Government Housing Assistance Overview

Last Updated: July 6, 2024

Given the pivotal role of housing in all community development initiatives, community leaders and organizations simply must stay informed about government housing assistance programs and approaches. Below we describe 21 types of governmental housing programs grouped into categories.

My goal here is to reduce vast amounts of government information into a very small bite for each program. Along the way, I give perspective on a few programs that I personally have administered or taken advantage of. While I try very hard to keep up, these programs are subject to change on any given day, so take these recommendations as suggestions for your further investigation.

Government housing assistance programs in the U.S. are most often administered at the national level by the Department of Housing and Urban Development, known as HUD, although the Treasury and Agriculture Departments are in charge of some options.

State and many local governments offer housing affordability help also. 

new home without landscaping in open area

Other Western countries often are more generous about housing benefits for lower-income and middle-income households. Europe offers better examples of social housing (public housing) policies and practices than the U.S. But to keep things manageable, this page addresses only U.S. programs.

While many Americans are philosophically opposed to this use of public monies, this Urban Institute report makes a good case for more housing assistance, not less.

If you need to access a federal housing program, please do not pay for information. It is freely available; nothing is hidden. The U.S. government almost never gives cash housing grants (free money that does not have to be repaid). Too many scams promote something that usually does not exist. You can call HUD at 1-800-955-2232 or a regional office if you need to determine what is true. It is much more likely that government housing assistance programs make your loans cheaper.

For a good introduction, read this page and pursue the links and phone numbers. If confused, ask the person in your city government who is responsible for community development, an extension agent, or a trusted and knowledgeable community leader.

Most government housing assistance programs have significant restrictions on your income, where the housing is located, or uses of the money. Some pertain only to special situations such as foreclosures. Let us take a look at them.

Down Payment Assistance

1. The federal HOME program, which is described under number 21 below, sometimes furnishes down payment assistance for home purchase. State and local jurisdictions administer this program, and it is inconsistent from place to place, and from time to time. To determine its current status, call what they consider your local HUD office, which may well be in another city.

Other federal involvement includes the Federal Housing Administration (FHA) guaranteed loan program, which require only a 3.5 percent down payment.

Your state, or in a less likely case your city, may offer a cash down payment assistance program, usually requiring a contribution from the buyer as well. Typically this program is limited to first time homebuyers. If a state agency sponsors the program, often it passes through the money to a few select local banks, credit unions, or CDFIs. (See our what is a CDFI page if you need that information.)

In my career as a planner I have found local homebuying programs to be somewhat ineffective, either because in the end, people could not qualify, or because the people assisted had already owned a home at some point in their past and could have probably qualified for a loan on their own.

This may be heresy in some community development circles, but if you, or someone you are working with, can't afford a down payment, our view is that you can't afford the maintenance and financial risks of being a homeowner. So think carefully.

Methods to Reduce the Cost of a Mortgage or Home, or Increase the Size of a Mortgage

2. When you want to buy a home, the Federal Housing Administration (FHA), which is part of HUD, can help. With an FHA loan, HUD sponsors mortgage insurance, which brings down the total cost of your mortgage. FHA insures the loan, so that a local lender can charge you less. Here's a link to the FHA lender list .

Remember that under FHA, your down payment could be as low as 3.5% of the purchase price of the house. This applies only to single-family homes or multiple-family homes with four or fewer units. In a variation called a Section 203(k) loan, an FHA loan also may allow you to roll the cost of repairs and renovation into your mortgage instead of having to take out a separate loan for this purpose.

3. The FHA also offers energy-efficient mortgages, which allow you to add the cost of energy-saving improvements, such as energy-saving windows or an energy-efficient furnace, into your mortgage. The EEM, as lenders and HUD like to call it, also can used during refinancing. Access this through approved FHA lenders.

4. Would-be owners of manufactured housing (mobile homes) also can obtain FHA loan financing that is often better than what is offered on the private market. They have two separate programs, depending on whether you will own the land or locate the unit in a mobile home park. My personal experience was that a private market loan was better.

5. The U.S. Department of Agriculture (USDA) also sponsors government housing assistance programs in rural areas. Some places you probably wouldn’t consider rural, such as small towns and cities in a rural environment, qualify for these programs. Here's the link for the rural housing programs, which help low- to moderate-income rural families with an affordable rate 502 loan for purchase.

There is now a separate page describing rural home repair loans.

6. Also in rural areas, nonprofit organizations can apply to the Department of Agriculture to administer mutual self-help housing programs and receive Section 523 loans. These allow groups of households to supply sweat equity in working on one another’s houses. A household must supply about two-thirds of the total work on its own home, but also work on homes for others in the self-help group. 

