A lot of people find it difficult to stay on top of housing expenses, especially in the world we live in today. According to the United States Department of Housing and Urban Development (HUD), affordable housing is when a family does not spend more than 30% of their gross monthly income on housing costs. Anything more than 30% can make a family cost-burdened and will not be defined as affordable. When families are cost-burdened, they can find it challenging to deal with other costs such as groceries, medical care, and more. It is crucial for you to find housing that fits your budget.
Other than supporting people with affordable housing, some popular housing assistance programs can support people to reach their goals of becoming a homeowner. Fortunately, there are many options to consider when it comes to housing support. These options can make life significantly better for those in need. Before going into some of these popular assistance options, you should know more about what affordable housing means to you.
What You Should Know About Affordable Housing
Remember how we said that the general rule of thumb is to keep housing expenses below 30% of your gross monthly income? Well that number can vary depending on your specific financial situation. As an example, a person who makes $8,000 (gross) per month would find spending $2,400 per month on housing affordable. Another person who earns $1,600 per month (gross) would find spending $480 per month on housing affordable. To figure out what “affordable housing” means with your income, you should take the income amount you earn before taxes and multiply that number by .30. The total amount that you get will be how much you should spend on housing costs per month if you want to reach affordable housing!
A Guide to Popular Housing Assistance
There are many popular housing assistance options to look through. These assistance options come from all kinds of sources, from the federal government to nonprofit organizations! Some of the options that are worth looking into when working on your housing situation include:
Housing Choice Voucher Program
The Housing Choice Voucher Program aims to support low-income households with affordable housing–this is also referred to as Section 8 housing. This program is available because of the United States Department of Housing and Urban Development (HUD), which funds the program. Despite that, local public housing authorities (PHAs) are in charge of managing the program. This housing support program will offer housing choice vouchers to anyone that is able to meet the eligibility requirements.
Recipients can use these vouchers for properties (like housing units such as townhouses, apartments, single-family homes, etc.) that allow housing vouchers as a type of payment. Not all properties will allow these housing vouchers in the private housing market. For the properties that allow these vouchers, they will need to meet the standards that the local PHA sets.
Section 8 works by paying the voucher amount directly to the landlord on the recipient’s behalf. The recipients are then responsible to pay any remaining difference between the rent and the voucher amount. Through the authorization of local PHAs, recipients might even have the chance to buy a home.
Another popular housing assistance option is Public Housing. Despite the fact that this is a HUD program, Housing Agencies (HAs) are responsible for managing it locally. This program offers different types of homes, such as housing units and single-family homes to recipients at an affordable price. The HAs act as your landlord. HAs are responsible for managing the properties and the HUD is responsible for the planning and development process.
Not anyone can qualify for this popular housing assistance option. The aim is to support low-income individuals that need housing aid. The rent amount you will need to pay is also known as Total Tenant Payment (TTP). This amount considers your household’s yearly gross income. If you are interested in applying for this support option, then you should contact your local HA. In the case that you find it hard to contact your local HA, then you can contact your local HUD Field Office.
There are various supportive housing out there that can help people who are struggling with housing. Some of these options include:
- Transitional Shelters
- Emergency Shelters
- Permanent Supportive Housing (PSH)
- Rapid Re-Housing (RRH)
One popular form of supportive housing is transitional shelters. These shelters offer services, but it depends on the shelter. Additionally, the length of time will vary based on the shelter. Typically, people can stay in these shelters for six to 24 months. Some of the services focus on their wellbeing, jobs, and so on. This is a great option for people who are going through homelessness.
Sometimes, unfortunate events can lead families to a crisis that makes them need shelter as soon as possible. This is where emergency shelters come in handy. Emergency shelters focus on being the first place for families and individuals to move to when they need short-term shelter. The amount of time a person or family can stay in these shelters depends on the shelter. You should look into local opportunities to find out what is available for you.
Permanent Supportive Housing (PSH)
It is not unexpected to find that PSH is a type of supportive housing; it is literally in the name. This type of housing assistance aims to support people that are chronically homeless. Other than providing housing stability and security, it also offers support services. This is a form of “housing first solution.” These forms of housing highlight people’s recovery while offering them support to achieve independence, in order to get them into permanent housing as fast as possible.
Rapid Re-Housing (RRH)
Another form of “housing first solution” option is Rapid Re-Housing. As opposed to PSH, it focuses on supporting people that do not usually deal with homelessness or otherwise known as non-chronic homelessness. This housing solution can offer affordable rent to families and individuals to try and get them out of their unfortunate housing situation as fast as possible. Also, RRH comes with temporary community support services!
The Chenoa Fund is a type of down payment assistance program that helps people across the United States. It is not a federal program, rather it is available from the CBC Mortgage Agency. This agency is a federally chartered government entity. This agency provides special focus on those that have a hard time with their credit or income. Although there is a special focus on those people, it is not only restricted to them! Any person that meets the minimum eligibility requirements of this support option can be eligible.
Who is Eligible for the Chenoa Fund?
The minimum eligibility requirements for this program will differ based on the form of home loan that the buyer currently has. For an FHA home loan, people that want to gain from the Chenoa Fund will need to meet the minimum eligibility conditions as follows:
- Have at least a FICO credit score of 620
- Have a debt-to-income ratio of 45% maximum
But, if you are a person with a conventional loan that wants to gain from the Chenoa Fund, then you will need to meet the following minimum requirements:
- Have at least a FICO credit score of 640
- Have at most a debt-to-income ratio of 50%
- Not have an interest rate that is more than 2% on your first mortgage
- Have a second mortgage term of 10 years
How Many Benefits Can You Get Out of the Chenoa Fund?
The biggest amount of down payment assistance this program can offer is up to 3.5% of the price of the property that a person is trying to purchase. If you qualify to get this type of support, it will come in the form of forgivable or repayable second mortgage loan options.
FHA Home Loans
When it comes to purchasing a home, there are many different loans to look through. One opportunity is FHA insured loans. Although the FHA insures these loans, banks or other approved lenders offer these loans. People can gain from this loan option because of the low down payment requirements and easier eligibility requirements than a standard loan. Those who qualify would be able to offer down payments as low as 3.5% in the case that they meet certain eligibility requirements.
As an example, a person with a credit score of at least 580 can get a 3.5% down payment. People who have credit scores in the range of 500 to 579 can still be eligible for these loans but at a down payment of 10%. These FHA loans are suitable for new homebuyers.
While the FHA is famous for providing insurance for conventional mortgages, they also offer other types of loans such as:
- 203(k) Home Improvement Loans
- Energy Efficient Mortgages
- Home Equity Conversion Mortgages
- Section 245(a) Loans
There are several housing assistance options out there to help people who need housing support. If they are trying to reach affordable housing or trying to buy a home, there are more options available than most people realize. The best thing is that we only mentioned a few of these options–there are many more options out there!
You can find different housing opportunities online or through benefits.gov. This website gives users the chance to look through more than 1,000 different government programs available. You might find more assistance that can improve your current situation!