Buying Versus Renting on a Low Income

HUD housing offers prospective home buyers with a greater opportunity to purchase a home, even when an applicant family is considered to be low income.

HUD homes are often priced lower than that of the home’s value or traditional homes and the mortgage programs offered by the Department of Housing and Urban Development (HUD) can assist low-income buyers in obtaining a mortgage. Yet these homes are not without their potential drawbacks.

Some families benefit more from other HUD housing assistance programs, such as the housing choice voucher program, also referred to as Section 8. Section 8 is designed to provide monetary rental assistance to qualifying families and households that are considered to be low to very low income. Low-income apartments for rent are paid for, in part, by the government on behalf of a participating family while that family is then responsible for the remaining rental costs.

By learning more about HUD housing and Section 8, you will gain a better understanding of the benefits, drawbacks and eligibility requirements as well as the ability to make an informed decision as to which program you apply for.

Learn About Section 8 Rentals Requirements and Benefits

If searching for low-income apartments for rent, it is worth taking the time to learn more about Section 8, also known as the housing choice voucher program, including eligibility requirements and benefits. The housing choice voucher program is a government program designed to assist low to very low-income families, the elderly and disabled individuals afford sanitary, decent and safe housing. The program provides monetary payments directly to landlords on a participating family’s behalf, thus reducing the number of rental costs that a household must pay each month.

Section 8 rentals include apartments, townhouses and single-family homes that have been approved for the housing choice voucher program. Participants are free to choose any housing that meets program requirements after being approved for benefits.

Section 8 rentals are only available to families and households that meet eligibility requirements, including income, citizenship or immigration status and categorical qualifications. The program is only available to U.S. citizens and those who have qualifying immigration status. Benefits can only be provided to families who have at least one dependent child under the age of 18 living within the home or households that include at least one senior citizen or disabled person.

Section 8 housing list income limits vary by county or metropolitan area as limits are based upon the median income level for a particular area. Generally, a household’s income may not exceed 50 percent of an area’s median income level in order to qualify for assistance. However, by law, at least 75 percent of the available housing vouchers must be provided to families and households that do not exceed 30 percent of an area’s median income level.

Discover Potential Drawbacks of Low-Income Apartments for Rent

While Section 8 housing for rent has a lot of benefits to low-income families and households, it is not without its drawbacks. The program is very selective as income limits are quite low in comparison to other government and state programs. Additionally, the program is notorious for long waiting lists and some families and households may need to wait months or years to receive assistance as funding is limited.

After completing a Section 8 housing application and being approved for benefits, the majority of households that apply will not be eligible to receive rental assistance right away and must instead be placed upon a waiting list. Most Section 8 rental waiting lists are not “first come first serve” as many counties will enact “priority systems” in which certain families and households will receive assistance first, such as households with a disabled individual or senior citizens. Priority systems vary by county and metropolitan area.

Learn About the Benefits and Requirements of Purchasing HUD Housing

HUD housing offers low-income families and households a unique opportunity to qualify for a mortgage and purchase a home. HUD homes are one to four-unit residential properties that were acquired by the HUD after an FHA-insured mortgage is foreclosed upon. Homes are often offered at a reduced price in order to sell a home quickly to recover from the loss of the foreclosure claim.

This form of HUD housing assistance is available to anyone that can either pay for a HUD home upfront or qualify for a loan. Therefore, these homes are viable options to those who do not qualify for Section 8 assistance, those that would remain on a waiting list for a lengthy amount of time and those who would rather purchase a home.

Financing for HUD housing is not provided directly by the HUD. However, there are a number of programs designed to assist low-income families and those with poor credit scores to purchase a home. One such program is an FHA-insured mortgage, which insures a mortgage that is offered by a private lender, thus enticing the lender to offer lower down payments and accept lower-income, debt to income ratios and credit scores for a loan.

What are the potential drawbacks of HUD housing?

While HUD housing is a great way for low-income families to purchase a home, the program does have its potential drawbacks. Applicants must still qualify for a loan through a lender. Lender requirements vary by lender, even when applying for a HUD program, such as an FHA-insured mortgage. Additionally, most mortgages will still require a down payment on the home. However, that down payment amount may be lower than a traditional loan, such as in the case of qualifying FHA-insured mortgage applicants.

When reviewing the pros and cons of HUD housing assistance, it is important to know that HUD homes are sold “as is”. While most homes do not require numerous repairs, that is not always the case. The HUD strongly encourages anyone interested in the purchase of a HUD home to hire an inspector, raising initial costs for the purchase of a home.

Find Out About Additional HUD Housing Assistance Options for Veterans

If seeking VA homes for sale, it is worth knowing that VA loans can be used towards the purchase of a HUD home. These loans are guaranteed by the Department of Veterans (VA) and are one of many types of VA benefits that may be available.

Additionally, HUD housing assistance is available to veterans are currently homeless and are seeking low-income housing to rent. The HUD-Veterans Affairs Supportive Housing (HUD-VASH) program combines the housing choice voucher program along with case management and clinical services that are offered by the Department of Veterans Affairs. Eligibility requirements are different than that of the standard housing choice voucher program as beneficiaries are selected based upon homelessness status, income and VA healthcare eligibility.