7. HUD also sells homes that it obtains through foreclosure on these various loan guarantee programs. These homes are offered first for a period of time to people who pledge to own and occupy the home. Then if no satisfactory offers are received, they may be offered to investors.

HUD uses local brokers to sell the homes, and sells homes "as-is," making no repairs. So a housing inspection is highly encouraged, but this will not result in HUD agreeing to fix problems. To begin to obtain information on this topic, consult the portal page for HUD home sales.  

In a good step forward, our experience is that this page now links to several other federally owned homes, including Veterans Administration homes, US Department of Agriculture rural homes, and Internal Revenue Services homes. Some, but not all, government owned homes are bargains. Many are quite problem-ridden though.

Again I have to caution there is a lot of scamming about government-owned homes, so I advise using only official websites.  Real estate professionals as a whole are not very well versed on this topic, so if you are using an agent, be careful that they really understand how to do this. Most of them hate it too.

8. HUD sponsors a Good Neighbor Next Door program that gives essentially a 50 percent price discount on its HUD-owned single-family homes to teachers, firefighters, and emergency medical personnel who will live in the home for three years. These homes also must be located in a designated revitalization area. This might be the most significant government housing assistance program of all, if you qualify.

9. An array of government housing assistance programs focus on Native Americans, Alaskans, and Hawaiians. There’s an Indian Housing Block Grant, Indian Community Development Block Grant, a variety of loan guarantees, and a program specific to Hawaii. They are administered by the Office of Native American Programs. On their tribal housing page you can find information about TDHEs (Tribally Designated Housing Entities).

Home Repair and Renovation Loans and Grants

10. For home repairs, energy improvements, or wheelchair accessibility improvements to be made after you have already purchased the home, you might use a Title I home improvement loan. These loans always are obtained through a certified lender and not from a contractor, who may try to rip you off by implying they can arrange this.

I have found this program to be helpful to a number of households in a city where I worked.

Loan amounts are limited; for a single-family home, it is $25,000. A multi-family unit cannot exceed $60,000 or more than $12,000 per unit. Check carefully to see if the Title I rate is really better than what your local banker can offer you. Maybe it will be, but maybe not. Shop around! Depending on your lender, these loans may require a minimum of red tape.

These loans also permit you to repair or build a nonresidential structure. This is a good approach for those falling-down garages. In fact, the program more properly is called the Title I property improvement loan.

11. If your income is classified as low or moderate, and you live in an area that is entitled to a regular Community Development Block Grant (CDBG), or has successfully competed for one recently, you might be eligible for a free grant for home repairs to bring your house up to code. Basically every city over 50,000 population automatically receives this grant, with the amount based on the more favorable of two sets of criteria. Smaller cities may compete for a grant administered through the state government.

Some locations make CDBG-funded loans conditional upon placing a lien on the house, requiring repayment upon resale. There could be other variations, such as a loan that is forgiven if you live in the home for five years, or a gradual reduction of the principal amount over five years as long as you live there. Often the home must be in a designated target area where other CDBG work is underway.

State and Local Government Housing Assistance 

12. In addition, states may offer programs, which might include down payment assistance, first time homebuyer programs (which often are also available to folks who haven't owned a home for at least three years but aren't genuine first time buyers), and mortgage rate write-down. There is a national organization of these state housing finance agencies, but honestly their website is extremely slow. You will be better off using a search engine, putting in your state's name plus terms such as housing finance agency, to find yours.

Next, please check with your local city and county governments. From time to time, a local government may offer homes for sale at a very substantial discount, which would be equivalent to receiving a grant for housing..

For instance, tax forfeiture properties are available for purchase from a county government, sometimes for very modest prices, or even $1 in the occasional aggressive homesteading program. It's also worth checking into whether any local land banks offer discounted housing that they have acquired other than through non-payment of taxes. When you ask your county about tax sales, ask if there is a county or city land bank if they do not volunteer this information. Some land banks are non-profit corporations or quasi-governmental organizations rather than governments as such; others are overloaded government bureaucracies.

Lastly, a particular local government might offer a limited-time cash incentive for home purchase for particular types of buyers or neighborhoods, or they might even have corporation or foundation money to write down the costs of certain kinds of housing. The CDBG program locally might offer an imaginative program in target area. It's worth checking with your city government. Also ask them what they know about private community development corporation programs.

Rental Housing for the Low-Income

13. If you are a low-income renter and need to continue rent, you may be eligible to live in a public housing unit or what is commonly called a Section 8 home. Traditional public housing is an apartment or detached home complex administered by a local housing authority.

