What to Know About the Dollar Home Program from HUD

The first thing that people probably think about when it comes to buying a home is that most home listings are hundreds of thousands of dollars. Luckily, the housing market actually has a variety of different options available. Some of these different options are available thanks to the United States Department of Housing and Urban Development (HUD). HUD aims to assist people with affordable housing. The Dollar Home Program is one such option that can help with this goal. However, this program operates differently than other housing assistance programs.

The Dollar Home Program: What is it?

HUD created this initiative to support local governments to offer housing support options to eligible people. For just $1, your local government can buy a home that belongs to the HUD. The Federal Housing Administration (FHA) is responsible for insuring housing loans that lenders provide. A property becomes foreclosed after a borrower defaults on their loan. When that happens, the property becomes the FHA’s responsibility in selling it. As long as the properties were available for 6 months and passed market value guidelines, the program can sell vacant foreclosed homes.

Let’s say that a home has a market value of $25,000 or lower and remained on the market for 6 months. This home would be available for local governments to buy at the price of $1. Local communities have the option of repairing the property. Communities can gain a lot from the amount of savings this program offers, providing affordable housing to eligible households.

Local governments that want to participate in this HUD program can join efforts with local nonprofit homeownership organizations. Local agencies that resell homes to qualifying people in the local community can also join local governments in this initiative. Most people commonly misunderstand that families can directly purchase the property, but instead, it is the role of the local government to buy the property at the price of $1. After that, local governments have the opportunity to provide affordable housing to those who qualify. In order for housing to be considered affordable, a household should not spend over 30% of their income (in accordance with HUD’s definition).

How Can You Look for $1 HUD Homes?

Only local governments can buy the homes for $1. Government employees that want to purchase these homes can look through the HUDHomeStore website online to find available homes. When looking for properties, users will need to filter Dollar Homes in the search bar of the website.

Other Housing Support Opportunities from the HUD

As much as the Dollar Home is a great option for local governments, it cannot necessarily help families with affordable housing as quickly as possible. Fortunately, there are other housing support opportunities from the HUD that directly benefit families like:

  • Housing Choice Voucher Program
  • Public Housing
  • Good Neighbor Next Door Program (GNND)
  • Mixed-Income Housing
  • Foreclosed Homes That are Put Up for Sale

Housing Choice Voucher Program

The Housing Choice Voucher Program is also referred to as Section 8. This housing support option works on helping those who need affordable housing. Affordable housing is when a person spends less than 30% of their income on housing expenses. The program offers qualifying recipients housing vouchers as a form of payment to landlords that accept them. The good thing about the Section 8 program is that recipients have the right to choose the property they want to live in. Recipients do not need to move into homes that belong to the HUD.

Each state has its own version of eligibility requirements for the Section 8 program. You can, however, anticipate meeting the four requirements, which are:

  • Background of Eviction
  • Citizenship Status
  • Family Size
  • Level of Income

A lot of people have received housing support from Section 8, but there are long wait times to get housing aid. After you send in an application, you can anticipate being placed on a waiting list that typically lasts 28 months. On the other hand, the program prioritizes people that need the most assistance. If you are interested in applying for Section 8, then you should contact your local public housing authority (PHA).

Public Housing

Public housing is another housing support opportunity from the HUD, which offers the opportunity for recipients to pay 30% of their earnings on housing expenses. As opposed to Section 8 homes, recipients can only live in properties that belong to the HUD. In this case, your local PHA plays the part of your landlord. The homes that public housing offers are apartment complexes, but there are other types of homes too. Just like with Section 8, each state has its own version of eligibility requirements. Requirements that can affect your application include the following:

  • Citizenship Status
  • References
  • Level of Income
  • Family Size

If you are interested in applying for Public Housing, you will need to contact your local PHA.

Good Neighbor Next Door Program (GNND)

HUD’s Good Neighbor Next Door Program (GNND) is a housing assistance program that provides qualifying individuals with homes at a reduced cost. In this case, a “good neighbor” is usually someone who works as:

  • Officers in Law Enforcement
  • Teachers of Pre-k to 12th Grade
  • Firefighters and Emergency Medical Technicians (EMTs)

The GNND program allows qualifying individuals to buy homes at a 50% discounted price off the home listing. Additionally, people that participate in this program need to stay in the home for 36 months as their main and only residence. If you want to know more about these kinds of homes, you can look through listings for your state online. The HUD site offers guidelines to help you understand the steps you need to follow, in the case that you want to buy one of these homes. When you are looking through these homes, you can anticipate that the properties change every week.

Keep in mind that you will be required to sign a second mortgage and note for the discounted amount. These second mortgages are required by this program. However you shouldn’t expect to deal with any payments or interest.

Mixed-Income Housing

Mixed-income housing is not a housing option that the HUD provides, but the HUD does support it. HUD works on supporting affordable housing concerns through tax incentives to landlords that provide units at a discounted price to eligible recipients. Mixed-income means a mix of household incomes in the housing complex, which is where the name came from. How much rent costs in these units depends on the landlord. Some landlords set rent prices based on the housing market. Other landlords set rent prices based on a person’s income. There are other ways that landlords set up rent prices in mixed-income housing, too!

Foreclosed Homes That Are Up For Sale

The FHA insures loans that lenders offer. If a borrower defaults on their loan, then the home can become foreclosed. Once the home is foreclosed, the FHA is responsible for selling the property.

Because the FHA is attempting to make up for the losses associated with this property, the FHA usually puts up these homes for sale at a price less than its market value. You should be mindful that these homes can have a lot of damage. On top of that because they are a foreclosure, there will not be a home inspection done before the purchase. If you want to look for all these kinds of homes, you have the option of viewing the HUDHomeStore website.

In Conclusion

Some people have heard about the Dollar Home program, which allows families to purchase properties for as little as $1. However, this is not the case. Instead, the Dollar Home Program allows local governments to pay $1 for properties worth less than $25,000 that have been on the market for six months. Local governments can use the properties to provide affordable housing to those in need. There are, however, other HUD housing assistance options that can provide individuals with the opportunity to obtain housing assistance, such as:

  • Housing Choice Voucher Program
  • Public Housing
  • Good Neighbor Next Door Program (GNND)
  • Mixed-Income Housing
  • Foreclosed Homes That Are Up For Sale

If you want to get benefits from these options, then you can look them up online or contact your local PHA. You should look through your options carefully. There might be more affordable housing support options out there than you might think!