1.    What is the Section 8 Housing Choice Voucher Homeownership Program?

It is a HUD-funded program wherein an eligible family receives assistance from the Housing Authority towards the purchase of a home.  Before the implementation of the Homeownership program, an assisted family used its voucher housing assistance towards renting a unit; now the family can use its voucher assistance towards paying a mortgage when purchasing a home.

2.    What are the eligibility requirements?

There are HUD requirements which all housing authorities must use.  There are also Housing Authority requirements; HUD allows housing authorities to establish their own requirements in addition to HUD's mandatory requirements.

HUD Requirements:

(1).   Eligible for the Section 8 Housing Choice Voucher Program.

(2)    First-time homebuyer requirements.

(3)    Minimum income requirement - annual income not less than federal minimum wage multiplied by 2,000 hours (except disabled and elderly)

(4)    Minimum employment requirement - one or more adults who will own the home is currently employed full-time (not less than average 30 hours per week) and has been continuously employed during the year before homeownership assistance.

(5)    No previous default on a mortgage under the Homeownership Program.

(6)    No family member has ownership interest in a residence.

       (7)    Mandatory pre-homeownership and housing counseling.

       (8)    Family has entered into a Contract of Sale.

Housing Authority Requirements:

(1)    Family has had no family-caused violations of HUD's Housing Quality Standards within the last one year period.

(2)    Family is not within the initial one year period of a HAP contract.

(3)    Family does not owe money to the HACNLV.

(4)    Family has not committed any serious or repeated violation of a HACNLV-assisted lease within the past one year period.

3.    Do I have to be a participant in the Housing Authority's Family Self-Sufficiency (FSS) Program?

      No - but the Housing Authority gives a preference to FSS participants who are contributing to their escrow accounts, which means that these FSS participants have the first chance to be offered the  program.  However, if there are not enough FSS participants eligible for the program, the next groups to be offered the program will be in the following order:

- Other families who are participating in other self- 

  sufficiency programs in other federal , state or local

  agencies; or state agencies;

- Other families currently participating in the regular

  (Rental) Section 8 Housing Choice Voucher  Program who

  have been under the program for at least two years;

- All other applicant or participating families under the

   regular (Rental) Section 8 Housing Choice Voucher  

   Program.

4.    How do I know if I'm ready for homeownership?

Owning a home is a big responsibility.  It is important that you understand those responsibilities before you look into being a homebuyer.  It is a HUD requirement that you take an approved homeownership counseling course prior to purchasing a home.  You should also first clear up any credit problems and save enough money so you can make a down payment. 

5.    What kind of paperwork is involved?

A lot. First, in order for the Housing Authority to determine your eligibility for the program, it will be requiring you to complete various eligibility, verification and other related forms.    Secondly, when you go through the process of locating a home to purchase and of finding financing, any real estate professionals and lending institution you will be working with will require various forms for you to fill out.  Also, the H/A will need reports on your progress.

6.    How much money, at the minimum, do I have to come up with?

The program requires a minimum down payment of three percent (3%) of the purchase price, one percent (1%) of which must come from your own resources. There are also closing costs and pro-rated expenses such as document fee, recording fee, title insurance, pro-rated interest, etc.  The title company which will handle your escrow can help you estimate these costs.

7.     Will the Housing Authority help me with financing my home?

If you mean financing by means of a loan or mortgage to purchase your home, NO – you have to obtain your own financing from a lender.  The Housing Authority will assist you in the purchase by referring you to agencies and lenders who may have programs that can help you with down payment and closing cost assistance.  But the Housing Authority will give your homeownership assistance after you purchase your home.

8.    Do I have to have good credit?

You can't have bad credit if you want to buy a home.  But if you do, the homeownership counseling you have to go through may include cleaning up your previous bad credit.  Different lenders have different ways of evaluating your credit. 

9.    Can my family help me buy the home?

Yes, your family can assist you with your down payment or other expenses.  However, under HUD regulations for this program, a non-occupying co-borrower cannot own an interest in the home; in other words, they cannot hold title to the home.  

10.   Can I have a roommate?

No.  Under the standard family obligations for use and occupancy for the Section 8 Housing Choice Voucher Program, no other person except members of the assisted family may reside in the unit except for a foster child or live-in aide.  Furthermore, the family cannot sub-lease the unit.

11.  What realtor or banks can I use to assist me?

You can use any realtor or lender of your own choosing.  The Housing Authority or your homeownership counselor cannot require you to use a specific realtor or lender.  There are many realtors and lenders in town who have expressed their interest in helping Housing Authority clients.

But remember: your type of financing must be approved by the Housing Authority.

12.   Am I limited as to how much I may pay for a home?

The amount you are able to pay for a home depends on your total income and resources,  Different lenders use different methods of qualifying a prospective homebuyer.  The lender will pre-qualify you for a loan based on your income and other financial information regarding your family.   It is important that you have this pre-qualification before you begin shopping for a home.

13.  If I am eligible only for a 1-bedroom voucher, can I buy a 2-bedroom or 3-bedroom house? 

Yes, you can buy a house whose bedroom size is larger than the unit

size that your family qualifies for but the Payment Standard on which

your homeownership assistance will be based will be the lower of the

Payment Standard for the family unit size and the Payment Standard

for the size of the home. In this case, your Payment Standard will be

based on a 1-bedroom unit not on a 2-bedroom or 3-bedroom unit. In

most cases, a house with more bedrooms will cost more and therefore,

will have a higher mortgage payment.  So since the Housing Authority’s

assistance will be based on a 1-bedroom unit, your portion of the

mortgage payment will be higher for a larger size home.  If you can

afford a larger house (meaning a lender would qualify you for a larger

house at a greater mortgage payment), then you may do so.  The

limitation of family portion to 40% of income does not apply to the

Homeownership Program.