What we are calling traditional public housing is not being built in the U.S. any more, as it has been determined that subsidizing rentals on the open market, as described below, costs less in the long run that constructing and maintaining public housing. Consequently the number of these  traditional units has been declining from around 1.4 million in 1994 to about a million now.

Just to help you understand some conversations you might hear if you become an advocate, in the mid-1990s the federal government started funding what they called HOPE VI projects, which allowed demolition of traditional projects and replacement with mixed-income housing. At the same time they revoked the rule that said the total number of public housing units had to be preserved when any were to be destroyed. The net result was a decline in the number of units, and only about a fourth of the previous residents were able to be housed in the replacement buildings. In 2010 HOPE VI was placed by Choice Neighborhoods, a highly competitive grant program.  (See more about this on our answer to a question about this program.)

"Section 8" is further divided into the Project-Based Rental Assistance (PBRA) program, where the project itself, whether large or small, entitles eligible recipients to live there, or the Housing Choice Voucher, which means that the prospective tenant can take the voucher to any private landlord who will accept it. This is basically the old "scattered site" program.

Although the financial help is federal, you deal with a local housing authority administered by local people. Cities and counties are allowed to decide whether to form housing authorities, so an urbanized county could conceivably have a county housing authority and one or more municipal housing authorities operating within its boundaries. Also there may find there is no housing authority in your area of interest.

In smaller cities especially, this is worth a look if you are having trouble affording to rent. In larger cities you could wait for years for something to become available, so don't make this your primary strategy. This is true of some smaller places too. However, contrary to the image, some housing authorities actually are well administered, and while the digs are never posh, they may be passable until your financial picture improves.

In the Housing Choice Voucher program, your rent from a private landlord is directly subsidized to allow you to pay no more than a given percentage of your income. The federal government pays the rest. Only a very small proportion of landlords participate in the program, or would be willing to participate on your behalf.

If you are looking for low-rent housing and have determined you are eligible to have your rent subsidized by having the government pay the portion of the rent you cannot afford (according to their standards, not yours), you might be lucky enough to receive a housing choice voucher. Only about a fourth of eligible recipients do; in other words, the government does not fund enough vouchers to meet the demand.

If you receive a voucher, the first question to ask a possible landlord is whether they are willing to enter the program. Many don’t want to do it, partly because the program has a bad reputation (only occasionally deserved) about strict inspections.

One possible remedy for this unwilling landlord situation is that some cities and counties have started enacting what might be called source of income ordinances. Essentially these prohibit landlords from discriminating on the basis of the source of income, which means that they are required to accept government housing vouchers.

Landlord Assistance

14. If you are or want to be a landlord, HUD offers some government housing assistance programs to reduce the cost of mortgages on rental properties. The so-called Section 207 mortgage insurance program may assist those who want to buy or refinance five units or more. HUD currently handles all its multi-family programs through a regional multi-family HUB and program center

15. It's possible that your local jurisdiction might include landlord assistance for rehab as part of their Community Development Block Grant program. It's worth asking. A few municipalities might provide loans, loan guarantees, or small subsidies for purchase and/or rehab of rental property, especially if it is located in a target area of interest to the city.

16. The Section 202 Supportive Housing for the Elderly and a similar Section 811 Supportive Housing for the Disabled programs are available from HUD to help only non-profits and non-profit consumer co-operatives build low-income housing for these groups.

These are now pretty small programs, folks, but do check into them. Some of the appropriated money passes through to state housing agencies, so you might find your success there.

HUD provides no-interest "capital advances" for construction. Your organization could correctly interpret these as grants, providing you continue to serve the low-income elderly population for 40 years. We should note you have to provide a miniscule percentage of the funding, but we're telling you that you can do this. You also must provide supportive services, which could include transportation, cleaning, and so forth. Make sure you have the capacity to keep up that commitment.

In 2021-22, Congress authorized funding for intergenerational housing for elderly owners who are raising children, so keep that in mind.

On top of what is already a great deal, your tenants also would be subsidized.

Note that since 2004, faith-based organizations are equally eligible for federal programs such as Section 202, which has built a large percentage of the elderly housing you see, especially in smaller towns.  

Housing Counseling and Foreclosure Prevention

17. HUD provides housing counseling through approved local agencies. To find an agency located near you, call 1-800-955-2232, or look on-line for HUD approved counseling offices. This is a major resource for you, particularly if you find yourself in immediate danger of foreclosure. Just like you never need to pay for housing information, please don't feel that you ever have to pay for legitimate housing counseling.

You also might get faster, more local help by calling 1-888-995-HOPE.

