Government Housing Assistance Program Overview

In the U.S., federal government housing assistance of any type most likely is provided through the Department of Housing and Urban Development, known affectionately as HUD from here on. The most important thing to stress to you, as a prospective recipient of federal aid, or as a community organization that deals with folks who might seek a government program, is that there is no need whatsoever to pay for information about government programs.

Also be aware that it’s extremely rare to non-existent for there to be U.S. government grants (free money that doesn't have to be repaid) to be given to citizens for housing-related expenses. In some developing countries, the government provides much of the supply of decent housing. So it can be either way.

Nevertheless, there are some exceptional deals available right now, related to buying foreclosures and receiving essentially an instant grant for down payment assistance. These will go away quickly, however, once the recession and foreclosure crisis are wrestled to the ground. And of course, misinformation abounds about the current programs too.

If you don’t know the answers, read this page and pursue the links and phone numbers. Ask someone in your city government that deals with community development, or ask an extension agent. But you don't have to pay one of those internet scam companies for government housing assistance information.

Also be aware that many if not most government housing assistance programs have significant restrictions either on your income or on where the housing is located.

Here's a brief run-down of the various types of government housing assistance, grouped into categories.

Housing Counseling and Foreclosure Prevention

1. HUD provides housing counseling through approved local agencies. To find an agency located near you, call 1-800-569-4287, or look on-line for HUD approved counseling offices. This is a major resource for you, particularly in the current economic crisis or if you find yourself in immediate danger of foreclosure.

2. In the current mortgage crisis, special government housing assistance programs are available for loan modifications and refinancing for some people. The mortgage relief program allows an advantageous refinancing if you have a Freddie Mac or Fannie Mae mortgage, are current in your payments, but are "under water," in that you owe more then the home is worth. The limit is increased to owing no more than 125 percent of the home's current value. See the special website for the Making Home Affordable programs, or you can call 1-888-995-4673 for a more interactive response.

3. Also be aware that your city may have access to neighborhood stabilization funding to address the foreclosure crisis. This money comes to the same office that usually handles Community Development Block Grant funds in your local government. The neighborhood stabilization program is temporary but extremely flexible, so if you want to prevent foreclosure or obtain foreclosure property through this method, get moving right now. Your community or state might be handing out grants to people who buy houses that have been foreclosed.

Methods to Reduce the Cost of a Mortgage or Home, or Increase the Scope of a Mortgage

4. When you want to buy a home, HUD sponsors mortgage insurance, which brings down the total cost of your mortgage. It does this through the Federal Housing Administration, usually known as FHA. FHA insures the loan, so that the lender can charge you less. Here’s a link to the FHA lender list. Under FHA, your down payment could be as low as 3.5% of the purchase price of the house. This applies only to single-family homes or multiple-family homes with four or fewer units. An FHA loan also may allow you to roll in the cost of repairs and renovation into your mortgage instead of having to take out a separate loan for this purpose. This might be called a Section 203(k) loan.

5. The FHA also offers energy-efficient mortgages, which allow you to add the cost of energy-saving improvements, such as energy-saving windows or an energy-efficient furnace, into the cost of your mortgage.

6. Would-be owners of manufactured housing (mobile homes) can obtain FHA financing that is often better than what is offered on the private market also. They have separate programs, depending on whether you will own the land or locate the unit in a mobile home park.

7. The U.S. Department of Agriculture (USDA) also sponsors government housing assistance programs in rural areas. And some places you wouldn’t consider rural, such as small towns and cities in a rural environment, qualify for these programs. Here’s the link for the portal website for the rural housing programs described on this site.

8. Low to moderate-income rural families may receive an affordable rate 502 loan for purchase. The section 502 loan guarantee program allows up to 100% financing, so it effectively eliminates the need for a down payment.

9. Staying on the rural side of things, nonprofit organizations can apply to administer mutual self-help housing programs (Section 523) that allow groups of households to supply sweat equity in working on one another’s houses. A household must supply 65% of the total work on its own home, but also work on others in the self-help group.

10. HUD also sells homes that it obtains through foreclosure on these various loan guarantee programs. These homes are offered first for a period of time to people who pledge to own and occupy the home. Then if no satisfactory offers are received, they may be offered to investors. HUD uses local brokers to sell the homes, and sells homes “as-is,” making no repairs. So a housing inspection is highly encouraged, but won’t result in HUD agreeing to fix problems. To begin to obtain information on this topic, consult the portal page for HUD home sales. Even better, homesales.gov shows all government-owned homes at one place. Some rural, tribal, drug seizure, and other miscellaneous source homes may not be shown at the HUD site. Some government owned homes are bargains, but many are quite problem-ridden.

