Can You Buy a Home With Section 8?

The Housing Choice Voucher (HCV) program, known as Section 8, primarily assists low-income families, the elderly, and individuals with disabilities in affording safe and sanitary rental housing. The program also offers a homeownership option, allowing eligible participants to use their housing voucher to purchase and maintain a home.

The Section 8 Homeownership Program Overview

The Housing Choice Voucher program supports eligible low-income families in achieving homeownership. This program promotes self-sufficiency by converting rental assistance into mortgage payment assistance. The U.S. Department of Housing and Urban Development (HUD) oversees this federal program, but local Public Housing Agencies (PHAs) administer it.

PHAs have the discretion to offer the homeownership program, and not all agencies participate. For those that do, the program helps first-time homeowners with monthly homeownership expenses, which can include principal and interest, mortgage insurance premiums, property taxes, and home insurance.

The program allows families to choose eligible housing that meets program requirements, fostering broader housing options beyond traditional rentals. The assistance provided is a monthly payment, similar to how rental vouchers operate.

Eligibility Requirements

Participation in the Section 8 Homeownership Program requires meeting specific criteria established by HUD and individual PHAs. Applicants must be active Housing Choice Voucher holders and in good standing with their current rental program, adhering to all lease obligations and program rules.

A minimum income requirement applies, often set at the federal minimum hourly wage multiplied by 2,000 hours annually, which is approximately $14,500 per year. For elderly or disabled families, this income threshold is usually lower, sometimes equivalent to 12 times the monthly Supplemental Security Income (SSI) benefit for an individual. Welfare assistance income generally does not count towards this minimum unless the head of household is elderly or disabled.

Employment stability is a common requirement, mandating full-time employment for at least one year continuously before receiving homeownership assistance. Full-time is often defined as working an average of 30 hours or more per week. This employment rule is typically waived for elderly or disabled families.

Participants must qualify as first-time homebuyers, meaning no family member has owned a principal residence during the three-year period preceding the home’s purchase. Exceptions exist for single parents who only owned with a former spouse, or displaced homemakers who only owned with a spouse. Pre-purchase homeownership and credit counseling are required, covering budgeting, credit management, and mortgage readiness.

The Home Purchase Process

Once eligibility for the Section 8 Homeownership Program is confirmed, the process of purchasing a home begins with notifying the local Public Housing Agency (PHA). The PHA provides authorization and guidance on local program variations, as requirements can differ. Families then search for a home that meets program guidelines, typically single-family homes, condominiums, or cooperative units. Manufactured homes may also be eligible in some areas, but mobile homes are usually excluded.

The selected property must undergo an inspection and valuation process. A Housing Quality Standards (HQS) inspection, conducted by the PHA, ensures the home meets basic health and safety criteria. HQS standards ensure the unit is decent, safe, and sanitary, checking for issues like working utilities, proper sanitation, and structural soundness. An independent professional home inspection is also required, and families are typically responsible for arranging and paying for this. The PHA reviews both inspection reports before approving the sale.

Securing a mortgage from a lender is a key step, as the voucher assists with payments but does not directly finance the purchase. Lenders consider the ongoing voucher assistance when underwriting the loan, which can aid in the approval process. Applicants still need to demonstrate creditworthiness and manage their debt-to-income ratios to qualify for a traditional mortgage. Some PHAs may also have specific requirements regarding the types of financing or lenders allowed.

After the property is chosen, inspected, and mortgage pre-approval is obtained, the PHA reviews the purchase agreement. They then calculate the monthly Housing Assistance Payment (HAP) based on the family’s income and the home’s expenses, including the mortgage, taxes, and insurance. Upon PHA approval, the closing process can proceed.

Financial Contributions and Ongoing Responsibilities

Using a Section 8 voucher for homeownership involves a financial structure where the voucher helps cover a portion of monthly housing costs. The Housing Assistance Payment (HAP) is calculated based on the family’s income and the total homeownership expenses, which include the mortgage principal, interest, property taxes, insurance (PITI), and allowances for utilities and routine maintenance. The family is responsible for paying any remaining homeownership expenses not covered by the voucher.

Homeowners are responsible for the portion of the PITI not covered by the HAP, as well as all utility costs, maintenance, and repairs. Any Homeowners Association (HOA) fees for condominiums or co-ops are also the homeowner’s responsibility. While the voucher assists with ongoing costs, it typically does not provide funds for down payments or closing costs, though some local programs might offer separate assistance for these initial expenses.

Maintaining a mortgage requires timely payments, which directly impacts a homeowner’s credit history. Successfully managing these payments builds credit, while missed payments can lead to financial penalties and negative credit reporting. PHAs conduct annual re-examinations of the homeowner’s income and family composition. These reviews are essential, as changes in income or household size can lead to adjustments in the monthly voucher amount.

To continue receiving assistance, homeowners must maintain eligibility, including occupying the home as their primary residence and keeping the property in good condition. The homeownership assistance period is time-limited for most participants, typically ranging from 10 to 15 years, depending on the mortgage term. For elderly or disabled families, there is generally no time limit on assistance. If a family’s income increases to a point where they no longer need assistance, or if they choose to exit the program, they notify their PHA.