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Low Income Home Loans and Mortgage Programs

This guide has been written to help low income earners and the general public to understand the steps and processes required when purchasing affordable housing with low income home loans and mortgage programs.
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Apart from providing general information on the basics of refinancing and mortgages, by the end of this guide the reader should have a basic understanding of the following:


  • Understand what makes a home affordable.
  • Be familiar with the various low income home loans and mortgage programs available to people seeking affordable housing.
  • Programs and options available to the homeless.
  • Knowledge of the U.S. Department of Housing and Urban Development (HUD)
  • Organizations that cater to low income / homeless demographic.
  • Relevant resources for low income earners.

Part 1 – What Makes a Home Affordable?

Affordability in housing means something very different to a family of two making $60,000 combined income than it does to a family of four with an income of only $20,000 per year. Because of these different needs, the solutions to obtaining affordable housing must also be relevant to the specific situation of the family. For example, the goal may be unconventional housing for some people, but it could be apartment renting or home ownership for others. Affordability must necessarily involve unique variables for different people.


Much of what is considered “affordable” usually has more to do with the specific housing goal and personal circumstances than with the actual price tag. There are now more options for affordable housing units and more creative ways to finance these homes than any time in the past. By taking the time to learn about the different options, you should be able to take a direction in your search for affordable housing that is appropriate.


Home Ownership

Although home ownership is never inexpensive, the successful management of this debt can result in an affordable home. What really makes a home affordable depends on the method of financing, annual income, credit score and rating, current expenses, down payment and the annual interest rate on the mortgage loan.

There are quite a few ways to conduct a closing contract for the purchase of a home, but regardless of how the home purchase agreement is arranged, the most important aspect of the contract is the APR, or the annual percentage rate. One of the most valuable skills a low-income housing consumer must learn is how to anticipate what an interest rate will do to the entire loan as well as the monthly payments.


What an APR Does

To summarize: Because of the effect of the interest rate, a house with an 8.7% APR, priced only at $93,000 will cost a total of $262,192 over a period of 30 years. The monthly payment would be $728. However, with the same parameters, at an interest rate of 4.5%, the same home would only cost $169,638, and the monthly mortgage payment would be lowered down to only $471.22. It is absolutely critical to understand the impact that the APR has on the monthly payment as well as on the balance of the loan. It can mean the difference between actual affordability and the appearance of affordability. For some seekers of affordable housing, this is still a viable option — especially when armed with the knowledge that there are some programs that may assist with the down payment under certain conditions.


Many of the down payment assistance organizations serve only the residence of the state in which they are located. Interested consumers should conduct an online search for down payment assistance programs with the name of their state as the keyword phrase. The national program for down payment assistance to low-income families is administered through the U.S. Department of Housing and Urban Development, or HUD. Their web site is www.hud.gov. They also offer an emergency loan assistance program that for some people can prevent them from losing their current housing. This may resolve the need for affordable housing through direct intervention instead of relocation.


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The True Cost of Home Ownership, Hidden Costs

Even with a down payment assistance program, it is important to spend time calculating whether home ownership is really a viable option. Buying a home requires a great deal of research because there are many variables and hidden costs involved. These costs must be accounted for before you can make an accurate assessment of whether the home is affordable or not. It is highly advisable to take a homebuyers education course to understand the different aspects of financing a home. No matter how good a deal you can negotiate on a home, hidden costs can become a deal breaker if they are not accounted for in the buyer’s financial plan.

Part 2 – What Can You Afford?

The general guidelines for affordability, used in all of the assistance programs, should be adopted by individuals who are analyzing their own finances to determine what kind of housing they should pursue. These guidelines state that a family should allocate no more than 30 percent of their entire income to cover housing costs. These costs are inclusive; the final figure is the result of the taxes, insurance, utilities and repairs. If this figure is above 35 percent, then the housing is generally deemed to be unaffordable.


However, because this formula was calculated during the decades of economic growth, families who realize that these calculations are unrealistic should keep in mind that there was no adjustment made for a period of economic decline. The result is that you may benefit from these estimations when they are used to calculate eligibility. The downside is that these calculations will not always be applicable to the real tough decision-making process that families must go through on a regular basis when seeking affordable housing.


Closing Costs

One of the most highly overlooked aspects of home purchasing is the closing costs. These costs include the recording fees, city stamps, lien certification, deed preparation and more. It is very important to make sure that the city title search is included in the closing costs. This ensures that there are no liens, fines, taxes or other outstanding bills, such as unpaid utilities, which are encumbering the title. It might be affordable to offer to pay off these encumbrances under some conditions; it could be a potential point of negotiation. Remember, if you can negotiate a lower APR, you could save on most or all of the costs of these encumbrances in the long run.


In some states, such as Maryland, it is illegal to sell the title to a home that has such encumbrances attached to it. However, other states do not have similar legal protections. Because of the potential complexity of the transaction, in addition to the differences in state laws, many potential home buyers seek legal counsel in addition to using a real estate agent.


Repairs, Maintenance, Taxes

With ownership come all of the responsibilities associated with this status. Property taxes will vary greatly depending on where the property is located. This is often considered a justifiable expense or a trade-off if the property will eventually be rented out to long-term tenants in a good area. To find the tax information on the area, contact the town’s assessment office.


Maintaining a home can be a costly ongoing expense. It is extremely important to perform what is called “due diligence” prior to purchasing a home. This usually means that you will pay for an inspection of the property, which will include compliance with building codes, termite inspection, hazards and other related issues that require professional attention. The site www.domania.com can help buyers assess the value of various homes using a computerized program with many of the same specifications used by realtors.


