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Volume 1, Issue 6, 2001   Federal Reserve Bank of Dallas

Fast Facts: Financing Home Ownership with Section 8 Vouchers

The Waco Housing Authority has launched the Section 8 home-ownership option in its community. The program authorizes WHA to use Section 8 rental vouchers for mortgage payments in lieu of monthly rental assistance. Here is an example of how the home-ownership assistance program can help a working family with an annual income of $13,404 purchase a three-bedroom home.

Loan Amount
 
    Home purchase price $72,000
  Down payment (buyer) (720)
  Down payment assistance (CDBG funds) (9,780)
Total loan amount $61,500

Loan Calculation (30 years @ 8.5%)
 
    Principal and interest $473
Other Expenses
 
  Taxes 100
  Insurance 40
Total monthly expenses $613

Section 8(y) Assistance Payment Calculation
 
    Monthly home-ownership expenses
(Voucher payment standard of $615) [1]
$613
  Homeowner's payment
(30% of monthly income of $1,117)
(335)
Home-ownership assistance payment [2] $278

Notes

  1. HUD publishes fair market rents for each market area in the United States. Individual PHAs set their own payment standards at 90 to110 percent of the fair market rent for their area. In Waco, the one-bedroom standard is $415, the two-bedroom standard $546, the three-bedroom standard $615 and the four-bedroom standard $765.
  2. The home-ownership assistance payment is equal to the family's monthly home-ownership expenses minus the family contribution or the payment standard minus the family contribution, whichever is lower.

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e-Perspectives, Volume 1, Issue 6, 2001

Federal Reserve Bank of Dallas Off-site page
Community Development Office Send an e-mail
P.O. Box 655906, Dallas, Texas 75265-5906
214-922-5377
Gloria Vasquez Brown Send an e-mail
Vice President
    Nancy C. Vickrey
Assistant Vice President and
Community Development Officer
Jackie Hoyer Send an e-mail
Houston Branch
Senior Community Development Advisor
    Veronica Garza
Community Development Specialist
Toby Cook
Community Development Specialist
    Diana Garza
Community Development Specialist
The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Development Office.

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