What is the Housing Choice Voucher Home Ownership Program?
The basic premise of the Housing Choice Voucher Home Ownership Program is that the voucher subsidy can now be used to help a first-time home owner meet monthly mortgage expenses, in addition to the former use of the voucher subsidy to help a family with the rent.
In order to be eligible for the Garland Housing Agency's (GHA) home ownership program, a family must meet the following criteria:
- The family must be a current rental voucher program participant for at least one year.
- Must be currently employed for an average of 30 hours per week for the last three consecutive years.
- The family must qualify as a first-time home owner (no member of the family has had any ownership interest in a principal residence in the past 5 years).
- The annual income of at least one adult family member who will own the home must be equal to or greater than the Federal minimum hourly wage multiplied by 2000 hours.
- For disabled families, the annual income must be equal to the monthly Federal Supplemental Security Income (SSI) x 12. (employment requirements do not apply)
- If any family member has previously defaulted on a mortgage when participating in the voucher homeownership option, the family is ineligible for the homeownership option.
- Except for cooperative members who have acquired cooperative ownership shares to commencement of homeownership assistance, no family member may have a present ownership interest in a residential property.
- The family must also satisfy any other initial eligibility requirements established by the GHA.
How do I know I'm ready for home ownership?
Owning a home is a big responsibility. It's important that you understand those responsibilities before you look at being a first time homebuyer. It is mandatory that you take an approved home ownership counseling course prior to being issued a home ownership voucher. It is also wise to first clear up any credit problems and save enough money so you can make a down payment.
What is an eligible home?
Homes eligible for this program are new construction, manufactured housing, and pre-owned. All homes must be attached to a permanent foundation. On a new home purchase, ground must be broken (slab/basement foundation) before the date that you put a sales contract on the home.
Will you find me a home to live in?
No. It is the family's responsibility to find a home that is eligible for the voucher home ownership assistance. If the family is already a rental voucher participant and is determined to be eligible, the GHA will authorize the family to search for a home to purchase without the interruption of their rental assistance.
An eligible family will have 120 days from the time the voucher is issued to close on a home. Families participating in this program may select an eligible unit anywhere within the GHA's jurisdiction.
Families may purchase a unit out of the GHA’s jurisdiction under the portability procedures of the voucher program, but only if the receiving housing authority is administering a home ownership program and accepting applicants.
Will I need to get my home inspected?
Yes. There will be two types of inspection that will be needed. The first inspection is a Housing Quality Standards (HQS) Inspection, performed free of cost, by the GHA. The HQS inspection is used to determine if the current condition of the unit is decent, safe and sanitary. The GHA may, but is not required, to conduct annual housing quality standard inspections.
The second type of inspection is by an independent professional home inspector that you will hire. The purpose of this inspection is to identify home defects and assess the adequacy and life span of major systems, appliances and other structural components.
What about financing?
The participating family ultimately is responsible for securing its own financing. The GHA may develop partnerships with lenders to assist the family in obtaining financing, but can not require the use of certain lenders. A family may choose any lender it wishes.
Voucher funds can not be used to assist with financing costs, such as down payment or closing costs. If you do receive down payment assistance through another funding resource, make sure you understand all of their requirements and the impact they may have on any home ownership and financial decisions you may make in the future.
Can my family help me buy the home?
In most cases, your family can help you purchase a home. Assisting with a down payment or other expenses or co-signing or co-borrower on the loan may be helpful. However, it is important to understand that under the Housing Choice Voucher (Section 8) regulations, a non-occupying co-borrower can not own an interest in the house.
Am I limited to how much I may pay for a home?
The amount you are able to pay is dependent on your total income and resources. The mortgage lender will consider your income, housing assistance payment and any other additional assistance that you may be receiving from an outside source or agency. The lender will pre-qualify you based on income and other financial information. It is important to have this pre-qualifying letter before you begin shopping for a home. In this way, you can know how much home you can afford based on your financial standing.