Tax Credits, Homebuyers Education

If these costs are still within your budget, you may be able to take advantage of the first-time homebuyer’s tax credit. It can help leverage the expenses of homeownership. In addition, the homebuyer’s education courses are free and informative. You can interact with industry professionals in the fields of home financing, maintenance and building. This will enable you to get a personal perspective of the process of purchasing as well as getting specific questions answered by people who have years of relevant experience.


Any existing programs to reduce the long-term cost of financing a home contribute to the homes’ affordability. It is important not to overlook the possibility of receiving a tax deduction for the purchase of a home. It is advisable to consult a financial planner to determine if this is a relevant option. In addition, assistance programs for closing costs and down payments can tip the balance when the affordability calculations are being made. These programs are the SCHFA grant program and the CHF grant program. The CHDAP lending program is designed exclusively for people purchasing a home for the first time.


Habitat for Humanity
This famous program is one of the major organizations that contribute to an increasing population of homeowners who fall into the lower income range. Contrary to some popular beliefs, it is not a government agency. It is a private, non-profit organization that has multiple sources of revenue and financing in order to operate. The organization has local chapters, which should be contacted directly by prospective future homeowners. These local chapters are responsible for the construction of over 400,000 homes since it was founded in 1978. Habitat for Humanity operates on the principal of “sweat equity.” The future homeowners and their volunteer crew will work together to construct a home from scratch. These labor hours are then deducted from the cost of the home, which in turn reduces the monthly payments.


The Advantages

Because even an affordable home can incur considerable hidden costs, it is too often still out of the reach of many people. Some of the hidden costs can be mitigated through this program. Because the homes are not sold for profit, it is possible to obtain homeownership at a reasonable level of cost. The hundreds of hours of sweat equity reduce the price even further, and the program extends a policy of non-discrimination towards all prospective owners. However, the best reason to consider this program is their affordable loan program.


Contact your local Habitat for more specific details. The search engine for locating your local Habitat chapter can be found by visiting www.habitat.org. Because the APR has such an enormous impact on the monthly payments, the total cost of the home, and immediate cash resources, partnering with this organization will, in effect, create an environment of affordability. The organization also provides you with a lower APR than the lowest refinance mortgage rates you could obtain as an individual. This alone will save many thousands of dollars over the life of the loan.


The Disadvantages

Obviously, participating in the construction of one’s own home is a lot of work. It also requires a certain physical capacity. The program does require a down payment, although it may be mitigated through other programs that assist with the down payment. The time that it takes to apply to the various programs and coordinate the assistance with the purchase of the home is time-consuming. It can be a frustrating experience. It makes sense to perform your research well in advance of any deadlines.


The sweat equity is a trade-off that has a certain appeal to some prospective homeowners, but may not be an affordable option for others. If the trade-off makes sense, this is one affordable way to cross the barrier to homeownership for low-income individuals and families. The sweat equity should be considered a form of financing. It results in the reduction of both short-term and long-term costs associated with construction and financing. Because the labor pays for the construction of the home in the beginning of the process, the effect of the APR on the overall cost of the home will be less severe.


Is Sweat Equity Affordable?

Low-income residential housing is normally financed through the earning of wages. However, these wages cannot possibly cover all of the costs of construction, so financing has been the traditional solution. Until sweat equity was introduced as an alternative, there were few options for low-income prospective home owners. The difficulties in using sweat equity as a means of financing of a home cause the definition of affordability to change slightly, due to the different conditions involved. It is not a matter of money; it is a matter of time and health.


In this situation, affordability becomes a question of whether it is feasible to invest the required amount of time and labor into building the home. For people who are already involved in related work, such as electricians or plumbers, this option will have more relevance than for low-wage workers in unrelated occupations. The support of friends and family can also tip the balance. If you have a large group of people who are willing to volunteer their weekend hours to the program, this option is naturally more affordable than it would be to someone without these social supports. In this situation, the issue of affordability is as much a matter of social contributions as it is a matter of income.

Part 3 – Defining Low-Income

The sweat equity program does target low-income individuals and families. The problem is that this group still has a broad range of annual incomes. This makes it difficult to refer to the entire low-income population at the same time. To deal with this problem, the terms “income ceiling” and “income floor” are used. An income floor is the minimum amount of income that an individual must earn in order to qualify for the program. An income ceiling is the opposite; it is the maximum amount of income one is allowed to earn before they become disqualified from the program.


The assistance program you will apply to, whether for down payment assistance, renter’s assistance, or sweat equity, will calculate your eligibility using standardized guidelines. These guidelines define who is considered to be a qualifying low-income household. Because the Habitat for Humanity program is offered specifically to this group, these are the two major things to be aware of during the application process: The income ceiling and the income floor. Applicants should learn what these limitations are prior to completing the application process. They might discover that they earn too much or too little.


If this happens, be sure to keep good records and do not give up. The definitions change with the local and national economy, and policies are routinely reviewed. If you do not qualify today for any reason, it does not mean that you will not qualify at a later time. Too often, people who receive a denied application never apply again, assuming that the rules which determined their eligibility status do not change. In fact, if you plan for a few denials along the road to affordable housing, you are much more likely to succeed than if you accept the first application denial. Check back at another time to see if the rules or guidelines have changed.


