Homeownership Programs

Owning your own home might seem like an impossible dream, or you may own your home and worry about losing it — in both cases, there are programs that can help you with homeownership:

• Down payment and mortgage programs can help you buy a home.
• The Section 8 homeownership program can help you with mortgage payments on a home if you are currently renting using a Section 8 housing choice voucher.
• Foreclosure assistance programs can help you if you own your home, but are worried about falling behind on your mortgage payments.

After you read this page, you can also see DB101's Homeownership for People with Disabilities article to get more information about buying a home.

Down Payment and Mortgage Programs

A mortgage is the type of loan used to buy a house or other real estate. A homebuyer typically has to come up with 20% or more of the sale price of the home as a down payment on the mortgage.

You might think that you can never save up enough for a down payment on a home, but there are programs that can help you with your down payment and mortgage so that you don’t need to save up as much as you may think. If you have a disability, the program may also help pay the cost of repairs or improvement to make the home more accessible.

HOME PLUS is an Arizona program that can help you with buying a home. It has a course about buying a home and then can help you with your down payment and to get a lower rate on mortgage insurance.

Here are some other ways you may be able to get help with your down payment and mortgage:

• Some cities and counties offer financial help that may cut your share of the down payment to as little as 1% of the purchase price. The rules are different for every program. For local details, contact a HUD Housing Counseling Agency near you.
• The Federal Housing Administration (FHA) offers mortgages with down payments as low as 3.5%, low closing costs, and easy credit qualification.
• Department of Veterans Affairs (VA) Home Loans are available with a zero down payment.
• Some credit unions and other lenders offer zero-down-payment mortgages.
• Habitat for Humanity requires only a small down payment, and then you put in “sweat equity” hours helping build your own home or the homes of others in the homebuilding program; cleaning up construction sites, working in a Habitat ReStore, or doing Habitat office work or other tasks also qualify. Contact your nearest Habitat for Humanity chapter for more info.
• Your family may be able to help with your down payment. A cash gift to help with a down payment is allowed on most types of loans. The gift may affect the income taxes of the person giving the money, but there are usually no limits on the amount of the gift.
• The U.S. Department of Housing and Urban Development (HUD) has a list of homeownership programs in Arizona.

Individual Development Accounts (IDAs)

An Individual Development Account lets you save up money to buy a home, pay for higher education, or run your small business. To open an IDA, you must find an IDA program in your area and meet certain eligibility requirements. Once you open your account, the sponsor of your IDA program may match the funds you deposit, helping your account grow faster.

Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.

You can read more about IDAs and how to find an IDA program in DB101’s IDA article.

Section 8 Homeownership Voucher Program

Some public housing authorities (PHAs) let you use a Section 8 housing choice voucher to buy a home or pay monthly homeownership expenses instead of paying rent. The amount of money that Section 8 pays for a home is the same as the amount it would pay for rent.

Read the DB101 page on How to Apply for Benefits at PHAs so you know how to get Section 8. There are waiting lists, and it can take time before you get a housing voucher.

Not all public housing authorities (PHAs) let you use a voucher to buy a home. If you already have a Section 8 voucher, ask the local PHAs to see if you can use it for homeownership. If you want to buy a home and don’t have a voucher yet, apply for vouchers at housing agencies that allow homeownership.

Finding a Home to Buy

When you have a Section 8 voucher that you can use for homeownership, start looking for housing to buy right away. Like rental vouchers, there may be a time limit for buying a home. There may also be limits on the size and price of the home you can buy, and rules about the types of mortgage you can get. However, there are no limits on which neighborhood you live in.

Housing authority staff can refer you to local realtors and lenders who can help you. If you are looking into this on your own, be careful about your lender and realtor. It is important to have a lender and a realtor who know how the Section 8 Homeownership Program works in your area, who have relationships with the local staff who handle the program, and who understand the paperwork. This helps the home-buying process go more smoothly; it also gives confidence to home sellers that you have the resources to buy their home.

Buying the Home

When you’ve found a home to buy, the housing authority inspects it to make sure that it is in decent condition and meets all safety and regulatory standards. It also has to be inspected by an independent inspector that you choose and pay.

If the housing authority gives the okay for you to buy the home you found, you can go ahead and buy it. Make sure to get a “contract of sale” and give a copy of it to the housing authority. Check with the housing authority about what must be included in the contract. If you don’t give your housing authority a copy of this contract, you won’t be able to get Section 8 support for your housing.

Once you have everything lined up and the sale actually goes through, your housing authority calculates how much you have to pay on your mortgage each month and how much Section 8 pays. As with Section 8 rental assistance, the amount you have to pay is about 30% of your income. As long as your income and family situations don’t change much, you can get Section 8 homeownership support for 10 to 15 years. And if you have a disability or are elderly, there is no time limit; you keep getting Section 8 homeownership support for as long as you need it.

Once your mortgage is fully paid off, you are the owner of the home and the government is no longer involved. You won’t get Section 8 benefits anymore, but that is fine because you’ll own your own home and won’t owe any more payments on it.

Get more information about buying a home with Section 8 in DB101's Homeownership for People with Disabilities article.

Foreclosure Prevention

If you are having trouble paying your mortgage, be sure to open all mail from your lender, and call for help as soon as you receive a warning notice from your lender. The U.S. Department of Housing and Urban Development (HUD) offers resources that can help:

• Search for a housing counseling agency near you or call HUD's Counseling & Agency Locator Line at 1-800-569-4287.
• Search for a foreclouse avoidance counselor.

These agencies have experts who answer the phone and give you information about what you can do to keep your home.

HUD also offers Tips for Avoiding Foreclosure and has a comprehensive guide for Avoiding Foreclosure. And the Arizona Attorney General provides a Foreclosure Information Workbook that explains the foreclosure process.