Section 8 Housing: A New Door to Homeownership?

Recent changes to HUD's Section 8 voucher program can help low income applicants not just rent a home, but eventually become homeowners as well. Take a minute to find out about how Section 8 Vouchers work and see if it could help you, or someone you know.

What do the vouchers do?

A section 8 voucher allows a borrower to obtain assistance paying rent. The holder of the voucher will pay 30% of their monthly income as rent. So, if you make $2,000 a month your rent cannot be over $2,000 x .30 = $600 a month. If your rental unit charges more than that the difference is paid as a subsidy by the government. So, using the above example if the unit charges $900 a month in rent, the voucher holder pays $600 and the other $300 are paid by the government.

So whats to stop someone from going out and getting a really fancy apartment? Housing and Urban Development, or HUD, calculates what is knows as a Fair Market Rent for each county. If the rental unit you want to live in charges more than HUD's Fair Market Rent for the area then you will have to pay the difference. So, again using the above example, if you get an apartment that costs $1,200 the voucher will still only cover $300, you would pay the rest. The most important thing to remember is to find an apartment that is safe, meets your needs, and does not overstretch your budget.

Who Accepts Vouchers?

Landlords are not required to accept a section 8 voucher. Their participation in the program is entirely voluntary. Many landlords do accept them, so ask when you are looking for a new apartment.

How long do I keep the voucher?

You can keep the voucher for as long as you are income qualified. The voucher is also portable, meaning if you move to a new city you can take the voucher with you. Remember, the Fair Market Rent is likely to be different in a new city so check with the local housing authority.

Qualifying for Section 8 Vouchers

Only borrowers who have what is known as very low income can qualify for these vouchers. Very low income is defined as 50% or less than the Area Median Income, called AMI for short. These income levels changes based on the county that you live in. To find out if you qualify call your local housing authority, or for 2010 numbers visit http://www.huduser.org/portal/datasets/il/il10/index.html , move down towards the bottom of the site and click on your state. Then click on the pdf link and find your county. The chart shows 30% of Median, Very Low Income, and Low-Income. Look to see if your income is less than the VERY LOW INCOME for your county.

In many areas vouchers are in high demand and there may be a waiting list.

So How Does This Help Me Get a Home?

The Section 8 voucher program has been modified by HUD to allow some participants to use the voucher towards paying for a mortgage. There are some restrictions. The participant must have had the voucher for at least a year, been employed for at least a year, and be a first time home buyer. They are income limits as well, you need to be able to afford to purchase the home and the income subsidy guidelines are the same. You also need to attend a first time homebuyer education course that has been approved by HUD. For agencies that offer such a course look on HUD's website at http://portal.hud.gov/portal/page/portal/HUD/i_want_to/talk_to_a_housing_counselor . Additional requirements may be added by local housing authorities so be sure to check with them on the rules in your area.

I hope this has helped you learn a little more about the Section 8 voucher program. I think the new changes that allow the voucher to be applied towards home ownership are a step forwards for the program and those who use it. Home ownership may not be for everyone, but there are many families that would otherwise not have the opportunity to own without some assistance. It is a way for low income families to move forwards and build assets, ones that will hopefully help them become more self-reliant as well.