Determining Eligibility for Habitat

The guidelines for eligibility are determined by the agreement between the governing organization, the financing institutions, and the future home owners. The income floor is a minimum amount that you must earn. It ensures that the mortgage payment will be made on time. The ceiling is to limit the program to families and individuals most in need of affordable housing. These limits are often adjusted in accordance with the state of the local and national economy. The ideal income level, in order to qualify for a Habitat home, is between 30 and 50 percent of the median income of the area. As this number changes, the range of income for prospective applicants also changes.


The Habitat homes are made affordable in part through the use of donated lands and materials. In addition, the costs are kept under control because the homes are not sold in order to make a profit. However, the financing trade-off is sweat equity, which can be leveraged if you have a network of participants who are willing to volunteer their labor. This enables people to become creative with their home financing; you now have the option of using your social skills, talents, and imagination to enlist a network of people into participating in your project.


For more program details, and to find your local Habitat for Humanity chapter, visit www.habitat.org.


Affordable Housing — The Renting Option

Even with the best organizational leverage, managing the expenses involved in home ownership is challenging. The ownership programs will not help everyone who is in need of affordable housing. For this group, the definition of affordable housing is more likely to entail a renter’s assistance program. Remember, the most important aspect of navigating an affordable housing application is to take the necessary precautions to ensure that the method of housing and the tenant’s or new owner’s situations are mutually compatible. It is helpful to think of this task as a one-size-fits-one situation, instead of the classic one-size-fits-all paradigm.


Apartment affordability has several key variables, or items that tend to differ drastically from person to person. Some of these variables include the following status markers: Single mother with children, single female, veteran, tribal recognition, disabled and elderly. When seeking help from various agencies, it is important to learn the different kinds of documentation they will require in order to process the application. Because of these different classifications categories, different documents will be required by the assistance programs. It is important to learn the specific terminology, especially preferred status terms, in order to build a successful application for housing or renter’s assistance.


Understanding the Application

With any assistance program, make sure that you understand and meet all of the application requirements prior to submitting an application. Many people have become overly optimistic about these programs without realizing all the obligatory requirements that must be met. If this happens, the best way to proceed is to keep a file with the required documentation and a list of the missing documents. Depending on the time it takes to locate or create the required documents, this method could become a long-term project.


Because of the time required to submit and process an application, it may be more appropriate for people who are already in a relatively stable housing situation than for people who need immediate assistance. Unfortunately, if you are in need of immediate housing, the local community shelter is the only option. If it becomes necessary to use the services of a community shelter, be sure to ask about any other assistance programs they offer. These organizations usually have links with other services in the community that can help you get back on your feet.


Sources of Information

The best source of information is the information that comes from the source. When you contact an agency directly, you can be sure that the information is current. Remember, information obtained from the Internet is not always current. Depending on where you are located, the local Public Housing Authority can assist consumers with the most updated information on public housing program.


The requirements and qualifying guidelines also change from time to time, so be prepared to apply periodically and persistently. Local agencies may have slightly different regional programs. Check with the housing authorites directly for specific details instead of relying on the information you hear from other sources. The local PHA in your area has forms and applications that can be downloaded directly from the Internet, or via a walk-in visit.

Part 4 –HUD – The U.S. Department of Housing and Urban Development

The U.S. Department of Housing and Urban Development, or HUD, is one of the most reliable means for people who are seeking affordable housing to ensure that they will be able to navigate the vast system effectively. Unlike other ways of securing home ownership, the transaction process is determined through an application process. People who are well-versed in the lingo of real estate and do not mind dealing with the legal transactions, housing inspections, and the financing aspects of home ownership may find that HUD is not always the best source for real estate leads.


As always, whether the services provided by a government agency will be appropriate depends on many different variables. The advantage of using HUD is that their mission is intended for the low-income population in need of affordable housing. There are three major programs devoted to affordable housing:


1. The HOME Investment Partnership

This is a grant program for states to develop affordable housing units. This law has been in effect since 1990, and it has resulted in the construction of over 450,000 affordable housing units. The government supplies the states with the grants to develop in what are called “PJs,” or participating jurisdictions. This program enables local organizations to offer the housing units at affordable prices.


2. Self-Help Homeownership, or SHOP

These funds go to local participating non-profit organizations and community assistance programs that work to create affordable housing opportunities. Participating organizations should be contacted directly. Ask if they are receiving a grant from the SHOP program after asking for an application form. Different local organizations will be operating under different rules, and there are too many to list in this article. An online search can help you to locate the participating organizations in your area.


3. Homeownership Zone

This is another program that empowers local communities to act and reclaim homes that have fallen into disrepair, are neglected, or are in need of serious rehabilitation. To get more information about this program, you should contact HUD directly for updated information on funding and allocations.


More details about these programs can be found at www.hud.gov/offices/cpd/affordablehousing/#hip.


When looking for related information online, remember to look at the Housing and Urban Development’s web site directly. There are many imitation sites that use the name HUD in their URL and company name. This can be misleading, as many of these sites are not affiliated with HUD in any way, and many will attempt to charge fees just to look at a list of housing units. Any site that requires visitors to pay a fee in order to look at cheap housing should be avoided. One such site is www.hudforeclosed.com. It is very important to know how to recognize an imitation site so that you will be able to avoid them.


Popular HUD Programs

• Rental Assistance — Rental assistance programs are mediated by the Public Housing Authority. This subsidized rental assistance gets paid directly to the landlord. However, tenants are still fully responsible for paying their share of the rent. There are some cases where this voucher can be used for the purchase of a small home, and some states even offer transition programs that are designed to assist renters in becoming homeowners.


