Section 8 and Rent to Own Can Help You Buy a Home
Section 8 Can Help You Buy a Home
The Section 8 Housing Choice Voucher makes it possible for low-income renters to find a place to live that meets basic quality standards. While the program makes it easier to rent, owning a home can seem completely out of reach for a renter using government assistance. However, it may be possible to use a section 8 voucher to purchase a home.
Under certain circumstances, if authorized by the local Public Housing Agency, a family may use its voucher to purchase a modest home. Certain United States PHAs offer a Homeownership Voucher Program. The Department of Housing and Urban Development has a list of housing agencies that provide homeownership vouchers and more information about eligibility. It’s easy to make the switch if you already have the Housing Choice Voucher and your PHA offers the program. If you don’t have a voucher, you’ll need to apply at the PHA and meet eligibility requirements. For a home to be purchased under this program, it must pass a PHA initial housing quality standards inspection and an independent home inspection.
Once the property has met the requirements, and you have a voucher, you are one step closer to owning a home. Your voucher payments go towards paying your mortgage each month. However, you will still need to qualify for a mortgage and come up with a down payment. Even with government assistance, these last two conditions to homeownership can seem daunting. That’s were renting to own comes in.
What is Rent to Own?
When you rent to own, you make monthly rental payments on a property for a year or more, just like you would rent any property. Your payment includes standard rent and a premium. At the end of your lease, you have the first option to purchase the home you have been renting. Your premium payment has been “saved” in an escrow account and at the end of your lease, you can apply that money to the down payment for the property you have been renting. At the beginning of the lease, you pay an option fee to be able to lease the property with the option to buy it. That option fee also goes towards your down payment if you purchase the home.
This path to homeownership gives you time to save up for a down payment, improve your credit so that you qualify for a mortgage and assess your future home and neighborhood first hand.
Can You Rent to Own with Section 8?
You can rent to own with section 8 because, during the rental period, you are doing just that, renting the property, which is what section 8 checks are for.
Unless you have a disability or are elderly, the time that you receive government assistance is limited. Combining your assistance with rent to own can help you improve your financial position.
You can use your housing choice voucher to help pay for your rent and rent premiums during your lease. Then you can use your homeownership voucher to make payments on the mortgage once you purchase the home. A 30-year mortgage qualifies you for 20 years of support from the homeownership voucher.
By taking advantage of this program, you will be much closer to owning a home at the time when your assistance expires. Once you own a home, you rent will not factor into your monthly budget and you will be able to use the money you earn to pay off other bills or debts and improve your quality of life. Owning a home means you’re not giving your money to a landlord every month. Instead, all the money you earn can benefit you and your family. Homeownership will help ensure the future of your family and help you feel safe and secure.