The Department of Housing and Urban Development
How HUD Can Help You
The Department of Housing and Urban Development (HUD) offers a number of programs that can assist families in finding affordable housing, purchasing a home and avoiding homelessness. The HUD strives to reduce the amount of homelessness throughout the United States as well as ensure that low income families are able to find affordable, sanitary and decent housing. HUD contributions allow many sought after assistance programs to assist and provide aid to low-income individuals and families.
An Overview of the Department of Housing and Urban Development (HUD)
The United States Department of Housing and Urban Development, also referred to as the HUD, oversees and administers a number of assistant programs such as the Home Investment Partnerships Program, the Continuum of Care (CoC) Program and the Housing Choice Voucher Program, known in some states as Section 8. Additionally, HUD offers homes at substantial discount to qualifying applicants with even greater savings for teachers and emergency responders such as firefighters, police officers and EMTs.
The Home Investment Partnerships Program
The Home Investment Partnerships Program provides grants to both state and local nonprofit groups so that they may build, buy or rehabilitate affordable housing that low income families may rent or obtain ownership of. The Home Investment Partnerships Program is the largest federal block grant for state and local governments and is exclusively designed to create more affordable options for low-income families and households. The program collaborates with local organizations to help provide these resources.
The Continuum of Care (CoC) Program
The Continuum of Care (CoC) Program is an invaluable HUD program that provides resources that combine housing and services funding that goes directly towards homeless families and individuals. The HUD identifies four steps that must be taken in an effort to end homelessness and prevent its return:
- An assessment, intake and outreach that is provided in order to identify the housing needs and services of homeless and low income individuals and families
- Provide emergency shelters that are a safe and immediate alternative to sleeping on the streets, especially for families that have children
- Provide transitional housing and allow for the development of the skills needed to obtain permanent housing
- Aid families and individuals in finding affordable places to live and provide supportive services if needed
Purchasing a HUD Home
An HUD home is a one to four unit residential property that was given to the Department of Housing and Urban Development after a foreclosure action on an FHA-insured mortgage. The HUD becomes the owner of the property and offers it for sale, often below market value, in an attempt to recover some of the losses after a foreclosure. Due to the reduced cost of these homes, they offer a great deal of benefits for potential homebuyers. HUD homes are also available to qualifying organizations who may look to manage residential properties or commercial properties.
Most HUD homes are in good condition, but it is important to know that these homes are sold “as is” and it is strongly recommended that potential buyers have an inspection performed by a licensed professional before placing an offer on the home.
Additionally, the HUD has special offers on HUD homes, such as the Good Neighbor Next Door. The Good Neighbor Next Door program offers law enforcement officials, firefighters, emergency medical technicians (EMTs) and teachers with up to 50 percent off the listed price on an HUD home. In return, buyers must agree to live within the home for a minimum of three years and it must be the buyer’s’ sole residence.
An Overview of FHA Loans
The Federal Housing Administration (FHA) is a division of the HUD that provides FHA loans to first time home buyers. While these loans can be used towards the purchase of a HUD home, they can also be used for other types of home purchases. FHA loans are loans from private lenders that are insured by the FHA. Low income families and those with lower credit scores can greatly benefit from FHA loans as they:
- Allow for down payments that are as low as 3.5 percent
- Require a lower credit score than conventional loans
- Require a lower debt to income ration and income level
When it comes to FHA loans, loan maximum amounts are determined by the county that a buyer is interested in. FHA loans can be applied for through approved FHA lenders.
The HUD Housing Choice Voucher Program
The Housing Choice Voucher Program, formerly called Section 8, provides low income families with affordable, sanitary and safe housing options. Eligible families receive rental assistance in that a portion of their rent is paid directly to the family’s landlord. The beneficiary family would then be expected to pay their portion of the rent on time each month. Under some circumstances, if authorized by the public housing agency (PHA) in their area, families may even use a voucher to assist them in purchasing a modest home.
In order to be eligible for the Housing Choice Voucher Program, a family’s income may not exceed 50 percent of an area’s medium income level. While a family is eligible to receive assistance so long as they do not exceed 50 percent, it is worth knowing that the PHA must provide 75 percent of its vouchers to families whose income does not exceed 30 percent of an area’s medium income. Additionally, a household must consist of either a dependent child, a senior citizen or a disabled individual in order to be considered for the Housing Choice Voucher Program. The household must also consist of United States citizens or individuals who have eligible immigration statuses.
Families can submit an application for the Housing Choice Voucher Program at any public housing agency (PHA). Due to the notoriously long waiting lists that each PHA has, families are encouraged to apply to more than one PHA in order to receive assistance faster. It is not unusual for a family to be on a waiting list for months or even years after the submission of an application.