The PHA determines who qualifies for this program through an application process in which the family income is compared to the median income of the area. It cannot be greater than 50 percent of the median income of that area. Because of this relative determination,you wll probably not know if you qualify prior to submitting your application. Since the median income of the area changes, the qualifying income will be adjusted periodically. This is an important point, because during an economic downturn, it is likely that people who did not previously qualify for this assistance may suddenly find themselves within the qualifying income range.


Since it is usually not possible to get accurate information, or, more importantly, the same information as the PHA in regards to the current median income of your area, the best way to find out if you qualify is to apply periodically. You can also go to the main HUB web site and look under Topic Areas, then click on Renter’s Assistance. You will be able to find a list of apartments that participate in this program. The private subsidized housing is different from the Section 8 program, even though they both use the term “voucher.”


• Section 8 — An important task when looking for housing is to be able to find the apartments that offer the Section 8 assistance. One of the benefits of this program is that residents can look around at different housing facilities and choose the best fit. If it is a family with very small children, the choice of residence may include inspecting the neighborhood for school zones and roads without speeding traffic.


For some, this feature is also a drawback. It is very time consuming to search for housing. To do this effectively, consider both the direct and indirect methods. It is possible to contact the manager of the housing facilities and ask them if they participate in the program. Or, you can search online for the many sites that offer the direct contact information of housing units that participate in this program.


One such site is www.section8programs.com. Here, you can look at all of the different housing options for different states. Just click on the link of the state you reside in, and you will be taken to a page with more detailed contact information. The name of the program is Section 8; the housing voucher is the means of payment.


For more details, please visit portal.hud.gov/portal/page/portal/HUD. This web site can direct you to the individual state program site. It has a listing of homes for sale, information for veterans, and many other links to useful sites. It has links to applications for renter’s assistance programs, housing counselors, and information on reverse mortgages for seniors.

Part 5 – PHA Programs

Although HUD has some assistance programs, particularly for the first-time, low-income home buyer, the rental assistance program is often handled by the Public Housing Authority. HUD gets funding through the government and then administers these funds to the local PHAs. For certain programs, if you apply through HUD, you will be directed to your local PHA for the forms and applications.


It is important to apply for these programs before your housing situation becomes serious. There is often a waiting list of people who are in line for any openings, and the wait time can be stressful if your situation has become urgent. If you are even considering applying for housing assistance, it is important to do so before you really need to move. There are some important factors that may advance your position on the waiting list. These are generally, but not always: The homeless, people who are living in a dilapidated facility, people who pay over half of their income in rent, or involuntarily displaced individuals.


People who face any of these circumstances should apply immediately for a housing voucher because their situation will secure them a higher place on the waiting list. However, there is no guarantee that placement will happen immediately, so it is important to have a contingency plan. All of the housing units go through an approval process for safety standards and health risks. This ensures that the units will be safe and clean before they are approved for the new tenants.


In addition to the PHAs, the HUD program is interlocked with the Veteran’s Administration and Indian Housing programs. Tribal members, veterans, and seniors may find that they must interact with multiple agencies at the same time.


• Native American

Although there are some specific tribal housing programs, most federally recognized tribal members find the information they need for affordable housing on the HUD web pages. These programs are administered through the Office of Native American Programs, or ONAP.


• Veterans

Veterans who are in need of affordable housing have the option of requesting assistance from the Veterans Administration’s housing support services program. Because homelessness is such a huge problem in the veteran population, it is important to get the following information to any veterans who are facing homelessness. Be sure to visit www.va.gov/HOMELESS/housing.asp for the details.


• Senior Housing

There are organizations that exist solely to provide adequate and affordable housing to senior citizens. One such organization is called Accessible Space, Inc., or ASI. The mission statement of this organization is to use good management practices in senior housing complexes, as well as arranging for supportive services. The issues of affordability of this population cannot be separate from issues of accessibility.


Seniors who partner with an organization that has implemented accessibility into the design of the apartment complex will find that they will be able to live within their budget and still get their transportation needs met. For more information,visit www.accessiblespace.org. This organization serves Minnesota, Montana, Nevada and North Dakota. For information on similar organizations operating in other states, contact HUD directly with an inquiry.


• People with disabilities

For the disabled population, affordable housing is intricately connected with the quality of life. The application for a housing voucher from the local PHA is a first step. It is equally important to ensure that the housing has the appropriate accommodations for the specific disability. One of the best comprehensive web sites for information on housing, transportation and general interest topics is www.disability.gov. You can select your state of residence and get the most current information regarding housing opportunities in that location.


This program also protects families who may find their situation, and therefore their housing needs, changing over time. The program allows the recipient of the program voucher to transfer it to another facility, provide adequate notification is given. The tenant must also comply with any lease termination policies. This will ensure that the voucher will be transferable. The federal program enables the transfer to occur anywhere in the United States, but they should always take the precaution of reviewing the procedures of both housing facilities, i.e. the one you are leaving and the destination facility.


Non-Traditional Low-Income Housing

There are many ways to secure affordable housing. The web site for the marketplace for goods and services is www.craigslist.org. You can select your state and city from a list and view all of the current market offers under the housing section. Some people can get affordable housing by interviewing with a person who has a home that they will rent out a room in exchange for housekeeping, childcare, or land maintenance. There is an extensive database of housing options, many of which are creative housing solutions.


What Defines a Home?

There is a growing trend in the United States towards alternative housing solutions. For ideas on how to leverage your current situation into a more affordable housing solution, you may consider the following solutions taken by many others:


• Manufactured Homes

• Mobile Homes

• RVs

• Houseboats

• Cooperative Housing

• Intentional Communities


The options are only limited by your imaginative application of your current resources. The best way to get into affordable housing is to determine what that means for you and how you can leverage your specific housing profile.