11. HUD sponsors a Good Neighbor program that gives especially good deals on its foreclosure homes to nonprofit organizations, local governments, teachers, firefighters, emergency medical personnel, and the like.

12. There are an array of government housing assistance programs aimed at American Indians and also native Alaskans and Hawaiians. They are administered by the Office of Native American Programs. There you can find a list of TDHEs (Tribally Designated Housing Entities) and tribes.

State Government Housing Assistance

13. In addition, states may offer programs of their own, which might include down payment assistance, first time homebuyer programs (which often pertain to folks who haven’t owned a home for at least three years but aren't genuine first time buyers), and mortgage rate write-down. Here’s where people find the government housing assistance information for your state.

Home Repair and Renovation Loans and Grants

14. For home repairs after you have already purchased the home, you might benefit from a Title I home improvement loan. These loans always are obtained through a certified lender and not from a contractor, who may try to rip you off by implying they can arrange this. There are limits to the amount of loans; for a single-family home, it is $25,000. A multi-family unit cannot exceed $60,000 or more than $12,000 per unit. Check carefully to see if the Title I rate is really better than what your local banker can offer you. Maybe it will be; maybe not. Shop around! You can team up a Title I loan with a 203k mortgage described above.

15. If you are of low-income or moderate-income, and you live in an area that receives a regular Community Development Block Grant, or has successfully competed for one recently, you might be eligible for a free grant for home repairs to bring your house up to code. Some locations make these loans by placing a lien on the house, requiring repayment upon resale.

Reverse Mortgage Assistance for Older Homeowners

16. For people 62 years of age and over who own their home outright, meaning they do not have a mortgage on it, a reverse mortgage from FHA is possible. Under this program, instead of paying money each month, you receive money monthly to use as income. Alternatively, you can receive a one-time payout. This does reduce the equity in your home, and at your death or when you move out, you or your heirs will have to repay the loan. And you can outlive the reverse mortgage, so be careful not to rely on the reverse mortgage totally for necessary income. For someone in relatively good health who doesn't want to pass the home on to heirs, this is a great program to provide additional income. Local banks and mortgage companies originate these government housing assistance loans.

Down Payment Assistance

17. In addition to various temporary programs offered by state and local government in connection with the foreclosure crisis, the federal HOME program enacted in 2003 was to furnish down payment assistance for home purchase. To determine its current status, call 1-800-998-9999. State and local jurisdictions administer this program, and it is inconsistent from place to place, and from time to time.

But as I hope today's mortgage problems have taught you, if you can't afford a down payment, maybe you can't afford to be a homeowner.

Rental Housing for the Low-Income

18. If you are a low-income renter and need to continue rent, of course you may be eligible to live in a public housing unit or a Section 8 home. Traditional public housing is an apartment or possibly detached home complex administered by a local housing authority. Although the help is federal, you deal with a local housing authority. In smaller cities, especially, this is worth a look if you’re having trouble affording to rent. Contrary to the image, some housing authorities actually are well administered, and while the digs are never posh, they may be passable until your financial picture improves.

Section 8 or housing vouchers are programs where your rent from a private landlord is directly subsidized. Of course only a very small proportion of landlords participate in the program, or would be willing to participate on your behalf. So if you are looking for low-rent housing and have determined you are eligible to have your rent subsidized by having the government to pay the portion of the rent you cannot afford (according to their standards, not yours), the first question to ask a possible landlord is whether they are willing to enter the program.

Landlord Assistance

19. If you want to be a landlord, HUD offers some government housing assistance programs to assist in controlling the cost of mortgages on rental properties. The so-called Section 207/223(f) mortgage insurance program may assist those who want to buy five units or more. HUD currently handles all its multi-family programs through a multi-family hub and program center.

20. It's possible that your local jurisdiction might include landlord assistance for rehab as part of their Community Development Block Grant program. It's worth asking. A few municipalities might provide loans, loan guarantees, or small subsidies for purchase and/or rehab of rental property, especially if it is located in an area of city government focus.

21. The Section 202 Supportive Housing for the Elderly and a similar Supportive Housing for the Disabled program are available from HUD to help non-profits (only) build low-income housing for these groups. The Section 202 program requires the non-profit to come up with only a 0.5% match, and the government furnishes the rest of the "capital advance," which doesn't have to be repaid as along as the housing remains available to low-income elderly for 40 years. What a deal for a non-profit with management capability!

Return from Government Housing Assistance
to Housing

Return to Useful Community Development home