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Buying house with Section 8 voucher
Hello Everyone,
I have a client that would like to use their section 8 voucher to purchase a home in Massachusetts. On the state wedsite it is doable. I am curious if anyone has done this before and know how the exact process works. Any feedback would be greatly appreciated. Thank you all!
#2 Real Estate Agent Contributor
- Real Estate Broker
- Coppell, TX
I didn't think that was possible, but I've had people ask.
I think the biggest trick might be not the amount they are getting, but everything else involved.
Can they get a mortgage with a payment for what they're getting in the voucher?
What are they going to do for down payment?
What kind of credit score do they have, and is it high enough to meet the requirements of lenders?
I'd think most of the questions would kill the deal in most cases.
I did see a guy that was a teacher once, I think wife had passed. He had 4-5 kids, so got a nice S8 voucher for the rent. Plenty of owners don't like S8 tenants, but this guy was pretty golden I thought, just bad circumstances and teacher income. Hero in my eyes.
Hi Bruce, thank you for the feedback. I'm going to try call the state office and see what information they provide me. I'll keep you updated with any updates.
Quote from @Nolan Fernandez:
Hello Everyone,
I have a client that would like to use their section 8 voucher to purchase a home in Massachusetts. On the state wedsite it is doable. I am curious if anyone has done this before and know how the exact process works. Any feedback would be greatly appreciated. Thank you all!
Thank you @Harjeet Bhatti for this information. I really appreciate it. Do you know if there is a lot of red tape which makes it difficult or is it fairly easy if you meet requirements and lender knows what to do?
Wow this is very interesting to me as I have never heard of this @Nolan Fernandez! So if the voucher will be paying the mortgage then I’m assuming that means they will also be on the deed? The government is now buying housing for low income families? it seems if it can be done in one state it should be able to be done across other states… Doesn’t sound right but something I’d like to learn more about.
Quote from @Marian Huish:
Wow this is very interesting to me as I have never heard of this @Nolan Fernandez! So if the voucher will be paying the mortgage then I’m assuming that means they will also be on the deed? The government is now buying housing for low income families? it seems if it can be done in one state it should be able to be done across other states… Doesn’t sound right but something I’d like to learn more about.
Good morning @Marian Huish, from my understanding section 8 voucher were originally created to help people buy homes, but it ended up being used for paying rentals. Attached I added more information for my state. https://www.mass.gov/service-d...
Quote from @Nolan Fernandez:
Quote from @Marian Huish:
Wow this is very interesting to me as I have never heard of this @Nolan Fernandez! So if the voucher will be paying the mortgage then I’m assuming that means they will also be on the deed? The government is now buying housing for low income families? it seems if it can be done in one state it should be able to be done across other states… Doesn’t sound right but something I’d like to learn more about.
Good morning @Marian Huish, from my understanding section 8 voucher were originally created to help people buy homes, but it ended up being used for paying rentals. Attached I added more information for my state. https://www.mass.gov/service-d...
Today I learned... Just when I thought I knew a little bit about real estate, a post like this shows up. Thank you for sharing this - very interesting!
Hi @Owen Dashner and @Marian Huish, would you like if I fill you in on my progress with purchasing a house via this program?
Quote from @Nolan Fernandez:
Hi @Owen Dashner and @Marian Huish, would you like if I fill you in on my progress with purchasing a house via this program?
#5 Medium-Term Rentals Contributor
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- Youngstown, OH
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#5 Medium-Term Rentals Contributor
- Investor
- Youngstown, OH
Is this a state-by-state thing or federal??
Good morning @Nicole Heasley Beitenman, I believe it's federal, but not 100% sure. Try searching buy house with section 8 voucher in "your state" and see if your states web page pops up with this information. On Monday I'm going to try to call my local housing authority to ask more information about this.
And most will be able to pay the taxes when they come due, and put on a new roof, and put on a new coat of paint.
As well as replace the carpets, cut the grass on a regular basis, replace the windows, reseal the chimneys when the liners crack, etc..