Part 6 – Homelessness / Homeless housing / Homeless housing programs Low income housing Affordable housing

Homelessness has been increasing in recent years, mainly because of the troubles that began in the housing industry. Those who are always very close to being homeless if the circumstances present themselves, the poor, have been the ones hardest hit. Ironically, it is the program designed to help those who have the hardest time qualifying for mortgages that has encouraged the housing bubble to burst. The federal government sought to create more homeowners among the lower income demographics, but what has been found is that other federal government programs are better options for increasing those currently homeless or close to it to have more stable housing choices.


The Demographics of Homelessness

People who tend to fall into homelessness occupy several different categories. One large segment of the country’s population that tends to have high numbers living without proper shelter is children. Single mothers make up the largest number of parents that are homeless, while single fathers become homeless in much smaller numbers.


Although men with children do not constitute large numbers in the homeless population, single males make up the largest group of people that have fallen into homelessness. A lot of these single men are former members of the military, and their numbers are represented in a greater proportion in the homeless population than they are in the entire populace of the country.


The Current Reasons for Homelessness

The United States has been suffering through economic difficulties, and one of the hardest industries that have been hit recently has been the housing industry. Over the years, housing prices became artificially inflated, and many people were purchasing houses with sub-prime mortgages. Sub-primes mortgages were loans where the qualifications needed to obtain a mortgage were relaxed.


To qualify for a regular mortgage loan, lenders will perform a credit check on their prospective clients. Lenders retrieve one of the three credit reports from the three credit bureaus in order to study the potential borrowers’ credit history. These reports contain facts that inform the lender how well these potential clients pay their bills. A credit report that has several late payments, non-payments, collection agency activity and bankruptcies is a credit report that will have a low score.


Sub-Prime Mortgages

A mortgage-seeker who has a credit report like the one described above would ordinarily have been turned down by lenders, because the potential borrower’s credit history shows that this person has a tendency of being delinquent in paying his bills. As a result, many low income people were having difficulties purchasing their own homes. To combat this trend, sub-prime mortgages began to become more prevalent.


Typically, to receive a sub-prime mortgage people could have credit scores that fell below 600. Income requirements were also eased for people who applied for sub-prime mortgages. They did not have to demonstrate to lenders that they had a verifiable income as they would have to do to acquire a regular mortgage.


The other common denominator of sub-prime mortgages is the fact that they have the highest interest rates. Lenders who approve loans for people who have low credit scores and cannot demonstrate that they have a stable income are taking a larger risk than when they lend to people with better credit histories. As a result, these lenders will assign the highest risks much higher interest rates and they came in the form of the adjustable rate mortgage.


The Adjustable Rate Mortgage (ARM)

The ARM had become very common during the time that the housing bubble was increasing. These are mortgages that began with a typically low fixed interest rate that the client could afford, but the terms required that the interest rate would be adjusted at a later date. A common term for the rate to adjust was five years, and this is when the housing industry’s difficulties began. After five years, the ARMs re-adjusted to a much higher interest rate than it had been at the beginning, and several homeowners found it impossible to keep current with their payments. The result has been that these people simply walked away from their homes, and the number of foreclosures began to rise.


Renting Has Not Solved the Homelessness Problem

After walking away from a home, former homeowners would need a place to go. One solution would be to rent an apartment, but this has been hard for people whose houses went into foreclosure. Apartment managers perform credit checks on prospective renters for the same reasons that lenders do; they are investigating how well future renters pay their bills. Those potential renters who have foreclosures on their credit reports have extreme difficulties finding apartment managers who are willing to rent to them.


The other reason that renting has not solved the problem of homelessness is that rents have been much too high for lower income people to afford. The trend in recent years has been that rents were steadily increasing but the renters’ income has not. During these same years, people have been losing their jobs due to the recession, and they have been falling behind in their payments in this area as well. People have begun to share housing which enables them to split the cost of the rent, but this has led to overcrowding and also leads to eventual homelessness.


Living Beneath the Poverty Level

People who are living below the poverty level are suffering from the fact that housing costs can be very expensive. Because these expenses take up the majority of a person’s income, it is often the first thing that people decide to stop paying. In the event that a catastrophic event was to occur such as an illness, those expenses will have to be addressed. Often, there is nothing left over to pay for housing, and the entire family is out on the street.


The Decrease In Job Opportunities

As a lot of people lose their jobs and find it difficult to find a replacement, they lose their ability to pay their rent and make their mortgage payments. Jobs in several industries have been moving away from the United States to foreign countries where the labor can be purchased for a much cheaper price. One industry where this is common is in the manufacturing industry. On the other hand, the types of jobs that appear to be increasing in the United States are low-paying jobs in the services industry. The minimum wage also has been determined to be too low to meet most people’s housing needs.


Former Safety Nets Have Become Scarce

Government programs that were meant to help the poor receive proper nutrition, medical care and help with living expenses through welfare programs have become scarce for the poor. As they have not been able to rely on these programs to supplement their incomes, they have had to take on more of these expenses themselves. This prevents them from being able to pay their biggest expense, their housing. As people lose their benefits either from their jobs or from government programs, homelessness increases.


Domestic Violence Contributes to Homelessness

A major contributor to the large numbers of women who have become homeless is domestic violence. For these women, the choice that they had to make was to either remain living with an abusive husband or leave the house without any other viable place to go. The decision to leave forces women and children into poverty and homelessness with households headed by single mothers constituting the highest numbers of people who are poor.


