Section 8 home buying assistance and mortgage support
The federal Housing Choice Voucher program, often called Section 8, can help some low income households buy a modest home instead of renting. Under the homeownership option, an eligible family uses its voucher to help pay a monthly mortgage. The assistance can cover a portion of the principal and interest on the loan as well as property taxes, required insurance and other allowable homeownership expenses. This gives working families, single parents, seniors and people with disabilities one more path toward stable, long term housing and learn more about using Section 8 vouchers to buy a home / pay a mortgage below with contact information listed.
Income, rent and how the section 8 home buying payment works
The homeownership option is written into the same federal rules that govern regular vouchers, but it adds extra requirements around income, employment, credit and counseling. The idea is that a family should only move into ownership once they can realistically keep the home after the voucher ends, not just in the first year. The option has existed for years and is available only where a local public housing agency chooses to operate it.
Section 8 income limits are set by county or city and are based on local median family income. In the regular voucher program, a household generally pays around thirty percent of its adjusted income toward rent, and the voucher makes up the gap between that amount and the payment standard set by the public housing agency. The section 8 homeownership option uses the same basic formula, but it applies the subsidy to a mortgage payment and other approved homeownership expenses instead of rent. When the numbers work, the monthly cost of owning a small home can be similar to renting with a voucher, and in some communities it can even be lower.
The home buying program matters because many voucher holders struggle to find landlords who will accept a voucher at all. There are long waiting lists, units that pass inspection may be in areas with few services, and families can lose their assistance if they cannot lease a unit within the search period set by the housing agency. Allowing a family to use the voucher to buy a home instead gives another way to use the assistance and can let the household stay in the same community instead of moving far away to find a landlord.
Basic eligibility for the Section 8 homeownership option
The homeownership option is only available if the local public housing agency participates in it. Each agency decides whether to offer it and may limit the number of families using section 8 to pay a mortgage each year. Some agencies focus on households that have already been successful in the rental voucher program and that have a strong payment record.
There are national standards that every participating agency must follow. In most cases a family must be a first time home buyer, which means no member of the household has owned a home in the past three years. There are narrow exceptions, such as some families that include a person with a disability or families that previously owned a home only through certain cooperative arrangements, but in general the program is aimed at first time buyers.
For most non-elderly, non-disabled families, there is a minimum income requirement. The combined annual income that is not from government benefits has to be at least the equivalent of the federal minimum wage multiplied by two thousand hours for the year. On top of that, at least one adult in the home has to be employed full time, which federal rules define as an average of at least thirty hours per week, and that work history must be in place for at least twelve consecutive months before homeownership assistance can begin.
For elderly and disabled families using section 8 vouchers to purchase a home, the employment rule does not apply, and the public housing agency is required to count government assistance payments, including programs such as Supplemental Security Income, toward the minimum income test if the household meets the federal definition of an elderly or disabled family.
Families applying also have to meet the ordinary screening used by lenders and public housing agencies. They must be in good standing with the voucher program, have no serious lease violations, and meet any local rules on credit history, prior evictions or required home buyer education. Many agencies require completion of a homeownership or money management class before they will approve a sale.
Mortgage and down payment rules
Voucher holders who use the homeownership option still need to obtain a mortgage from a lender. The public housing agency does not make the loan. The mortgage must be affordable and must meet federal standards. The financing usually has to be provided, insured or guaranteed by a government entity, or it must meet secondary mortgage market or other widely accepted underwriting rules.
- Common choices include Federal Housing Administration insured loans and state housing finance agency products, which often allow down payments in the range of three to three and a half percent of the purchase price. Information on FHA-insured home loans is available at https://www.hud.gov/helping-americans/loans.
Federal regulations require a participating public housing agency to show it has the capacity to run a homeownership program. One way to meet that test is to adopt a policy that every family must put down at least three percent of the purchase price, with at least one percent coming from the family’s own resources such as savings. The remaining two percent can often come from other approved down payment or closing cost assistance or even interest free loans. Many agencies structure their plans this way and then allow families to combine the voucher with separate down payment grants from state housing finance agencies (website: https://www.ncsha.org/housing-help/), city housing departments or nonprofit organizations.
The voucher itself normally cannot be used to pay the down payment. Instead, the monthly subsidy begins after the home is purchased and is applied to the ongoing mortgage payment and other allowed housing costs. Families who qualify for down payment aid from a state or local program can layer that support with the voucher as long as the home meets all program rules and the public housing agency approves the financing structure. More information on these kinds of programs appears on pages such as mortgage assistance programs listed on needhelppayingbills.
How long Section 8 can help with a mortgage
The homeownership option does not provide unlimited, permanent mortgage payment assistance. For families that are not elderly or disabled, the federal rules set a maximum period that the voucher can help pay a mortgage. If the initial mortgage used to buy the home has a term of at least twenty years, the maximum period of voucher assistance is fifteen years. If the initial term is less than twenty years, the maximum period of assistance is ten years. These limits apply across all homes and public housing agencies combined, not just with one property.
There is an important exception for elderly and disabled families. If the household qualifies as an elderly family when assistance begins, or becomes a disabled family at any time during assistance, those time limits do not apply. If a family later stops meeting the elderly or disabled definition, the maximum term becomes effective from the date assistance started, but the rules still require that the family receive at least six months of support once the limit applies, as long as they remain otherwise eligible.
Local agencies can decide whether to keep helping a family near the end of the maximum period if the regulations allow it and the household is stable. They can also move a family back to the rental voucher program if homeownership proves unsustainable and the household needs to sell the home and return to renting.
Counseling, preparation and other support
Most public housing agencies that operate the homeownership option require extensive pre-purchase counseling. This usually covers how mortgage underwriting works, how taxes and insurance are paid through escrow, the responsibilities for maintenance and repairs, and the risk of foreclosure if payments are missed. The agencies may provide the counseling themselves or refer families to independent nonprofit organizations.
The United States Department of Housing and Urban Development approves counseling agencies nationwide. These organizations help families who are thinking about buying with a voucher to review their credit, reduce unsecured debt, set a savings goal for a down payment and understand the costs that continue after closing. Look for a directory of credit counseling agencies (local and national) here.
Contact information and applying to start the process
The first step for any family interested in using a voucher to buy a home is to find out whether the local public housing agency runs the homeownership option and what its specific policies are. HUD maintains a searchable directory of public housing agencies at https://www.hud.gov/program_offices/public_indian_housing/pha/contacts. That page lists agencies by state and city, along with basic contact details.
- Families who are already using a voucher for rent can ask their caseworker or housing specialist whether the agency offers homeownership / buying assistance using section 8 and whether the household might qualify. Households that are not yet on the voucher program generally need to go through the standard application and waiting list process first.
To learn more about using a Section 8 voucher to purchase a home or to apply for homeownership assistance, families can call the United States Department of Housing and Urban Development customer service at 800-955-2232. Public housing agencies can then guide applicants through local requirements, mortgage preparation steps, and any available down-payment or counseling resources.
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