HOME Program Requirements

HOME Program Requirements

The HOME Program is designed to provide affordable housing to low-income and very low-income families and individuals. Therefore, the program has some key restrictions that are designed to foster HUD’s commitment to long-term affordable housing, quality units and reasonable costs. These key restrictions are discussed below.

Income Eligibility and Verification

Beneficiaries of HOME funds—homebuyers, homeowners or tenants—must be low-income or very low-income. “Low-income” is defined as an annual income that does not exceed 80 percent of area median income, as adjusted by household size. “Very low-income” is defined as having an annual income that does not exceed 50 percent of area median income, as adjusted by household size. A household’s income eligibility is determined based on its annual income. Annual income is the gross amount of income anticipated by all adults in the household during the 12 months following the effective date of the determination. To calculate annual income, the PJ may choose among three definitions of income:

  • Section 8 annual (gross) income. Annual income determinations are based on the Part 5 definition of annual income. Note that this definition is now known as Part 5.
  • IRS adjusted gross income. The calculation for “adjusted gross income” outlined in the Federal income tax IRS Form 1040.
  • Census long form annual income. Annual income is defined as annual income used for the Census long form, for the most recent decennial Census.
    • Having the flexibility to choose the definition of income facilitates the combination of HOME with other funds, from sources that use differing definitions of income. The PJ’s choice of definition may depend on the other sources of funds in a project. For example:

      • The Community Development Block Grant (CDBG) Program allows the same three definitions of income; therefore, projects with both sources should use the same definition.
      • The Low Income Housing Tax Credit (LIHTC) Program requires the use of the Part 5 definition of income; therefore, projects that use both HOME and LIHTCs can use the Part 5 definition and comply with the requirements of both programs.

      Subsidy Limits

      HOME establishes minimum and maximum amounts of HOME funds that may be invested in any project. The minimum amount of HOME funds is $1,000 multiplied by the number of HOME-assisted units in the project. The minimum only relates to the HOME funds, and not to any other funds that might be used for project costs. The minimum HOME investment does not apply to TBRA.

      The maximum per-unit HOME subsidy limit varies by PJ. HUD determines the maximum amounts, which are based on the PJ’s Section 221(d)(3) program limits for the metropolitan area, each year. As above, those limits apply only to HOME funds and not other funds that may be invested in the project. These limits are available from the HUD Field Office, or information can be found online at https://www.hud.gov/offices/cpd/affordablehousing/programs/ home/limits/subsidylimits.cfm.

      The maximum per-unit subsidy limit is:

      • 100 percent of the dollar limits for a Section 221(d)(3) nonprofit sponsor, elevator-type development, indexed for base city high cost areas, and adjusted for the number of bedrooms.
      • For some PJs, the 221(d)(3) limit has already been increased to 210 percent of the base limit. For these PJs, HUD will allow, upon request, an increase in the per-unit subsidy amount on a program-wide basis. However, the absolute maximum subsidy limit that HUD will allow is 240 percent of the base 221(d)(3) limits.

      Affordability Periods

      To ensure that HOME investments yield affordable housing over the long term, HOME imposes rent and occupancy requirements over the length of an affordability period. For homebuyer and rental projects, the length of the affordability period depends on the amount of HOME assistance to the project or buyer, and the nature of the activity funded. Table 1-1 provides the affordability periods.

      Table 1-1: Determining the HOME Period of Affordability

      HOME Assistance per Unit or Buyer

      Length of the Affordability Period

      Less than $15,000

      5 years

      $15,000 - $40,000

      10 years

      More than $40,000

      15 years

      New construction of rental housing

      20 years

      Refinancing of rental housing

      15 years

      Throughout the affordability period, income-eligible households must occupy the HOME-assisted housing.

      • Rental housing. When units become vacant during the affordability period, subsequent tenants must be income eligible and must be charged the applicable HOME rent.
      • Homebuyer assistance. If a home purchased with HOME assistance is sold during the affordability period, resale or recapture provisions apply to ensure the continued provision of affordable homeownership.

      Maximum Value

      HOME investments are for modest housing. Thus, HOME imposes maximum value limits on owner occupied and homebuyer units. The maximum purchase price may not exceed 95 percent of the median purchase price of homes purchased in the area. In the case of a purchase-rehabilitation project, the value of the property after rehabilitation may not exceed 95 percent of the area median purchase price for that type of housing. The after-rehabilitation value estimate should be completed prior to investment of HOME funds.

      There are two options that PJs have for determining the 95 percent of the median purchase price. Most PJs opt to use the FHA Section 203(b) Mortgage Limits. These limits are available online at https://www.hud.gov/offices/cpd/affordablehousing/programs/ home/limits/maxprice.cfm.

      PJs also have the option of conducting a specialized market analysis that meets certain requirements established by HUD. (These can be found in the HOME Final Rule at 24 CFR 92.254 (a)(2)(iii).)

      Property Standards

      HOME-funded properties must meet certain minimum property standards.

      • State and local standards. State and local codes and ordinances apply to any HOME-funded project regardless of whether the project involves acquisition, rehabilitation, or new construction.
      • Model codes. For rehabilitation or new construction projects where there are not state or local building codes, the PJ must use one of three national model codes.ii
      • Housing quality standards. For acquisition-only projects, if there are no state or local codes or standards, the PJ must enforce Housing Choice Voucher Housing Quality Standards (previously Section 8 HQS).
      • Rehabilitation standards. Each PJ must develop written rehabilitation standards to apply to all HOME-funded rehabilitation work. These standards are similar to work specifications, and generally describe the methods and materials to be used when performing rehabilitation activities.

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