The Homeless Who Are Mentally Ill
Most people believe that the release of mentally ill patients from mental hospitals contributed to the increase of the homeless who began to live on the streets 1980s. Further investigation into this subject found that this was not the case. The truth was actually that the decrease in programs that help the poor, as described above, was the main contributing factor.


People who are mentally ill have difficulties maintaining employment, because they are not receiving adequate treatment for their illnesses. Further, they are not receiving the assistance they need to live productive lives from the social services industry, because there are too many people to help with not enough case workers to manage everything. The help they would ordinarily receive from housing programs largely does not exist, because there are so many people who need assistance and not enough resources to help everyone. All of these factors put together have caused a surge in the mentally ill homeless population.


Drug and Alcohol Addiction Plus Poverty

Drug and alcohol addiction does not necessarily cause someone to become homeless. When an addict is poor, this factor is what increases the possibilities of homelessness for this person. The poor are closer to being homeless than other addicts because of the reasons listed above, and they have less access to drug and alcohol rehabilitation. When something happens to them because of their addictions to cause them to lose their current housing, they have even less chances to receive the help they need for their addictions. This cycle is what causes homelessness to increase amongst the population of the addicted.


The Lack of Affordable Housing

The lack of affordable housing for people who are living below the poverty line makes it a formidable task for them to first, find a decent place to live, and second, to keep from falling behind on their payments. What is making it more and more difficult for the poor to find affordable housing is the fact that housing that can be considered affordable to people living below the poverty line are being destroyed faster than they are being built. With renting being the best option for people in this demographic, the competition for the few affordable housing units left is increasing. Fewer options mean that more people are becoming homeless, because they do not have many other choices to make.

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Part 7 – Homeless Housing Programs

All of the trends that have been described above needed a solution, because homelessness has been a growing problem in this country. In order to help decrease the numbers of people who have no other choice but to live in substandard housing or on the streets, state and local governments have looked to the federal government for help. In response, the United States Government has created programs aimed at decreasing the homeless population.


Second Chance Homes

Children and single mothers represent large numbers in the homeless population. Those of this group who are especially disadvantaged are teenage mothers who do not have the option of living with their families because these homes are detrimental to their well-being. Second Chance Homes provide these single mothers with living accommodations that are supervised by adults. Part of the program is to teach the mothers how to support themselves and also how to prevent future pregnancies.


This homeless housing provides a loving and nurturing environment that encourages everyone to either graduate from high school or receive their general equivalency degrees (GED). They receive help taking care of their children, medical care, transportation to and from school and any counseling services they may need. They also learn how to properly take care of their children. Once they have completed all of the programs that Second Chance Homes have to offer them, they are ready to transition to living on their own.


The prerequisites for becoming a resident of a Second Chance Home can vary, but some programs require that prospective residents be 14 to 20 years of age, currently on welfare or presently homeless. Six states have implemented Second Chance Homes programs, and they are Georgia, Massachusetts, Nevada, New Mexico, Rhode Island and Texas. Welfare agencies, foster care agencies and schools alert the Second Chance program when they learn of a single mother who could benefit from their services; the mothers themselves may also seek to become residents of a Second Chance Home.


BRAC – Base Realignment and Closure

Base Realignment and Closure (BRAC) is a program that seeks to create new uses for property formerly used for military purposes. One of the aims of this program is to help the cities these bases are located to convert these structures into buildings that can house the homeless. The government’s Department of Housing and Urban Development (HUD) has a very prominent role in determining the suitability of each particular base for meeting the needs of the homeless.


As a base is being considered to take part in BRAC, HUD asks several questions of the base. They must ensure that the base is in an area that has resources that can serve the needs of the homeless population. To qualify as a BRAC program, the base must have had the intention of re-organizing it into a possible haven for the homeless by consulting people who are expert in the area of what it takes to help the homeless. The infrastructure on the base must also be appropriate as housing for the homeless.


Further qualifications to be a part of the BRAC program include the necessity of increasing the economic opportunities for the community where the base is located as well as meeting the needs of the homeless. There must not be the possibility of any adverse economic reaction to the community that has a BRAC program in place. Finally, the base must fully enumerate the ways in which the base will be given over to help the homeless. After all of these requirements have been determined to be present in the plan, HUD continues to work with the bases to ensure the project can begin.


Emergency Shelter Grants Program

Either state or local governments can apply for a grant intended to fund their homeless programs. The entities that may receive these funds can either be governmental or they may be not-for-profit organizations whose mandate it is to aid the currently homeless or those who are about to become homeless. These grants also are a way of funding the homeless shelters that can be found in the cities of each state.


The funds that local governmental agencies or non-profit organizations receive may be used for several purposes. Some of these organizations are shelters for the homeless, and these funds are very useful to keep these types of programs alive. They also offer services to the homeless such as drug and alcohol addiction programs, medical care, any mental health care that may be needed, day care services for the children and social work. The money may also be used to make improvements at the homeless shelters that will make them a more inviting place for the people who live there.


Shelter Plus Care Program

Within the homeless population there is a group of people that is especially difficult to assist. The hardest people to help in this situation are those who will find it extremely burdensome, if not impossible, to ever be able to improve their situations enough to live on their own and support themselves. These are the homeless who have debilitating mental illnesses, those who have the most severe drug and alcohol addictions and those suffering from AIDS.


This population comes from either the streets or from emergency shelters, and the program seeks to place these people in permanent housing. The program offers rental payments for this population through four different means: The Tenant-Based Rental Assistance (TRA) program, the Sponsor-based rental Assistance (SRA) program, the Project-based Rental Assistance (PRA) program and the Section 8 Moderate Rehabilitation Program for those who are living in a studio apartment.