14. Once I have purchased a home under this program, do I have to be

     recertified under Section 8 each year?

Yes.  You will still need to be recertified.  You still need to submit all the paperwork required under the regular (Rental) program.  There is a "Statement of Family Obligations" that you will be required to sign before you begin receiving homeownership assistance and you will need to comply with those obligations.

15.   Does the Housing Authority need to approve the home I wish to buy?

Yes.  You will be required to submit the Purchase Agreement to the HACNLV.  The unit cannot be an "assisted unit", nor a nursing home or similar facility, nor a dormitory or public facility.  It must already be existing or under construction at the time of the family's eligibility.  It must also be a one-unit property or a single dwelling unit in a cooperative or condominium.  Furthermore, the home will be subject to two inspections,  You have to arrange for an independent professional inspection and the Housing Authority will also conduct a Housing Quality Standards (HQS) inspection just like the HQS inspection under the regular (Rental) program.

16.   Is there a deadline for me to locate and buy a home?

Yes.  From the date you are determined eligible for the program, you have six (6) months to locate a home.  After you locate a home, you have ten (10) working days to obtain financing.  From that same date, you also have ninety (90) days to actually complete the purchase of the home.  So, in total, you have nine (9) months from the date you are determined eligible to complete the whole process.  After that period, if you fail to purchase a home, your participation will be terminated.  The Housing Authority will then move on to other interested families and give them an equal chance to qualify and achieve homeownership. 

17.   Will I be responsible for other expenses as a result of purchasing a home?

Yes.  You are responsible for all monthly related homeownership expenses such as association dues, if any.  You will also be responsible for repairs such as water heater repair or replacement, air conditioning repair, plumbing repair or other repairs as normal homeowners have to incur from time to time.

18.   What can I do if I have trouble paying my mortgage or maintaining my home?

This is one of the reasons why it is required that you attend ongoing homeownership counseling as long as you are assisted under this program.  You must understand that once you have purchased your home, you are responsible for the debt incurred in purchasing it.

19.   How do I make my mortgage payments to the lender?

You will pay your portion of the mortgage to the lender and the Housing Authority will send its portion (homeownership assistance) directly to the lender.  Or your portion and the Housing Authority’s portion may be paid to an escrow service who will then make the entire payment to the lender.

20.   What happens if I default on my mortgage or fail to comply with my family obligations under this program?

Your homeownership assistance will be terminated.  You will lose your home and you will not be eligible for homeownership assistance again.

21.   How long will the Homeownership Program assist me?

Fifteen (15) years if your mortgage is twenty (20) years or longer; ten (10) years in all other cases.  These maximum terms do not apply to a disabled or elderly family.

22.   What happens if my income increases and I become over-income? 

Then the same rules as in the Rental Program apply.  Your homeownership assistance will be zero but you can remain on the Homeownership program for six (6) more months.  After that, you will be terminated from the entire Section 8 Program. 

23.   Can I sell my home?

Yes.  However, the program has a "recapture" requirement if you sell your home during the first 10-year period.  There is a formula for calculating the amount to be recaptured.  The recaptured amount decreases by 10% each year.     

The program requires that a Notice of Lien be recorded when you purchase your home and the lien is effective for 10 years.  Therefore, you will not be able to sell your home without satisfying the lien for the amount that must be recaptured.

24.  What happens to my home if I die?

HUD's regulation states: "Upon death of a family member who holds, in whole or in part, title to the home, homeownership assistance may continue pending settlement of the decedent's estate, notwithstanding transfer of title by operation of law to the decedent's executor or legal representative as long as the home is solely occupied by remaining family members in accordance with Section 982.551(b).

In other words, questions need to be asked: Is there a will?  Are there remaining members of the family?  Are there additional owners listed on the deed?  Depending on the answers, the home may revert to those remaining members as defined by Section 8 regulations of the family who were residing in the home.  The home may have to be sold: if no one is able to take title and payments are not made, the home may fall into foreclosure.  One thing is important: if the homeowner dies, the Housing Authority must be notified immediately. 

25.   Can I “switch back” to the regular Rental program after I have purchased a home under this program?

Yes, but you have to first sell your home; this is if you are voluntarily giving up your homeownership assistance to go back to rental assistance. 

26.  What if I failed to pay for my mortgage, can I go back to the regular Rental program?

If you defaulted on an FHA-insured mortgage, the Housing Authority is required by HUD to terminate your homeownership assistance.

If your home was foreclosed upon, whether it has an FHA or non-FHA

Mortgage, the Housing Authority will terminate your homeownership assistance.

The Housing Authority has the discretion on whether to permit you to return to rental assistance.  It will not give you its permission if you did not cooperate with the mortgage company in getting the house sold or getting it returned to HUD and did not move out as you should, which made foreclosure necessary and action had to be taken to evict you from the home.  In this case, you cannot go back to receiving rental assistance.

27.   Do the rules under the Section 8 Rental program apply to me when I am on the Homeownership Program?

Basically, YES.  For example, if you fail to appear or supply the required information for your annual re-examination, or if you or your family engage in crime and drug-related activities, or if you commit fraud by not properly declaring your income, etc – the consequences in the Rental program will still apply to you in the Homeownership program.  What would terminate a family’s rental assistance can also cause termination of homeownership assistance.  Unless specified by HUD that a certain regulation does not apply to the Homeownership Program, Section 8 program rules will apply to both the Rental and the Homeownership programs.