Homeownership Assistance Programs

Programs like HAMP and the HARP mortgage program can aid homeowners who are struggling with mortgage payments, or those potentially facing foreclosure, modify or refinance an existing mortgage, so long as eligibility requirements are met. Established in the wake of the housing crisis, these programs can provide significant aid and savings to qualifying families.

However, if you are not yet a homeowner, it is worth noting that the Department of Housing and Urban Development (HUD) has numerous programs that may be able to assist you in the purchase of a home, including reduced eligibility requirements, better loan rates, discounts and more.

Through HUD homes and programs such as Section 184, Good Neighbor savings and USDA, you can review all your options for becoming a homeowner in order to make an informed decision moving forward surrounding this large new step in your life.

Reviewing HAMP Options

Established in 2012, HAMP was created in order to combat the growing amount of homeowners that were facing foreclosure within the United States due to a lack of payment. This program provided modifications to existing mortgages, upon a lender’s approval, in order to help borrowers avoid foreclosure. The HAMP program therefore aided in the repair of the economy and the stability of the housing market after the housing crisis had begun.

In order to be considered eligible for a HAMP loan, homeowners had to show documented financial hardship, as well as prove that they were capable of making new monthly mortgage payments after a modification had been instated. However, this FHA program was a voluntary one, and lenders were under no obligation to provide these options. Additionally, many lenders chose to make similar and ongoing programs to benefit homeowners that were struggling to meet mortgage payments.

As part of HAMP, most participating homeowners are subject to a trial period, in which the lender would see if a homeowner could make timely payments with modified mortgage amounts – before executing the official modification agreement. Download our informative guide to read more about HAMP and how it can help you.

Taking a HARP Mortgage Into Consideration

The HARP mortgage program was established in 2009, and will end on December 31, 2018. A HARP mortgage is a form of refinancing that is primarily focused on homeowners that owe as much, or more, than their homes are actually worth. Through this type of refinancing, homeowners can often reduce monthly mortgage payments, obtain better interest rates and obtain a fixed interest rate that will not change throughout the life of the loan.

The HARP mortgage program does not require homeowners to have equity when refinancing a mortgage. However, homeowners are required to meet very specific eligibility requirements, including an acceptable payment history for the past 12 months prior to the application date, that the current loan is owned by Fannie Mae or Freddie Mac, loan establishment dates and loan-to-value ratio requirements.

Considering an Application for a Section 184 Loan

A Section 184 loan is a type of mortgage that is available to qualifying American Indian and Alaska Native families and tribes. The program was created in order to provide these families and tribes with the opportunity of homeownership, as well as increased capital. Section 184 provides numerous benefits, including low down payment requirements, attractive loan rates and protection from predatory lending. This HUD program encourages private lenders to provide better approval rates, lower eligibility requirements and better loan terms by guaranteeing the loan and removing any risk of default or foreclosure to the lender.

If interested in a 184 loan, it is important to review eligibility requirements, in addition to learning how the program works. There are requirements for homes and properties to be eligible for this type of mortgage, areas within the United States that participate in this program and eligibility requirements that borrowers and tribes must meet in order to qualify.

Understanding HUD Homes

HUD homes are residential homes that have been previously foreclosed upon and purchased by the Department of Housing and Urban Development (HUD). The HUD assumes ownership of a home that will be foreclosed upon if the mortgage had received FHA financing. Most of these homes are still in great condition, but the HUD offers the homes at a significantly lower price than the value of the home, in order to make up some of the cost of the foreclosure.

When buying a HUD home, it is important to understand eligibility requirements for the home, as well as what it means for a home to be “as is.” These homes do not come with warranties or any types of guarantees, so a home inspection is strongly encouraged before you make an offer on the home. Offers can be made in cash or through an approved lender. If interested in one of these homes, you can view the HUD properties that are listed within your area online.

Saving More With the Good Neighbor Next Door

Good Neighbor Next Door is a special program that is offered by the Department of Housing and Urban Development as a way to provide substantial discounts on HUD homes to teachers, police officers, emergency medical personnel and firefighters. These discounts can be as high as 50 percent off the selling price of a home. By providing these discounts, the HUD is able to better and revive local communities, and positively impact any given neighborhood, as a whole.

Good neighbor homes can be found similarly to conventional homes, however, you will need to work with a real estate broker who has been approved for HUD listings. When purchasing an HUD home, it is also always a good idea to have a home inspection performed prior to placing a bid offer. Discounts for this program will be limited to HUD homes that are found within revitalization areas.

Understanding a USDA Direct Loan

A single-family direct loan is provided to qualifying low- and very-low-income families by the United States Department of Agriculture (USDA). This type of mortgage can often remove some of the barriers that low-income families may face when trying to obtain an affordable mortgage for the purchase of a home in rural areas.

To obtain a section 502 direct loan, families are required to meet a number of eligibility requirements. For example, a family cannot have access to another safe, sanitary or decent housing option, and must be incapable of obtaining any other type of loan through conventional lenders. If approved, a family will also be required to use the new home as the primary residence, as well as meet Section 502 loan obligations.

If approved, a 502 direct loan can be used toward a number of purchases, including the purchase of a home or building site, as well as renovating and repairing an existing home or the installation of water and sewage facilities.

Considering a USDA Guaranteed Loan

A single-family guaranteed loan is provided by the United States Department of Agriculture (USDA) in an effort to provide low-to-very-low-income citizens with finances toward the purchase or repair of a rural home. Designed to improve the economy and quality of life of eligible families, this mortgage program offers low interest rates and, generally, does not require a down payment. However, borrowers will be required to pay mortgage insurance premiums up front, and on an annual basis throughout the lives of the loans.

To qualify for the guaranteed rural housing loan program, you must meet income limits that are based upon the county in which you live within. Applicants must also be U.S. citizens or lawful permanent residents, be capable of making monthly payments that are based upon income levels, provide a qualifying income history and have an acceptable credit history. Additionally, a home must qualify based upon the value of the home, as well as square footage and type of home.

Learn more about the federal home ownership assistance programs available by downloading our comprehensive guide.