Overview of the HOME Program

Created by the National Affordable Housing Act of 1990 (NAHA), HOME is the largest Federal block grant available to communities to create affordable housing. The intent of the HOME Program is to:

  • Increase the supply of decent, affordable housing to low- and very low-income households
  • Expand the capacity of nonprofit housing providers
  • Strengthen the ability of state and local governments to provide housing
  • Leverage private sector participation.

Every year, the U.S. Department of Housing and Urban Development (HUD) determines the amount of HOME funds that states and local governments — the PJs — are eligible to receive using a formula designed to reflect relative housing need. The HOME regulations may be found on HUD’s Office of Affordable Housing Programs website at https://www.hud.gov/program_offices/comm_planning/affordablehousing/programs/home/, and in the Code of Federal Regulations at 24 CFR Part 92.

HOME Program Partners

To ensure success in providing affordable housing opportunities, the HOME Program requires PJs to establish new partnerships and maintain existing partnerships. Partners play different roles at different times, depending upon the project or activity being undertaken with HOME funds.

Key program partners include:

  • Participating Jurisdiction. A Participating Jurisdiction (PJ) is any state, local government, or consortium that has been designated by HUD to administer a HOME program.
  • Community Housing Development Organization . A community housing development organization (CHDO) is a private, nonprofit organization that meets a series of qualifications prescribed in the HOME regulations at 24 CFR 92.2. Each PJ must use a minimum of 15 percent of its annual allocation for housing that is owned, developed, or sponsored by CHDOs. PJs evaluate organizations’ qualifications and designate them as CHDOs.
  • Subrecipient. A subrecipient is a public agency or nonprofit organization selected by a PJ to administer all or a portion of its HOME program.
  • Developers, owners, and sponsors. Developers , owners, and sponsors of housing developed with HOME funds may be for-profit or nonprofit entities. Developers are the entities responsible for putting the housing deal together. Owners are the entities that hold title to the property after rehabilitation, construction, or acquisition. Sponsors work with other organizations—such as other nonprofits—to assist them to develop and own housing. At project completion, sponsors turn over title to the property to the other organization.
  • Private lenders. Most HOME projects leverage or involve other financing, from for-profit lenders or other entities such as foundations or community groups.
  • Third-party contractors. Third-party contractors include a range of other entities that might work on the HOME program, such as architects, planners, construction managers, real estate agents, or consultants.

HOME-Eligible Program Activities

HOME funds can be used to support four general affordable, non-luxury housing activities:

  • Homeowner Rehabilitation. HOME funds may be used to assist existing owner-occupants with the repair, rehabilitation, or reconstruction of their homes.
  • Homebuyer activities. PJs may finance the acquisition and/or rehabilitation, or new construction of homes for homebuyers.
  • Rental housing. Affordable rental housing may be acquired and/or rehabilitated, or constructed.
  • Tenant-based rental assistance (TBRA). Financial assistance for rent, security deposits, and, under certain conditions, utility deposits may be provided to tenants. Assistance for utility deposits may only be provided in conjunction with a TBRA security deposit or monthly rental assistance program.

Prohibited Activities and Costs

HOME funds may not be used to support the following activities and costs:

  • Project reserve accounts. HOME funds may not be used to provide project reserve accounts (except for initial operating deficit reserves) or to pay for operating subsidies.
  • Tenant-based rental assistance for certain purposes. HOME funds may not be used for certain mandated existing Housing Choice Voucher Program (formerly known as Section 8) uses, such as Housing Choice Voucher rent subsidies for troubled HUD-insured projects.
  • Match for other Federal programs. HOME funds may not be used as the “nonfederal” match for other Federal programs except to match McKinney Act funds.
  • Development, operations, or modernization of public housing. HOME funds cannot be used alone or in conjunction with HUD-funded public housing program funds (e.g., Public Housing capital programs such as Development, Comprehensive Improvements Assistance Program (CIAP), or Comprehensive Grant Program (CGP)) to acquire, rehabilitate, or construct public housing units.
  • Double-dipping. During the first year after project completion, the PJ may commit additional funds to a project. After the first year, no additional HOME funds may be provided to a HOME-assisted project during the relevant period of affordability, with the following exceptions:
    • PJs can renew tenant-based rental assistance to families.
    • PJs may provide tenant-based rental assistance to families that will occupy housing previously assisted with HOME funds.
    • PJs may assist a homebuyer with HOME funds to acquire a unit that was previously assisted with HOME funds.
  • Acquisition of PJ-owned property. A PJ may not use HOME Program funds to reimburse itself for property in its inventory or property purchased for another purpose. However, in anticipation of a HOME project, a PJ may use HOME funds to:
    • Acquire property
    • Reimburse itself for property acquired with other funds, specifically for a HOME project.
  • Project-based rental assistance. HOME funds may not be used for rental assistance if receipt of funds is tied to occupancy in a particular project. Funds from another source, such as a Housing Choice Voucher, may be used for this type of project-based assistance in a HOME-assisted unit. Further, HOME funds may be used for other eligible costs, such as rehabilitation, in units receiving project-based assistance from another source—for example, Housing Choice Voucher or state-funded project-based assistance.
  • Pay for delinquent taxes, fees, or charges. HOME funds may not be used to pay delinquent taxes, fees, or charges on properties to be assisted with HOME funds.

