Eligible HOME Activities
In the years leading up to NAHA’s passage, some experts argued that local affordable housing needs varied, and that localities should be free to develop solutions that fit local conditions. HUD describes one of the purposes of the HOME program as reinforcing the principle that states and localities should have flexibility and control over how to best meet their affordable housing needs. Accordingly, a wide range of activities related to increasing the supply of affordable housing for low-income households qualifies for HOME funding. These include both homeownership and rental housing activities.
The eligible uses of HOME funds fall into four broad categories:
- Rehabilitation of Owner-Occupied Housing. Funds may be used to help existing homeowners repair, rehabilitate, or reconstruct their homes.
- Assistance to Home Buyers. Funds may be used to help home buyers acquire, acquire and rehabilitate, or construct homes. For example, down payment assistance is an eligible use of funds under this category.
- Rental Housing Activities. Funds may be used to help developers or other housing organizations acquire, rehabilitate, or construct affordable rental housing.
- Tenant-Based Rental Assistance. Funds may be used to help renters with costs related to renting, such as security deposits, rent, and, under certain circumstances, utility payments. “Tenant-based” means that the rental assistance moves with the tenant rather than being tied to a specific housing unit.
A participating jurisdiction may use up to 10% of the funds it is allocated in a fiscal year for administrative purposes.
The law requires participating jurisdictions to give preference to rehabilitation of existing rental and owner-occupied units. However, a PJ can undertake other activities if it determines that rehabilitation is not the most cost-effective way for it to increase its supply of affordable housing or that rehabilitation of the existing housing stock would not adequately meet its affordable housing needs.
Participating jurisdictions can disburse HOME funds in a variety of ways. Forms of assistance that may be provided with HOME funds include grants, various types of loans, loan guarantees to lending organizations, interest rate subsidies, equity investments.
Certain activities are not eligible for funding under the HOME program. Ineligible uses of HOME funds include modernizing public housing, providing tenant-based rental assistance under the Section 8 program, supporting ongoing operational costs of rental housing, paying back taxes or fees on properties that are or will be assisted with HOME funds, and providing non-federal matching funds for any other federal program. Other uses not authorized in statute or regulation are also prohibited.
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