It's unlikely that that these homes will fall into the slum category in 10 years or so, and make the asset underlying the loan virtually worthless.
Or just vanish when the place starts to fall apart too much, due to no down-payment (no skin in the game 100% loans).
Said the lawmakers who approved this.
(Mass Govt should be giving experienced landlords (5 years operating with at least one unit at profit as a buy and hold) zero down loans to house these people (in areas they currently live in--so they can stay close to friends and family), and free money to fix up the Brockton type area homes to modern standards inside.
With a requirement to hold and rent to Section-8 for 5 years upon completion.
Much safer loan, much more likely to house these people in safe sanitary conditions (over the long haul).
Just my 2 cents.
#2 Real Estate Agent Contributor
- Real Estate Broker
- Coppell, TX
Quote from @Nicole Heasley Beitenman:
Is this a state-by-state thing or federal??
Actually it looks like it is by each individual housing authority if they will participate.
Hate to say this, but it is going to be like finding a needle in a haystack.....borrower will need to find a lender that will do it. They'll have to find a home they can afford, and then one that meets the guidelines (needs to be in good condition.) Probably any one of those 3 is a challenge for Section 8 recipients.add all 3 together and it will be near impossible.
Quote from @Nolan Fernandez:
Thank you @Harjeet Bhatti for this information. I really appreciate it. Do you know if there is a lot of red tape which makes it difficult or is it fairly easy if you meet requirements and lender knows what to do?
This kind of programs takes little longer to close because lender has to take some extra steps to close these loans. But it's worth it to see someone's face light up.
#2 Real Estate Agent Contributor
- Real Estate Broker
- Coppell, TX
@Harjeet Bhatti Have you closed any using Section 8 vouchers for house payment? What are the lender requirements? Minimum credit score, down payment, closing costs, reserves? How long do they take to close?
Quote from @Bruce Lynn:
@Harjeet Bhatti Have you closed any using Section 8 vouchers for house payment? What are the lender requirements? Minimum credit score, down payment, closing costs, reserves? How long do they take to close?
Section 8 Homeownership Vouchers (TOTAL) Definition
Section 8 Homeownership Vouchers refer to housing subsidies received under the Housing Choice Voucher homeownership option from a Public Housing Agency (PHA).
Required Documentation
The Mortgagee must verify and document the Borrower’s receipt of the Housing Choice Voucher homeownership subsidies. The Mortgagee may consider that this income is reasonably likely to continue for three years.
Calculation of Effective Income
The Mortgagee may only use Section 8 Homeownership Voucher subsidies as Effective Income if it is not used as an offset to the monthly Mortgage Payment. The Mortgagee must use the current subsidy rate to calculate the Effective Income
Very selective process, and geographical regions- but this is an AMAZING tool for some people. Check with your local HUD office.
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Quote from @Nolan Fernandez:
Hello Everyone,
I have a client that would like to use their section 8 voucher to purchase a home in Massachusetts. On the state wedsite it is doable. I am curious if anyone has done this before and know how the exact process works. Any feedback would be greatly appreciated. Thank you all!
hello I am replying a year later wondering if you made any progress with your client?
Replying also because I’m currently in the process of learning how to use the section 8 rental choice voucher —for a mortgage.
*I’m a first time low income homebuyer. Fairly knowledgeable w USDA rural 502 direct and new to Sect 8 voucher to homeownership process
There is quite a lot to the process and it does require planning ahead and persistance -but it can be done. I don’t think I can list every step here, but I’m happy to answer specific questions. or refer to my realtor who may be on here!
no I have not purchased the home yet -but I’m educated and working with a realtor who understands the process.
