In what might be the lowest loan rate around, 2 percent fixed-rate mortgages are being offered to Section 8 voucher recipients.
New York state and federal officials hope their new program will not only allow low-income renters to buy homes but free up resources of nonprofits that give out home-buying grants. Section 8 is the government program that helps pay housing costs that exceed 30 percent of recipients’ household income.
“Our new voucher homeownership mortgage initiative will promote sustainable affordable home ownership, which is our agency’s mission,” said Priscilla Almodovar, president and chief executive of the State of New York Mortgage Agency. “It helps voucher recipients transition into home ownership. And it enables public housing authorities and nonprofits to help more Section 8 recipients achieve the American dream of homeownership.”
Under the "SONYMA Section 8 Voucher Homeownership Mortgage Program,” the rent vouchers will be turned into homeownership vouchers, which would go toward paying off a SONYMA-approved mortgage lender. That voucher money will be combined with nonprofits’ grants to help Section 8 participants buy homes.
SONYMA will finance up to 99 percent of a home sale and offer loans without purchases of points and a $400 limit on bank fees.
"Our families are hard workers who contribute to the local economy,” said Marianne Garvin, president of the Community Development Corp. of Long Island. “They have the financial skills to achieve healthy homeownership, but they need an appropriate mortgage to turn the dream into a reality.”
There’s also the option of borrowing up to $5,000 to pay for closing costs or 5 percent of the SONYMA mortgage, whichever is higher – but certain homeowners won’t have to pay back such aid. There are no monthly bills for the closing cost loan, and those who keep up with mortgage payments will have their closing cost loan “forgiven” after 10 years. Payments on closing costs kick in if the home owner falls behind on mortgages or lives in the house less than 10 years.
In high-cost areas such as Long Island, loans on closing cost could go up to $10,000.
SONYMA-approved nonprofits and housing agencies determine whether the applicants are financially self-sufficient enough to keep homes for the long term. The applicants must also complete home owner counseling courses and meet credit criteria.
The homeownership voucher program is also being sponsored by the New York State Division of Housing and Community Renewal and the federal Department of Housing and Urban Development (HUD).
Details are available at nyhomes.org or 1-800-382-HOME (4663).