Single Room Occupancy (SRO) Program

Single room occupancy buildings contain rooms for the placement of the homeless population. They are a place to stay that also offers the former homeless access to a kitchen as well as bathrooms. The SRO program pays the rent for former homeless people who take up residence in a single room occupancy establishment.


The buildings that qualify for SRO program funds are those buildings that were formerly used for public housing, a hotel that needs to be renovated or maybe a house that is not presently occupied. To receive money from the SRO program, a public housing building must be in the process of being converted into an SRO. The tenants of these SROs make contributions to their rental payments of a negligible amount, around 30 percent of their income, and the SRO program’s funds pay for the rest.


Supportive Housing Program (SHP)

The Supportive Housing Program aspires to guide the homeless into the most independent and productive lives that they are capable of living. State and local governments along with not-for-profit organizations and public housing agencies do this with grants they apply for from this program. The people that these establishments help with SHP funds are those who are in the process of going from being homeless to living more traditional lives.


Those who enter into the SHP program have specific goals that they must meet, and they must demonstrate to the particular agency that is helping them that they are meeting these goals. The first goal is to help the homeless live permanently in a dwelling. The second goal is to obtain more education in order to increase their value and income level in the workforce. The third goal is to begin to be able to take greater control of their lives. Both the agency that is directly involved in helping the former homeless population as well as HUD will monitor the formerly homeless’ progress meeting the three goals.

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Title V

The Title V program is a federal program that puts federal property to use that is not currently being utilized. State governments, local governments or not-for-profit organizations that plan to use these buildings for the purpose of housing the homeless population in their areas are eligible to receive these dwellings. The dwellings can be used to assist the homeless by providing them with shelter, giving them a place to store their belongings or anything that can be considered as benefiting the homeless. The government may offer the organizations a lease for the buildings without charge. In some cases, the government will offer the agencies the deed to the building.


Many Would Benefit from Affordable Housing Programs

The amount people pay for their housing qualifies as affordable if it requires the occupants to pay, at the most, 30 percent of the total amount they earn each year. Under this definition, people who struggle to meet other needs such as for food, health care and clothing because they pay more than 30 percent toward they housing costs are considered to be those who are in need of affordable housing. This factor prevents these people from having the ability to save money toward any future expenses and puts these families in jeopardy of becoming homeless.


Affordable Housing Programs

To help people extricate themselves from the possibility of being left homeless due to the lack of affordable housing, three affordable housing programs have been created.


The Home Program

In order to ensure that there are more opportunities for people earning the lowest income to obtain affordable housing, state and local governments may apply for grants under the Home Program. These programs work in conjunction with state and local governments and the agencies that help the homeless. The agencies that receive Home Program grants use these funds to purchase properties that would be sufficient to serve the homeless’ needs.


If there are dwellings that would be appropriate to house the homeless, these dwellings can be renovated with these funds. In the event that the agencies have the ability to build housing that would serve the homeless’ needs for affordable housing, the Home Program can help here, too. The final purpose for Home Program funds is to pay the rent for people who need affordable housing assistance.


The funds they receive under this program are disbursed to people who are currently renting, in the process of purchasing a house and those who have already received a mortgage loan. For renters, the Home Program funds can be applied toward monthly rental payments and their security deposits. For those who are seeking a mortgage, the program will assist people by offering to guarantee the loan with the bank in the event that future homeowners default on the loan. The program also has been designated to give loans to people who need them.


Self-Help Homeownership Opportunity Program (SHOP)

The money for SHOP will be used by not-for-profit organizations to build houses. The people who will eventually live in these houses will be people who need affordable housing, and they will physically take part in the building of the house. The SHOP program also uses volunteers to build these houses, and the houses are designated for people who would ordinarily not be eligible to receive a mortgage loan.


The Homeownership Zones Program

Some communities contain housing that is unlivable. HUD set out to help these communities build up these areas and make them animated again, and they had the added bonus of creating affordable housing for people in danger of becoming homeless. They did not just want to increase the options for affordable housing; they wanted to help people become homeowners who would have trouble qualifying for mortgages because of their low incomes.


The areas that were targeted for the Homeownership Zones Program were to be areas where several houses needed to be renovated that were located near centers of employment. These areas were given the name homeownership zones. It was important to the program’s initiators to develop these homeownership zones where people of different socio-economic backgrounds would live together. They also kept in mind that the program was designed with low income families at the forefront and made it a prerequisite that these homeownership zones be in close proximity to mass transit.


It has been an experiment that began in 1996, and has been determined to be a success at re-invigorating the homeownership zones. The lessons learned will be used in future programs of this type that will be implemented in more areas of the country.


Choice Neighborhoods

Similar to the Homeownership Zones Program that was begun in 1996 is the Choice Neighborhoods initiative. This program targets communities that have areas overtaken by extreme poverty. Its purpose is similar to the Homeownership Zones Program in that it seeks to transform these areas from economically distressed into dynamic places to live with a good mixture of different economic backgrounds.


With Choice Neighborhoods, the emphasis is not just on the housing situation; this program has been created to also address the factors that will help people pull themselves out of poverty. This program seeks to ensure that the social services people will need in these areas will have a visible presence. They also endeavor to work with city planners in order to make access to quality education a possibility. Also important to this program is that people have access to mass transit and jobs within the area.