How do I make the mortgage payments?
The GHA will make the monthly homeownership housing assistance payment (HAP) directly to the family, unless other arrangements are made by the family and lender and approved by the GHA. The payment should arrive before the beginning of each month to ensure timely payment.
You will need to combine the GHA's payment along with your payment and forward one check along to the lending institution. Once again, make sure you pay special attention to the rules the lender has for payment. In addition, always keep any records or documentation the lender sends to you.
What do I pay for?
The family is responsible for all home owner expenses not covered by the HAP payment. Such costs to consider are: home inspection and appraisal fees, down payment and closing costs. In addition, the family will be responsible for maintenance, repair and utility costs (if applicable), as well as any home owner's association dues.
Are there ongoing requirements?
Yes. In order to receive continued HAP home ownership payments, the family must continue to live in the home. If the family moves out, the GHA will not continue the assistance after the month when the family moves out. Neither the family nor the lender is required to refund to the GHA the home ownership assistance for the month when the family moves out.
The family must comply with the terms of the mortgage in order to qualify for continued assistance from the GHA. In addition, the family must remain eligible according to HUD rules and regulations as stated in the GHA Administrative Plan.
Will I still have to have a re-certification meeting each year, even after I purchase the home?
Yes. You will still need to submit all your paperwork for re-certification and you will have to continue to abide to the "Statement of Homebuyer's Obligations" that you sign prior to purchasing a home.
Are there any time limits?
Yes. Housing Choice Voucher home ownership assistance may only be paid for a maximum period of 15 years if the initial mortgage incurred to finance purchase of the home has a term that is 20 years or longer. In all other cases, the maximum term of home ownership assistance is 10 years. There is no time limit on home ownership assistance for elderly and disabled families.
However, if anytime during this time limit the family's income is able to support the full home ownership expense, the GHA will no longer be able to assist the family and the family will be totally responsible for the full mortgage payment. In addition, such factors as continued approval by Congress to fund the home ownership program and continued eligibility requirements may effect the amount of time that you receive assistance. It is important to understand that you are responsible for the full mortgage payment if your housing assistance payment is terminated for any reason.
Can I purchase another home?
Yes. The participating family may sell its home to purchase another home under the home ownership program. All sales must be approved by the GHA. However, the total amount of time the family receives assistance on both homes is counted towards the time limit.
The GHA will not commence voucher assistance (either rental or home ownership) for occupancy of another unit so long as any family member owns any title or interest in the prior home.
Will purchasing a home make me ineligible for other assistance programs such as food stamps, Medicaid & Medicare?
No. A home, as well as a car, is an exempt asset according to Social Security and other federal agencies. These types of assets do not count toward a person receiving other supports.
What if I have trouble maintaining my home or paying my mortgage?
You may be required to attend post-purchase home ownership counseling. In your community, there are experienced home ownership counselors who can assist you in such areas as saving towards repairs and the general maintenance of your home. In addition, they can provide financial advice and strategies that can help you avoid defaulting on your mortgage. It is important to understand that you are responsible for any debt incurred to purchase the home.
What if I get terminated from the program?
Among those reasons that the GHA may deny or terminate home ownership assistance are:
The GHA must terminate voucher home ownership assistance for the family if the family is dispossessed from the home pursuant to a judgment or order of foreclosure on any mortgage-securing debt incurred to purchase the home.
- The family does not comply with voucher program requirements at 24CFR 982.552 or for criminal activity as defined by 24CFR 982.553.
- The family does not comply with family obligations described at 24CFR 982.551 or 24CFR 982.633
The GHA may permit a family subject to a foreclosure action to move to a new unit with voucher rental assistance. However, the GHA must deny such permission and terminate the family's participation in the housing choice voucher program if the family defaulted on an FHA-insured mortgage and the family fails to demonstrate that it has (1) conveyed the title to the home to HUD or HUD’s designee and (2) has moved from the home within the period established or approved by HUD.