APPENDIX E

Process for Using the Section 8 Voucher Assistance Home Purchase Option

The PHA's role is as follows.

• Each PHA retains sole decision-making authority as to whether it will use its federal assistance for homeownership.

• The PHA must use its standard annual contribution from HUD to fund any homeownership program.

• The PHA is not allowed to set aside Section 8 program funding or create special waiting list positions for homeownership vouchers.

The process involves several steps.

• The PHA governing body must conduct public hearings prior to adoption of its annual plan.

• If the governing body approves, the PHA must state its intention to develop a homeownership program in its annual plan submission to HUD.

• The PHA must demonstrate capacity to operate a successful homeownership program by:
  1. requiring each participating family to pay a minimum down payment of at least 3 percent of the home purchase price;
  2. requiring that financing for homes purchased using Section 8 vouchers complies with FHA standards; and
  3. otherwise demonstrating its capacity to successfully operate a Section 8 homeownership program.

• The PHA must establish homeownership policies and describe them in its administrative plan. These policies must include:
  1. the amount of home ownership expenses to be allowed by the PHA;
  2. the policy for dispersing the homeownership assistance – either directly to the family or to the lender on behalf of the family.

• In addition, the PHA may also adopt any additional policies it deems necessary to ensure program success, such as:
  1. the maximum time a family is provided to locate and purchase a home;
  2. purchasing terms, including down payment, financing and mortgage payment requirements;
  3. whether families will be provided Section 8 rental assistance if purchases are not completed or in case of default;
  4. events that will trigger the PHA to prohibit a family moving to another home or to discontinue rental or homeownership assistance.

Families seeking to purchase homes using Section 8 must:

• be Section 8 housing choice voucher recipients;

• be first-time homebuyer eligible;

• be graduates of a pre-assistance and housing counseling program administered by the PHA or its designee;

• meet minimum income requirements:
  1. 2,000 hours of annual full-time work (30 hours per week) at the federal minimum wage. The income of all adult family members who will own the home upon receipt of homeownership assistance, as well as any welfare assistance, will be counted towards a family's adjusted annual income.
  2. at least one adult family member must be continuously employed full-time for the year before receiving homeownership assistance. The employment requirement does not apply to elderly or disabled families.

Participating households may not have:

• present ownership interest in a residence;

• a previous mortgage default using homeownership assistance.

Unit eligibility requirements are:

• The property can be a single unit, or be a condo or co-op in a multifamily building. A manufactured home may also be purchased either on a lease space or together with the real property on which it is sited.

• Each unit must be inspected, and pass, an initial housing quality standards review set forth by HUD.

The term of assistance is 10 years. If the mortgage has a term of 20 years or longer, the family's maximum term for assistance can be 15 years.

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