1st- you have to be a recipient of a section 8 housing choice voucher /in the program and in good standing
2nd you need to be in the rental unit and in the program for a year minimum
3rd you must to be in a “participating housing authority” or PHA because not all Housing Authority’s participate in this rent voucher -to -home mortgage voucher program
4th it may ( or may not) require recipient enrolling in an additional sub program called families for Self Sufficiency ( FSS) which has a class that teaches voucher holders how to use the voucher for a mortgage payment
5th I’m working with a realtor who understands the process - has used it for dozens if not hundreds of clients. it’s going to be VERY hard for anyone unfamiliar with government processes to get through it successfully.
note I’m also utilizing first time savings plans IDA‘s and local first time homebuyer grants and a USDA 502 direct low income Rural loan. and my own funds.
All aid mentioned can be “stacked” to lower mortgage & create long term affordability. For somebody like me in my situation that’s a big deal.
I have a client asking about this program. Can you contact me with the additional information? I am in the commonwealth of Virginia.
Quote from @Lisa Martin:
I have a client asking about this program. Can you contact me with the additional information? I am in the commonwealth of Virginia.
FYI this is a lengthy, bureaucratic process, but since Im not seeing a lot of info about the reality of it-I am sharing what I’ve learned. The above listed steps are a starting place. Let me know if this info helps. Lisa
Quote from @Bruce Lynn:
I didn't think that was possible, but I've had people ask.
I think the biggest trick might be not the amount they are getting, but everything else involved.
Can they get a mortgage with a payment for what they're getting in the voucher?
What are they going to do for down payment?
What kind of credit score do they have, and is it high enough to meet the requirements of lenders?
I'd think most of the questions would kill the deal in most cases.
I did see a guy that was a teacher once, I think wife had passed. He had 4-5 kids, so got a nice S8 voucher for the rent. Plenty of owners don't like S8 tenants, but this guy was pretty golden I thought, just bad circumstances and teacher income. Hero in my eyes.
1- A mortgage (in my area) will be higher than the amount of my voucher -so I am applying for a USDA Direct 502 rural loan. For non rural ppl have other options FHA, local lenders etc.
2 Yes a Minimum credit score for any lender will be required. Not an issue for everyone ( mine is 800)
3 For down payment there are down payment savings plans ( I have an IDA) In addition there may be additional 1st time or income qualified grants available ( in my area its up to 60k- if the funding is avail) Also non IDA savings and gifts ( from what I hear) could be used. USDA is zero down - which solves that piece- for some.
That these programs can be combined (stacked) together is what helps create a more affordable payment. In addition to what was specifically mentioned - there are other programs and agencies involved, required education etc. Finding a knowledgeable realtor is important Not the easiest process-For me personally -worth it so far.
Let me know if this info is helpful!
Quote from @Lisa Byrne:
hello I am replying a year later wondering if you made any progress with your client?
Replying also because I’m currently in the process of learning how to use the section 8 rental choice voucher —for a mortgage.
*I’m a first time low income homebuyer. Fairly knowledgeable w USDA rural 502 direct and new to Sect 8 voucher to homeownership process
There is quite a lot to the process and it does require planning ahead and persistance -but it can be done. I don’t think I can list every step here, but I’m happy to answer specific questions. or refer to my realtor who may be on here!
no I have not purchased the home yet -but I’m educated and working with a realtor who understands the process.
1st- you have to be a recipient of a section 8 housing choice voucher /in the program and in good standing
2nd you need to be in the rental unit and in the program for a year minimum
3rd you must to be in a “participating housing authority” or PHA because not all Housing Authority’s participate in this rent voucher -to -home mortgage voucher program
4th it may ( or may not) require recipient enrolling in an additional sub program called families for Self Sufficiency ( FSS) which has a class that teaches voucher holders how to use the voucher for a mortgage payment
5th I’m working with a realtor who understands the process - has used it for dozens if not hundreds of clients. it’s going to be VERY hard for anyone unfamiliar with government processes to get through it successfully.
note I’m also utilizing first time savings plans IDA‘s and local first time homebuyer grants and a USDA 502 direct low income Rural loan. and my own funds.
All aid mentioned can be “stacked” to lower mortgage & create long term affordability. For somebody like me in my situation that’s a big deal.