Section 8 Homeownership Program
The U.S. Department of Housing and Urban Development (HUD) provides and facilitates a significant portion of the nation's low-income housing stock. While rentals make up most of these units, an offshoot of HUD's popular Section 8 Housing Choice Voucher Program allows for a limited number of homeownership opportunities. Some local housing agencies participate in the agency's Section 8 Homeownership Voucher Program, which essentially provides a federal mortgage subsidy.
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Context
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When HUD issues a family a Section 8 rental assistance voucher, the family can search for market-rate units anywhere they wish to live. The voucher generally pays for the portion of a household's rent that outnumbers 30 to 40 percent of their combined income. Families can elect to use their housing choice voucher toward a monthly mortgage payment if they qualify and if the housing agency that covers the area they wish to purchase in participates in the Section 8 Homeownership Voucher Program.
Function
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HUD notes that families who wish to use a voucher to help pay a home loan do not receive preferential treatment over those who would like to rent. Once an applicant reaches the top of a housing agency's standard Section 8 waiting list--this can take months, if not years--he and his household must pass specific eligibility requirements for the homeownership initiative. If approved, the property they would like to purchase must pass a HUD inspection, just like prospective rentals. The voucher operates in the same way as the rental subsidy, covering 30 to 40 percent of a family's mortgage payment.
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Qualifications
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HUD only allows first-time home buyers--people who have not "owned or had an ownership interest" in a residence for the last three years, according to HUD's website--to participate in the program. Applicants must meet minimum income and employment requirements. With the exception of families who qualify as disabled, adult family members must combine to produce annual income no less than the federal minimum wage times 2,000. With the exception of families with disabled or elderly status, at least one adult household member must be presently employed and have held full-time employment for at least one year.
Size and Scope
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Not all housing agencies participate in the Section 8 Homeownership Voucher Program. As of December 23, 2010, housing agencies across the nation have executed 1,780 homeownership vouchers. That's up from the 1,607 transacted in 2009, but down from 1,909 and 1,933 in 2008 and 2007, respectively. The New York State Housing Trust Fund Incorporation completed the most homeownership vouchers in 2010 with 55. The Michigan State Housing Development Authority came in second with 40.
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