What is Section 8?
Section 8 is a common name for the Housing Choice Voucher Program. Section 8 is a federal program that provides low-income families and individuals, the disabled, and the elderly with financial help to pay for affordable private housing. Section 8 tenants receive vouchers to cover the cost of rent or to pay reduced rent. Vouchers may also be used to buy a house.
Section 8 offers two programs: the “project-based” program and the “tenant-based” program. The project-based program provides financial help for specific units and cannot be transferred to another unit. The tenant-based program provides transferrable help for tenants, where tenants can still receive help even if they move to a different unit. If you are looking to buy a home, you need to be enrolled in the tenant-based program. Some people only qualify for project-based vouchers, so check with your local HUD office to see if you qualify.
What are the Pros and Cons of each Voucher Program?
“Project-based” Voucher Program
- You may only be responsible for paying 30% of your “household adjusted gross income.” (That is the total household income with adjustments subtracted. You can reference your most recent federal income tax return to find this number.)
- There are different styles of homes available to rent, including apartments, townhomes and single-family homes.
- You may only use the government issued vouchers in certain areas.
- If you move, you lose your right to further housing assistance.
- You may wait on a waitlist for many months or even years.
- Homeownership assistance is not available under this voucher.
“Tenant-based” Voucher Program
- You have more freedom to choose where to live and can use the voucher to pay apartment rent or homeowners’ monthly payments.
- If you move, the rental assistance may be transferred to the new apartment.
- Although you have freedom to move, there is no statewide guarantee that all property owners will accept the Section 8 funds.
Am I guaranteed housing, if I enroll?
Landlords in most Maryland jurisdictions can legally reject applicants who are enrolled in the Section 8 program. (In Montgomery County, a landlord may not reject your application solely because you use Section 8 funds. Baltimore City also places restrictions on some landlords.) However, in many parts of the state, a landlord is not required to rent to participants in Section 8.
Is it possible to use Section 8 funds to buy a house?
While Section 8 was designed to help low-income tenants to pay rent, tenants may use a tenant-based voucher to buy a house as long as they meet the requirements listed below.
What do I need in order to use Section 8 funds to buy a house?
Public Housing Agencies (PHAs) are local offices that oversee issues of community development. Each agency runs the Section 8 program in its area, helping people to find housing, answering questions, and helping with applications. Contact your PHA to learn about its unique requirements. Generally, Section 8 programs have requirements like these:
- You must be enrolled in the tenant-based program.
- You must have successfully paid rent in the tenant-based program for a year and not be behind in payments.
- You must be a first-time homebuyer. Applicants who have purchased a home before are not allowed to use the voucher for another house.
- Unless you are elderly or disabled, you must be currently employed, and have over a year of continuous full-time employment. This means you must have worked at least 30 hours a week on average before applying for the homeownership help.
- You must meet the Minimum Income Requirement. Your annual family income must at least equal the Federal minimum wage amount times 2,000 hours. Disabled families must have an annual income of at least the Supplemental Security Income rate multiplied by 12.
- You must not have violated any of the terms of the lease contract within the last 3 years.
Baltimore City has other requirements, as well. In Baltimore City, you must also:
- Attend homeownership counseling;
- Receive a homeownership certificate;
- Ratify a sales contract within 120 days and settle within 180 days;
- Obtain a mortgage from a lender;
- Pass both a Housing Quality Standards and Private Home Inspection; and
- Contribute 3% toward the purchase (1% must be from personal funds).
See http://www.baltimorehousing.org/homeownership_hcvp for more details.
All of the requirements may vary based on where you live. So be sure to consult with the Housing Authority before applying for the program.
Which homeownership expenses can the voucher be used to pay for?
The government issued vouchers may be used to pay most payments relating to housing:
- This is the portion of your monthly payment, which reduces the overall balance on your loan and interest. This is a tool to help you figure out how much your principal and interest payments would be. (http://www.homebuyergo.com/Principal_Interest_Payment.aspx)
Real estate taxes and homeowner insurance
- Real estate taxes are taxes for the property, and homeowner’s insurance can protect the property if there is damage to your home or if your home is lost to events such as fire, flooding, and earthquakes.
Public Housing Agencies (PHA) allowance for utilities
- PHA covers expenses for heat, electricity, water, and other necessities.
PHA allowance for routine maintenance costs
- PHA provides money to cover plumbing repair, electrician repairs, and other services to ensure that your home is livable.
PHA allowance for major repairs and replacements
- PHA provides money to cover ceiling repairs, new necessary appliances, mold removal, asbestos removal and other health-related changes to the residence.
Principal and interest on debt to finance major repairs and replacements for the home
- These are payments to lower the balance of the bill for such services and to pay interest fees.
- Principal and interest on debt to finance costs to make the home accessible for a family member with disabilities if the PHA determines it is needed as a "reasonable accommodation.”
I am currently in public housing. Can I still participate in the homeownership voucher program?
Yes. Before you apply for the Homeownership Voucher Program, however, you must first participate in the Housing Choice Voucher Program (“tenant-based”) and be enrolled in that program for over a year to meet the qualifications for the Homeownership Voucher Program. Please see above for details regarding the qualifications for the Homeownership Voucher Program.
How do I apply?
You can contact your local Maryland Public Housing Agency (PHA) to request an application.
Return the completed application to the agency where you received it. Due to the large volume of applicants, you may be placed on a waiting list. It may take a long time to be approved for a voucher. You can either wait until the waiting list clears up, or you may apply in another location where there is no waiting list. However, the PHA for a different location may have different requirements. Some places may require you to live in the area for at least one year. Please discuss your residency preferences with the PHA and ask for more information before applying.
How much money will I get?
The standard voucher payment schedule will be used to determine your subsidy.
How long will I receive this benefit?
There is a time limit to how long you can receive this benefit. The time limit depends on your circumstances.
Read the Regulation: 24 Code of Federal Regulations §982.634