18.If you have an FHA loan, the HAMP (Home Affordable Modification Program) program can help you avoid foreclosure by reducing your mortgage payment permanently. In essence HUD “buys down” (decreases) the loan principal by up to 30 percent of the amount you still owe. Then this buydown amount, called a partial claim, becomes due when the first mortgage is paid off, which happens typically in the U.S. when you the sell the house. We suggest starting with the resources under number 17 above if you have not yet spoken with your lender about your financial difficulties.

Reverse Mortgage Assistance for Older Homeowners

19. For people 62 years of age and over who own their home outright, meaning they do not have a mortgage on it, or have quite a low balance left on their home loan, a reverse mortgage is possible. Local banks and mortgage companies originate these government housing assistance loans. Older adults need to be cautious about entering into a reverse mortgage agreement, as many don’t understand the disadvantages as well as the advantages.

Under this program, instead of paying money each month, you receive money monthly to use as income. You also could choose a one-time payout.

A reverse mortgage does reduce the equity in your home, and at your death or when you move out, you or your heirs will have to repay the loan. The only reverse mortgage with federal insurance behind it is called the Home Equity Conversion Mortgage, or HECM. (Just when we learn "reverse mortgage," there's another term to master.)

Be sure to understand that you can outlive the reverse mortgage, so be careful not to rely on a reverse mortgage totally for necessary income. For someone in relatively good health who doesn't want to pass the home on to heirs, this is a great program to provide additional income. My experience is that it is best for people who are long-time homeowners in an area where real estate prices have escalated rapidly.

The HECM also can be used to buy a primary residence, but you will need to bring some dollars to the table.

For reliable further information, begin with this AARP advice supplemented by information from your local chapter.  Don't rely on television ads to tell you what you need to know.

Disaster Relief Housing

20. Another type of assistance that will not have to be repaid may come in the form of disaster relief, for victims of hurricanes, earthquakes, tornadoes, or wildfires. Because there is usually plenty of local outreach after such a disaster, we will not add details to this already lengthy page. We will simply say you must be in a federally declared disaster area to qualify.

HOME Program Funds

21. Although you will recognize major overlap with the categories above, we decided to describe the federal HOME program in one concise heading. All HOME funds must benefit people who are at 80 percent or less of the area median income (AMI) in an area, and 90 percent of any tenant-based rental assistance must go to households below 60 percent of AMI. Think of this as a hard-core low-income and very-low-income household benefit program.

Otherwise the program is very flexible as to whether the activity being funded is new construction, rehabilitation, reconstruction, property acquisition (except vacant land must be acquired just prior to construction), demolition (also limited to just prior to construction), and relocation. In other words, eligibility includes almost all of the standard housing projects that fall within the community development field.

First you would have to learn whether or not the location you are considering lies within a Participating Jurisdiction (known as PJ). If a city meets the criteria, it is automatically funded. In other words this is a block grant program, but the criteria are different than for the Community Development Block Grant. If your locality is a PJ, that jurisdiction has enormous latitude to decide on the precise activities and rules of the program, so your next step would be to talk with that jurisdiction.

A PJ is required to contribute a 25 percent affordable housing match from non-federal resources as well, although here creativity reigns. The match formula is not required for the 15 percent reserved for CHDOs (community housing development organizations) or for administrative costs. In-kind labor, land, and so forth can be counted, as can street improvements to support projects. There are many ways to make this work, including of course contributions by developers, use of state funds, and counting a city’s foregone taxes or waived fees.

States receive 40 percent of the HOME funds, so if you find that your city or town does not meet the criteria to become a PJ, you will need to contact your state.

Just to give you an idea, the federal government permits the following types of programs, which your PJ may or may not include in their own custom program:

  • Loans, whether interest-bearing or no-interest
  • Forgivable loans
  • Deferred loans, where repayment is required later, perhaps at sale
  • Grants, usually covering down payments or closing costs, but at the city’s discretion
  •  Interest rate write-down (up-front payment to a lender to facilitate a lower interest rate for the borrower)
  • A fund for loan guarantees
  • Rental assistance to tenants
  • Taking an equity stake an affordable housing project

There are plenty of other interesting surprises as you dig into the HOME program further. For our particular audience, we will just leave you with the enticing fact that a PJ must reserve 15 percent of its HOME funds for CHDOs, which are private non-profits working in the housing field. If you want to learn more, the first step is to find your PJ. They will know all the rules.

A Word of Encouragement

As you investigate one or more of these programs, you will find that actual funding for these programs may or may not be available. Tracking real life appropriations can be frustrating and time-consuming, but neighborhood residents can and often do understand the ones of most significance to them. If you start with a list of 5 of these 21 ideas, you might find only one that is active, funded, and free of legal or financial barriers to entry for you. But that one can raise the quality of life for a household or a neighborhood.

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