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- Section 8 voucher program participants may be able to convert their rental assistance into mortgage assistance through a homeownership program.
- Instead of getting assistance with your rent each month, the program will cover a portion of your monthly mortgage payment.
- Not all public housing agencies offer a Section 8 homeownership option.
If you're a Section 8 participant, you may be able to use your rental assistance voucher to become a homeowner and start building equity.
The housing choice voucher program, commonly known as Section 8, pays a portion of participants' rent each month. This program, overseen by the US Department of Housing and Urban Development (HUD), helps low-income renters, elderly people, and those with disabilities afford rental housing.
But participants aren't necessarily limited to being renters. Some Section 8 programs also allow them to use their vouchers to pay a mortgage. If you're interested in participating, here's everything you need to know about eligibility for the Section 8 homeownership program.
What is the Section 8 homeownership program?
The Section 8 homeownership program, also known as the housing choice voucher homeownership program, lets current Section 8 participants convert their rental voucher into a homeownership voucher.
Instead of paying a portion of the participant's rent each month, the public housing agency that runs the program will pay a portion of their monthly mortgage payment. Typically, homeowners will need to pay about 30% of their monthly income, and the program will cover the rest.
Not every public housing agency that offers Section 8 assistance offers a homeownership program. You'll need to contact the agency you have your voucher with to find out if it has a homeownership option.
Section 8 homeownership program eligibility requirements
HUD has some basic requirements for the Section 8 program, and the public housing agencies that offer it often have their own additional rules.
To qualify, you'll need to meet these Section 8 homeownership credit requirements:
Income limits
The Section 8 Program is designed for working Americans with low incomes. The majority of Section 8 homeowners make 30% or less than the area median income. There are also maximum Section 8 homeownership income requirements, which we'll go into later.
First time homebuyer definition
You also must be a first-time homebuyer according to HUD's definition (meaning you can't have owned a home in the last three years)
Employment status
Finally, unless you're elderly or have a disability. you'll need to be gainfully employed, We'll go more into this below.
Specific criteria for eligibility
The above were general requirements for the Section 8 homeownership program. The specific eligibility standards include:
Minimum annual income
You must make at least $14,500 per year to ensure you can cover the costs of homeownership. Local agencies may require more than this.
Additionally, you also make under 50% of the area median income in your area (though 75% of Section 8 households are 30% of the AMI or under).
Employment duration
To qualify, there are certain Section 8 homeownership employment criteria you must meet. For example, you must work at least 30 hours per week and have been employed for at least a year. There are exceptions if you are disabled or elderly.
Credit and financial assessment
You'll also have your credit and financial details checked and will need to participate in homebuyer education and counseling. Your public housing agency may require a minimum savings balance or a minimum credit score to qualify
You can have no previous defaults on a mortgage while receiving Section 8 homeownership assistance.
Steps to determine eligibility
Considering the Section 8 homeownership program? Here are the steps to apply for Section 8 homeownership:
Contact local public housing agency
Find out if your public housing agency offers a Section 8 homeownership option. You can find your public housing agency's contact information on HUD's website.
Then, determine if you meet the program's requirements to apply. If you're not there yet, work on improving your credit score, saving a little bit of money each month, and paying down debt if you're able to. Talk to a HUD housing counselor if you need help.
Submit required documentation
You'll need to prove you're a current Section 8 voucher holder to qualify for the homeownership program. You will also need documents showing you make the minimum income, but fall below the maximum income threshold for your area.
You also may need to show that you're current on your rent, in compliance with current voucher requirements, in good standing with your landlord, and that you have a minimum amount in savings. Your lender may request more documentation once you apply for your mortgage.
Take pre-eligibility counseling
Last, you'll complete the required homeownership education and counseling. Once this is done, you can fill out the lender's application and move forward with your mortgage loan.
Benefits of Section 8 homeownership
If you're able to qualify for it, the Section 8 homeownership program can be life changing.
Financial assistance
The big perk of this program is that you can use your Section 8 housing choice voucher to cover a portion of your mortgage payment. This can reduce the financial burden on your household and free up money for other uses.
Lisa Lehman, manager of Key to Own, the Michigan State Housing Development Authority (MSHDA) Section 8 homeownership program, says she's seen this program stabilize families and give them the tools they needed to succeed.
"I've seen families grow up, I've seen the kids graduate from college, and it's been a pretty cool thing," she says.
Stability and investment
The benefit of paying a mortgage versus rent is that the money you put toward your monthly cost builds equity that belongs to you. This can help Section 8 participants financially in the long run.
"It gives them an advantage because rather than paying the landlord's mortgage, they're paying their own," says Jay Reulet, a consultant with Section 8 Consulting.
Section 8 Homeownership program FAQs
The Section 8 Homeownership Program allows eligible participants to use their housing choice voucher for homeownership assistance.
Applicants must meet specific income limits set by HUD, which vary based on family size and location.
Yes, typically at least one adult family member must be employed full-time for at least one year. To learn more about how to qualify for Section 8 homeownership, see HUD.gov.
While good credit is beneficial, the program may offer counseling and support to improve financial readiness.
Benefits include financial assistance, stability, and the opportunity to build equity through homeownership.
