The Way to Purchase a House Through HUD

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Through the Department of Housing and Urban Development (HUD), there are two primary ways to purchase a house. It is possible to buy a HUD Home, which HUD sells following foreclosing on an FHA-insured mortgage. Should you qualify for and obtain a Section 8 Housing Choice Voucher, you may use the HUD subsidy to purchase a house via the Homeownership Voucher Program, provided that your regional public housing authority participates.

HUD Homes

Safe funding as you would for a conventional home purchase. It is possible to use cash or apply for a loan. HUD notes that you may qualify for an FHA-insured loan, which, as of July 2010, offers a 3.5 percent payment to borrowers with FICO credit scores above 580.

Search online listings maintained by HUD-contracted businesses. HUD Homes are one- to four-unit properties. HUD-registered real estate agents can run HUD Homes’ trades. HUD pays their commission.

Get a house inspection on the HUD Home on which you would like to make a deal. HUD doesn’t guarantee the condition of the foreclosed houses it puts up for sale, nor will HUD cover repairs.

Make an offer throughout the”offer period” for your preferred property. Your real estate agent will know when this interval occurs. After the offer period closes, HUD takes the most favorable bidding. HUD explains that HUD Homes are available for sale at fair market value.

Homeownership Voucher Program

Contact your local public housing agency (PHA) to apply for the Section 8 application. The Section 8 program provides rental subsidies, known as Housing Choice Vouchers, to families that earn less than their area’s median income. This system contains a component called the Homeownership Voucher Program. Not all PHAs participate.

Ask the PHA regarding their eligibility requirements. While you can apply for the voucher program in any jurisdiction you wish, HUD points out that some regional PHAs give preference to neighborhood residents within non-residents. You also need to meet income requirements to your area. Generally, you can’t earn more than 50 percent of your area’s median income. In San Francisco, for instance, a four-person household cannot make more than $53,750 to qualify for the leasing or ownership section of the Housing Choice Voucher program, as of 2010.

Get on the waiting list, assuming it is open in the area where you wish to live. When it is not, you may look for an area with an open waiting list. In any case, HUD explains, at the Homeownership Voucher Program site, that once over the list, you can expect to wait anywhere in”a few months to many years” for a coupon, based on the locale.

Meet additional eligibility requirements for the homeownership part of the Housing Choice Voucher program. Just because you are eligible to lease and get on a Section 8 waiting list, doesn’t mean that you qualify to buy. HUD requires that homeownership voucher holders are first-time homebuyers. You must also meet income, occupation and other criteria set by your regional PHA. HUD also requires program participants to go through a pre-assistance homeownership education program.

Use your voucher to buy a house. The voucher generally makes up the difference between 30 percent of your median income and your monthly mortgage payment. If the house you purchase triggers a monthly payment that is higher than the total of your share and the HUD subsidy, you have to pay the excess. However, local PHAs may put limits on the purchase price of a house you can purchase throughout the program to ensure prospective homeowners do not get into a property they can’t afford.

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