Low Cost Housing

Are you buying your first home? Are you looking for a place with lower rent? Can you not afford to keep your home now? There are people in every walk of life that want to find a good deal on a home, but those with lower income have less opportunity to buy. An affordable home is not always easy to come by, especially when you want your total debt to income ratio to be less than 36%, and your housing payment to be 28% or less of your income for the conservative buyer or 33% or less for the aggressive one. If you can still handle all the bills and save for the future on top of your mortgage payment, you are doing well. But for those who can't afford to pay thousands a month in mortgage, there are low cost housing options. The federal government and other agencies have made it a little easier to afford housing whether you are buying or renting if you fit into the low cost housing bracket. Here are some resources and investment opportunities to look at when you are looking to purchase low cost housing.

1. HUD and FHA
2. Section 8 Housing
3. Low-Income Housing
4. Slow Housing Market
5. Fore-Closures

HUD and FHA

The U.S. Department of Housing and Urban Development, also known as HUD, is a great resource for finding low cost housing. They offer great programs for first time home buyers, sale foreclosures to the public, and assist in getting loans or refinancing and advice from people who know the industry. Their website, hud.gov, is the jumping off point for anyone looking to buy low cost housing. It includes articles and resources teaching you about home buying and has links to applications for Section 8 and low-income housing projects. They offer a state by state search for home buying programs and down-payment assistance and are linked directly with the FHA, or Federal Housing Administration which can help get you a low interest loan insured by the FHA for your low cost housing purchase.

The HUD also offers a rental assistance program. They offer help to apartment owners who want to offer reduced rates to low-income renters and they also offer a housing voucher program where you choose your housing and they provide vouchers that assist you in paying your rent. You must meet certain qualifications that differ from area to area and they have the application on their web site or you can apply directly at the apartment management office where you want to live.

The FHA has been helping people purchase homes since the 1934 housing act that stated everyone should have equal opportunity in purchasing a home. They insure loans so your lender can give you a better deal, more money, and a lower interest rate over the life of your loan. For first time home buyers, the FHA can offer enough assistance that you only have to cover 3% of the cost of the home up front and most of the time your loan covers all the closing costs and fees. If you are planning to purchase a fixer-upper, the FHA can assist you in obtaining a loan that covers the cost of the home and the cost of the remodeling or repairs. The FHA also provides financing for mobile or factory built homes, which are always low cost housing. They also provide assistance to seniors and veterans with low cost housing needs.

Section 8 Housing

Section 8 housing is a voucher program that allows housing assistance to low-income renters and home owners. It is a federal housing program whose assistance comes in the form of rental subsidies which limits the monthly rent payment you pay. You must be 50% bellow the Area Median Income to qualify for assistance. The part of the rent or mortgage payment you are responsible for is based on your income and the Area Median Income in which you live. The voucher will pay anything above 30% of you adjusted monthly income up to an established limit of the fair market rent (FMR) of your area. They will pay the FMR in the voucher so if you live in a place that has higher rent than the FMR for the area, you have to pay the difference, but if you live in a place that is lower than the FMR, you can keep the difference after you pay your part. To find voucher assistance in your area, contact the local public housing authority.

Once you have the voucher in hand, you can go shopping for a place to live that will accept the voucher. Landlords are not required by law to accept section 8 housing assistance tenants, but many do because of the dependability of section 8 assistance payments.

If you are a first time home-buyer you may also be qualified for the section 8 voucher program. You must have a household income of at least $10,300, been continuously employed for a year, and attend a homeownership counseling course in order to qualify. There may also be other restrictions set by the local public housing authority. This program is not offered in all areas, so contact your local public housing authority to find out if it is offered in your area.

Low-Income Housing

As part of the section 8 housing assistance, there are also project-based vouchers where the apartment is receiving the voucher rather than the tenant in the apartment. Probably the most recognizable section 8 low-income housing voucher system is the Projects in New York. Not all of the Section 8 low-income housing has as bad of a reputation as the Projects. The voucher system varies from state to state, so some states have higher requirements for section 8 housing than others. All the housing which receives the vouchers has to go through inspections and meet the guidelines to make sure the housing is decent, safe, and sanitary. So, if you are applying for low-income housing, you can be sure that the place provided for you meets the minimum requirements or it wouldn't be an option.

Slow Housing Market

One of the best times to buy low cost housing is during a slow housing market. If you have good credit and a well-paying secure job, you can really save money on purchasing a home by waiting for the market to hit a selling low. When that happens, the sellers lower their prices more and more to be competitive and off-load their property. This means opportunity for you to pick up low cost housing and either live in it or sell it for a profit when the market picks up again, which it always does. You always want to purchase in an area that has a strong housing market so you know the prices will bounce back in time for you to sell or gain some good equity in your home purchase.

Foreclosure

One thing that happens in any market, including slow markets, is foreclosure on homes. You don't want your home to foreclose, but when a home forecloses, great opportunities open up for those who are looking for low cost housing.

When a home is headed for foreclosure and there isn't really anything the homeowner can do about it, you can approach them and buy their property for a substantial discount. This is a win situation for everyone involved because the homeowner makes a sale and the lender doesn't loose money on their loan, and you still get great low cost housing. This is a great investment opportunity when done properly and fixed up and sold quickly.

If a house forecloses and goes to auction, the potential to get a home at a huge discount gets even better. When the home goes to auction it is sold to the highest bidder. This has potential dangers as well. Most sales at auction are final, and you are competing for the home against the lender and other property investors. One of the downsides is you have to pay at the time of winning an auction, so be ready to do so.

You can also buy a foreclosed home REO, which means real estate owned. This happens when the lender forecloses on the home and wants to move the property quickly and cut their losses. Lenders are not into selling real estate, so they will off load it for a good price as long as their losses aren't too significant. Investing in foreclosed properties can be a risk, so be sure to weigh your risks before you invest and make sure they are worth it, but any of these three methods can be a great way to get low cost housing.