Advantages and disadvantages
If you are able to qualify, the Section 8 Home Ownership Program can be life changing.
Lisa Lehman, director of Key to ownMichigan State Housing Development Authority’s (MSHDA) Section 8 Homeownership Program, says she has seen this program stabilize families and give them the tools they need to succeed.
“I’ve seen families grow, I’ve seen kids graduate from college, and that was pretty cool,” she says.
The advantage of paying a mortgage over rent is that the money you spend on your monthly expenses is capital that belongs to you. This can help Section 8 participants financially in the long run.
“It gives them an advantage because rather than paying the owner’s mortgage, they pay their own,” says Jay Reulet, consultant at Section 8 Consulting.
Having a Section 8 homeownership program can also save money for the public housing agencies that run them.
“It’s almost $200,000 less a month for us to put them in a house than for us to rent them out,” Lehman says.
But there are some hurdles that Section 8 participants will have to overcome if they want to become owners. For starters, the program is not offered everywhere. They are also often underfunded and understaffed.
In Michigan, for example, there are more than 100 public housing agencies, but only a handful offer Section 8 homeownership programs, Lehman says. At MSHDA, Lehman manages Key to Own with another employee.
At the individual level, it can be difficult for people with very low incomes to meet program requirements.
Lehman says one of the biggest challenges applicants face is building their credit. Key to Own requires a minimum credit score of 640 with at least $1,300 saved and no debt.
Another challenge is that mortgage assistance does not last for the full term of the loan unless you are elderly or disabled. In most cases, assistance is limited to 10 or 15 years. Once your voucher expires, you will need to be able to cover the full monthly payment.
Lehman says she is working with homeowners in this situation to find ways to make their payments more affordable. Refinancing into a new, longer-term mortgage, for example, can help lower their monthly payments.
Reulet says that to be successful in the program, you’ll need to do a lot of research and preparation, and be really motivated. Ultimately, he says he sees very few of his clients succeed in buying a home with this program.
One problem, Reulet says, is that those who receive housing assistance through the Housing Choice Voucher program are often unable to cover the other expenses associated with buying a home. as
But other forms of financial assistance, such as loans or grants for down payment, can help fill this gap. If you’re considering applying for this program, find out if your city or state offers assistance for homebuyers who need help with their down payment or closing costs.
Section 8 advantages and disadvantages of the homeownership program
6 Steps to Apply for Section 8 Home Ownership Program
If you are currently a recipient of the Housing Choice Voucher Program and think you might qualify for this program, here is what you need to do to apply:
- Find out if your public housing agency offers a Section 8 homeownership option. You can find your contact details of the HLM agency on the HUD website.
- Determine if you meet the requirements to apply. If you’re not there yet, improve your credit score, save a little money each month, and pay off your debts if you can.
- Make a request to your HLM agency.
- Complete the required homeownership education and counseling.
- Get pre-approved for a mortgage and start shopping for homes. Make sure the homes you are considering are in good condition, as they will need to pass an inspection.
- Once you have found a home and an offer has been accepted, you prepare for closing.
Once in your home, you will make your monthly mortgage payment with help from the Section 8 program. The amount of help you receive will depend on your income.