HOME Project 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 include:

  • Income eligibility and verification
  • Occupancy and rent requirements
  • Subsidy limits
  • Affordability periods
  • Property standards.

Beneficiaries of HOME funds—homebuyers, homeowners, or tenants—must be low-income or very low-income. Alow-income household” has an annual gross income that does not exceed 80 percent of area median income (AMI), as adjusted by household size. A very low-income household” has an annual gross income that does not exceed 50 percent of AMI, as adjusted by household size.

Occupancy and Rent Requirements

In projects assisted with HOME funds, the HOME-assisted units must meet the occupancy and rent requirements of the HOME Program. These requirements are explained in detail in Chapter 2.

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 relates only to the HOME funds, and not to any other funds that might be used for project costs.

The maximum per unit HOME subsidy limit varies by PJ. Annually, HUD determines the maximum amounts, which are based on HUD’s Section 221(d)(3) program limits for the metropolitan area. These limits are available at the HOME Program website at https://www.hud.gov/program_offices/comm_planning/affordablehousing/programs/home/.

Affordability Periods

To ensure that HOME investments yield affordable housing over the long term, HOME imposes rent and occupancy requirements for the duration 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. Throughout the affordability period, income-eligible households must occupy the HOME-assisted housing.

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. 1 For rehabilitation or new construction projects where there are not state or local building codes, the PJ must use one of the following three national model codes:
    • Uniform Building Code (ICBO), National Building Code (BOCA), Standard Southern Building Code (SBCCI)
      • Council of American Building Councils (CABO) one or two family code
      • Minimum Property Standards (MPS) in 24 CFR 200.925 or 200.926.
  • 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.
  • Uniform Federal Accessibility Standards. The UFAS standards apply to new construction and substantially altered rehabilitation, in accordance with Section 504 of the Rehabilitation Act of 1973.
  • International Energy Conservation Code and Site and Neighborhood Standards , for new construction projects.

HOME Administrative Requirements

HOME imposes certain administrative requirements related to the eligibility of administrative and planning costs, match, and commitment and expenditure deadlines.

1 Since the promulgation of the HOME Program regulations, these code issuing agencies have merged to form the International Code Council (ICC). The model codes used for the HOME Program are no longer being updated. In their stead, the ICC has issued the International Building Code. HUD will consider whether changes to the HOME regulations incorporating the International Building Code are appropriate. The HOME Program website provides updated information on all HOME requirements. (See https://www.hud.gov/program_offices/comm_planning/affordablehousing/programs/home/. ) For more information about the International Building Code, see www.iccsafe.org.

Administrative and Planning Costs

Each PJ may use up to 10 percent of each year’s HOME allocation for reasonable administrative and planning costs. In addition, up to 10 percent of program income deposited in a PJ’s local HOME account during a program year may be used for administrative and planning costs. PJs, state recipients, and subrecipients may incur administrative and planning costs.

Match

The HOME Program requires that PJs contribute an amount equal to no less than 25 percent of the total HOME funds drawn down in a year for project costs as a permanent contribution to affordable housing. PJs incur a match obligation only for project funds, not for administrative, operating, or capacity-building expenditures. Although the obligation is incurred per dollar expended in the project, match credit can be invested in any HOME-eligible project, whether the project receives HOME funds or not. Match funds can be contributed in many different forms, including cash; value of waived taxes or fees; value of donated land or property; or donated goods, services, materials, or equipment.

Commitment and Expenditure Deadlines

The HOME Program encourages PJs to expend their affordable housing funds expeditiously by imposing two deadlines. HOME funds for a given program year must be committed to HOME projects within two years of signing the HOME Investment Partnerships Agreement. For CHDO set-aside funds, PJs must reserve funds for use by CHDOs within that 24-month period. In addition, generally HOME funds must be expended within five years of receipt of funds. FY 2012 HOME funds must be spent within four years, in accordance with the Consolidated and Further Continuing Appropriations Act of 2012 (P.L 112-55).



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