Hope VI

The Hope VI program is the source that helps to fund the activities of Choice Neighborhoods. One of its goals is to integrate public housing units with other types of housing, thus promoting a mixed economic neighborhood. The program also supports the social services efforts of programs such as Choice Neighborhoods that bring poverty-stricken families into a more positive financial situation. The program seeks to accomplish its goals with the hope of ending the tendency for poverty to become clustered in particular areas of a community.

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Hope VI funds are eligible to finance several types of housing projects. If a building is capable of being rehabilitated into a housing structure that does not stand out as highly distressed, then a public housing agency can apply for funds that will pay for those repairs. In the event that the building has been determined to be too disheveled to benefit from renovations, Hope VI funds will pay to have the building torn down. If purchasing land for the purpose of constructing new public housing is seen as a feasible option, Hope VI funds can be applied toward this purpose.


Encouraging Homeownership for Native Americans

HUD has a special division of its department designated toward the needs of Native Americans in the United States including from the states of Alaska and Hawaii. The purpose of this agency is to ensure that low income members of the indigenous populations of the country can find affordable housing and promotes homeownership. The program does not stop at just making sure that Native populations have decent and affordable housing, because it also seeks to ensure that when people move into their new communities they also have job opportunities. For this purpose, HUD works with community planners to create a neighborhood that promotes an energetic community.


Developed just for the purpose of encouraging homeownership of Native Americans is an initiative called Section 184 of the Indian Home Loan Guarantee Program. This program is allocated toward offering loans to eligible Native Americans who will live either on traditional tribal lands or off. They can use these loans to build a home, refinance and renovate a house that is in need, buy a house that is ready to be lived in or to refinance a house to the advantage of the homeowner.


The funds from the Section 184 program go to housing agencies that serve each particular tribal area. These loans are guaranteed by the federal government which gives Native Americans the hope of owning their own homes when before they had none. In the process of the federal government guaranteeing these loans, the value of Native American communities has been raised.


Low Income Housing Programs

In 1937, the federal government developed a program called the United States Housing Act to aid in helping people pay for shelter. The United States government does this by paying a portion of the rent to people who operate private apartment buildings. This program has come to be known as Section 8, and its most popular program, the Housing Choice Voucher Program, is aimed at helping those with very low income, who are disabled or elderly to afford to live in decent housing.


The types of dwellings that people may use their Section 8 funds for are not limited to public housing. People who qualify for the Section 8 program may seek their own accommodations, and these can be houses or townhouses and the apartments of their choosing. Even though they are not required to seek accommodations in public housing dwellings, the applicants must apply with public housing agencies (PHAs), because HUD administers funds for this program directly through PHAs.


In order to qualify for a voucher, the applicants must be citizens of the United States. In some cases, non-citizens can qualify such as those who are legal residents of the country. Income requirements are that the family’s earnings are not more than 50 percent above the median income of the neighborhood in which they would like to purchase their homes. But most of the vouchers will be set aside for those whose incomes are beneath 30 percent of the median income of the neighborhood. The size of the family is also taken into consideration when determining eligibility for the voucher program.


In a lot of cases, those who apply for Section 8 housing vouchers will be placed on a long waiting list, because the demand for these vouchers has always been very high. Some people may be given first priority to receive a voucher, because they are the most in need. Some of these people are those that are currently homeless, people who live in housing that does not meet the standards for decency, people whose rental costs exceed their total income for the year by more than 50 percent and those who have had to move out of their current dwellings due to no fault of their own.


Public Housing

Another program is public housing that concentrates on the same population as the Section 8 housing voucher program: low income families, the disabled and the elderly. These qualifying low income residents of public housing buildings receive assistance from HUD through the housing agencies that administer to them. The point is to make the rents affordable for low income people.


Those who can apply with their local housing agency to reside in public housing are both whole families as well as those who will live alone. United States citizenship is required with some instances when legal residents may qualify. Of the three categories of low income citizens, families, the elderly and the disabled, eligibility will be determined by income. It is also very important that applicants be able to demonstrate that they will not be tenants who will create a disturbance for the other people in the building; otherwise, the housing agencies will turn down the application.


Receiving Help from Housing Programs

Those who can apply for grants from the housing programs that have been listed above are not individuals; applicants must be state governments, local governments, not-for-profit organizations, public housing agencies and also private establishments that assist the homeless. Individuals must go to one of these institutions in order to benefit from the programs that have been put in place to help them.


These programs are funded through the Department of Housing and Urban Development, and information as to who can help individuals and families can be found on their website. Those who are looking for help may click on their states to discover information as to how they can receive help paying their rent, for example. From this site, they can also investigate which of the programs they can qualify for, or even contact someone who can help them. They will also find out how to contact the HUD office in their states.


People who are experiencing such hardship that they are currently living in emergency shelters will have the help of these shelters’ administrators. Because these are the types of entities that receive grants from the programs listed above, they will be the most appropriate people to utilize the funds they receive for the benefit of their clients.

Part 8 – Conclusion

Homelessness has been increasing for several reasons in the United States even though the federal government began to take steps to combat this issue during the Depression in 1937. As time has marched on, events have occurred that cause people to lose their homes such as the foreclosure crisis. The many personal reasons that steep people into homelessness who are already close to being so also continue to persist within the American population. State and local governments along with the help of the federal government seek to tackle these issues, and people can seek to receive this help through the benevolent actions of several agencies and not-for-profit organizations within their communities.

Part 9 – Affordable Housing / Homelessness Resources:

NYC.Gov Apartment Lotteries

HUD.gov Homes for Sale

Habitat for Humanity

HUD.gov Affordable Housing

HUD.gov Low Income Housing Tax Credits


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