Every person needs a comfortable home. Families and individuals everywhere — from small towns to the most populous cities — need shelter to live a happy, healthy life. And though most American families and individuals have safe and stable living situations, millions still face housing insecurity daily.
With that in mind, the government offers housing assistance programs through funds, grants, and loans. These projects, managed by the U.S. Department of Housing and Urban Development (HUD), aim to help the 3.7 million people that suffer from housing insecurity have the opportunity to find homes.
In this article, have a look at government housing grants that people from low-income families can apply for and how they work.
How Government Housing Grants Work
Housing grants are free money from the government, so those with grants can find a home for themselves or their families without worrying about paying it back. Ultimately, grants can be a financially life-changing event.
If you are looking for housing grants, you should start at the Department of Housing and Urban Development website. There, you will be able to find the active funding opportunities, the amount the government has available, and the descriptions for the program. These things change yearly, so interested parties must work on doing their research and check back every once in a while.
You should check for eligibility requirements and process your application to qualify for a housing grant. Numerous grants are available for all kinds of low-income individuals and families, with some allotted for special beneficiaries like seniors, people with disabilities, and single parents.
Federal Government Housing Grants
Regarding housing programs, most of the financial support is available and funded through the federal government. Here are some of the most popular options and essential things to learn about them.
1. National Housing Trust Fund
The National Housing Trust Fund is a grant program administered by the HUD and the National Low-Income Housing Coalition (NLIHC) for very low-income and extremely low-income households. The awards are provided to help them create, rehabilitate, preserve, and operate rental housing.
This type of grant program provides the fund on a dedicated basis, highly targeted for those with the greatest need. Mainly, eligible individuals and households must earn no more than 30% of the Area Median Income (AMI) or the federal poverty limit.
However, since this is a block grant, the administration is left to the state agencies, which means each state decides which development to support and how to use its resources.
2. Public Housing Capital and Operations Fund
Public housing agencies are operating all across the United States to help more than one million households with limited incomes, particularly families with young children, have a place to live in. These public housing agencies cater to people whose incomes are 80% of the area median income at the time of admission or lower.
If you or your family gets into public housing, you will still contribute to maintain your home, paying for rent and utilities with at least 30 % of their income or the minimum rent established by the agency.
The rest of the expenses to maintain these homes rely on the Public Housing Capital Fund. This fund addresses the capital needs of the public housing properties and the activities involved, including safety and security, modernization, development, and other site improvements.
There is also the Public Housing Operation Fund which helps sustain public housing by paying for the difference between rental payment received and the cost of public housing. This includes routine maintenance, preventive maintenance, insurance, and salaries of public housing staff.
3. HOME Investment Partnerships Program
Low-income families also benefit from the largest block grant from the federal government, the HOME Investment Partnerships Program. This program funds large cities, towns, and counties for housing-related activities, including housing site acquisition, home purchase, home rehabilitation, and development of affordable rental or owner-occupied housing development, and tenant-based rental assistance.
These funds are also directed to individuals in low-income households, particularly those below 80 % of the Area Median Income. However, this fund offers flexibility that allow the participating jurisdictions who receive the fund to decide on how to use their funds for direct loans, loan guara
4. Community Development Block Grants
Another local-specific housing grant available is the Community Development Block Grant (CDBG). These funds focus on helping cities with populations over 50,000 and counties over 200,000.
The fund's goal is mainly for community development through providing affordable rental housing and homeownership, including rehabilitation and emergency repairs to owner-occupied and rental homes, downpayment and closing cost assistance, and acquisition and construction of rental housing.
Aside from these, CDBG also helps people gain valuable education through certain housing-related services, like housing counselling. The fund also aims to expand economic opportunities for viable urban communities.
5. Low-Income Housing Tax Credit
Low-Income Housing Tax Credit has been described by most as the most crucial resource for affordable housing since its establishment in 1986. Local housing financing agencies administer this federal project to create and preserve dedicated affordable housing. However, its governing rules and regulations are set by the U.S. Treasury Department.
Low-Income Housing Tax Credit is an indirect subsidy program that allows private companies to invest in affordable housing with the benefit of a dollar-for-dollar reduction in federal income tax liability. Then, the cities, towns, and counties launch project-based vouchers in their area or offer rental assistance projects in the housing units to reach individuals and families with low-income and housing affordability concerns.
6. Tenant-Based Rental Assistance
The HUD offers federal-based rental assistance through various programs, but primarily through the Housing Choice Section 8 Voucher. The voucher program, managed by state and local agencies, provides voucher holders with a subsidy they can use to rent any privately owned home, provided they find an owner who is willing to participate and meets the program's guidelines.
With tenant-based rental assistance, the support follows the family, not the property. This gives low-income families more flexibility in finding a home and increases their chances of finding a resource-rich community.
Like most low-income housing grants, this program is offered to individuals and households that don’t exceed 80 % of the area median income. Consequently, participants of this rental assistance program must also contribute 30 % of their landlord's income for rent and utilities.
Alternative Funding Options For Housing
Finding affordable housing can be difficult and daunting for low-income families despite the presence of housing grants. Fortunately, there are several alternative funding options available that can help make housing more affordable.
1. Emergency Rental Assistance
Several government programs can help you pay your rent if you are struggling. The Department of Housing and Urban Development (HUD) offers several emergency rental assistance programs, which can help cover the cost of rent for eligible families.
Emergency Rental Assistance can help you if you struggle to pay your rent due to the COVID-19 pandemic. The program provides financial assistance to help you catch up on past-due rent and pay your current rent.
If you are eligible for Emergency Rental Assistance, you may receive up to three months of rent assistance. The amount of rent assistance you receive will depend on your income and the amount of rent you owe.
2. VA Home Loan
If you are a Armed Forces veteran, you may be eligible for a VA home loan. VA home loans are backed by the Department of Veterans Affairs and can offer several benefits, including no down payment, no private mortgage insurance, and lower interest rates.
The VA home loan program was created to help veterans and service members purchase homes with favourable loan terms and at a competitive interest rate. With a VA home loan, you can buy a home with no down payment or private mortgage insurance (PMI).
VA home loans are available to eligible veterans, active duty service members, reservists, and certain surviving spouses. If you're interested in applying for a VA home loan, you'll need to obtain a Certificate of Eligibility (COE) from the VA.
3. FHA Loan
If you're looking for a loan with more relaxed credit requirements and a lower down payment, an FHA loan might be right for you. The Federal Housing Administration insures FHA loans, and they typically have lower interest rates and smaller down payments than conventional loans.
FHA loans are a good option for first-time homebuyers who may not have saved enough for a sizeable down payment. They're also a good option for borrowers with lower credit scores, as the FHA provides more flexible credit requirements than conventional loans.
To qualify for an FHA loan, you'll need to have a steady job and a good credit score. You'll also need to be able to provide a down payment of at least 3.5%. If you can't meet these requirements, an FHA loan might not suit you.
Making sure that people have a decent place to live is one of the government's main priorities. With this goal, they offer housing grants to help ensure low-income families and individuals have options. These grants are worth applying for, as they can help you and your family have less worry in living a comfortable, happy life.
If you want to learn more about free resources for low-income families, explore Gov Relations today. We have numerous guides that can help you, including programs on how to get free furniture, free water heaters, and free clothing.
As you delve into housing grants for low-income families and individuals, are you also aware of specific grants for sober living homes? Navigate to our blog post to learn how these specialized grants can offer a fresh start for many on their recovery path.