- Affordability and Other Requirements

The income targeting requirements described above ensure that HOME-assisted units benefit low-income households. Additionally, HOME-assisted units must be affordable to low-income households, and must continue to be occupied by low-income households and remain affordable to such households over the long term.

In order to achieve this goal, HOME-assisted units must meet a number of requirements. Some of these requirements govern the value of HOME-assisted units or the amounts that a household can pay to rent or purchase a unit. HOME-assisted units must also meet additional requirements, separate from the value of the home, to ensure affordability. As with income targeting, the precise requirements that must be met depend on whether HOME funding is used for assistance to home buyers, owner-occupied housing rehabilitation, or rental housing activities.

Assistance to Home Buyers. Housing bought by home buyers with the assistance of HOME funds must meet the following requirements:

  • The home buyer must belong to a low-income family, and the family must use the home as a principal residence.
  • The initial purchase price or value after rehabilitation must be no more than 95% of the median purchase price of homes in the area, as determined by the

Secretary of HUD and adjusted as the Secretary deems necessary for different types of structures and the age of the housing.

  • Home buyer units must continue to meet the definition of affordability described above for between five and fifteen years, depending on the per-unit amount of HOME funds expended on a project.
  • The housing must be single-family housing.
  • If the housing is newly constructed, it must meet energy-efficiency standards.
  • Participating jurisdictions must impose resale or recapture restrictions on units in which they have assisted the home buyer using HOME funds. These restrictions specify that if a homeowner sells his or her home during the affordability period, he or she is required to sell it to another qualified low-income buyer (resale) or to return some of the proceeds of the sale to the PJ in order to cover the HOME funds that were invested in the home (recapture).
  • HOME-assisted home buyers must receive housing counseling.

Home buyer units that are not sold to eligible home buyers within nine months of the project’s completion are to be rented to eligible tenants.

Resale and recapture restrictions are set by the jurisdiction and approved by the Secretary. Resale restrictions must ensure that, upon resale, (1) the housing remains affordable to low-income home buyers, and (2) the owner receives a fair return on investment. Recapture restrictions must ensure that the investment in the housing is recaptured in order to assist others who qualify for HOME-assisted housing.

Owner-Occupied Housing Rehabilitation. Owner-occupied housing that is rehabilitated using HOME funds must meet the following requirements:

  • The owner must belong to a low-income family at the time HOME funds are committed to the project, and the family must use the housing as a principal residence.
  • The value of the housing after rehabilitation must be no more than 95% of the median purchase price of homes in the area, as determined by the Secretary of

HUD and adjusted as the Secretary deems necessary for different types of structures and the age of the housing.

  • There are no statutory long-term affordability requirements for owner-occupied units that are rehabilitated using HOME funds. However, the PJ can choose to impose an affordability period.

Rental Housing. Rental housing that benefits from the use of HOME funds must meet the following requirements:

  • HOME-assisted units must be occupied only by low-income households.
  • Rents must not exceed HUD’s published maximum rents for the HOME program. The maximum rent for a HOME-assisted rental unit is the lesser of (1) the fair market rent for comparable units in the jurisdiction, or (2) 30% of the adjusted income of a household whose income is 65% percent of area median income.
  • If a project includes five or more HOME-assisted units, at least 20% of the HOME-assisted units must be occupied by families with incomes at or below 50% of area median income. Additionally, those families must have rents that meet one of the following requirements:
  • Rents are no higher than 1) the fair market rent for a comparable unit in the jurisdiction, or 2) 30% of 50% of area median income, whichever is lower.
  • Rents are no higher than 30% of the household’s adjusted income.

If rental projects temporarily fail to meet the requirements governing the incomes of occupants of HOME-assisted units because of an increase in the current tenants’ income, the project is still considered to be in compliance as long as vacancies are filled according to these requirements.

  • Rental units must continue to meet these requirements for between five and twenty years, depending on the per-unit amount of HOME funds expended on a project and the type of activity for which HOME funds are used.
  • If the housing is newly constructed, it must meet energy-efficiency standards.
  • The housing must be available to Section 8 voucher holders.

PJs must repay any HOME funds used for rental units that are not rented to eligible tenants within 18 months of the project being completed.



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