HCV Homeownership Program Lender FAQ
What is the HCV Homeownership Program?
The Housing Choice Voucher (HCV) Homeownership
Program was created to assist low-income homebuyers in
purchasing a home. The program is funded by the
Department of Housing and Urban Development (HUD)
and administered by local public housing authorities
(PHAs).
The Program allows homebuyers to use federal subsidy to
pay a portion of their monthly mortgage for up to 10 years,
or longer for eligible families.
Financing
Families are responsible for securing financing on their own.
The PHA does not finance the loan, nor do they determine
the maximum amount of loan a family qualifies for.
Knowledgeable lenders are key to the success of the
program. The use of HCV Homeownership funding is not
restricted to certain mortgage loan products or lenders.
Assistance payments as income
Once the family has been determined to be qualified and
provided a voucher, they will receive a monthly assistance
payment (HAP) to assist them with homeownership
expenses. The monthly HAP payments can be paid either to
the lender or directly to the family.
Down Payment
The PHA typically does not provide down payment
assistance directly, however they will work with the family
as they build up their own savings and connect with
resources for securing sufficient funds to meet down
payment requirements.
Does the mortgage subsidy fluctuate?
The mortgage subsidy is calculated based on the
homeowner’s income. If their income decreases, the
subsidy increases, and if their income increases, the
subsidy decreases accordingly. Therefore, the sum of the
subsidy and homeowner’s portion remains the same.
How can I learn more?
Contact your local PHA to find out if they have an HCV
Homeownership Program. You can find your local PHA at
this website: https://resources.hud.gov/. They will connect
you with an expert who will provide you with more
information about the program and answer any questions
you may have.
Financing Models:
Single mortgage, HAP as income
Underwriters consider the HAP as
an additional source of income.
Underwriters can inflate the HAP
by 25% and add it to other
income sources for total gross
income. Then use qualifying ratios
of gross income to determine the
PITI pa* yments the borrower can
afford.
Single mortgage, HAP as
additional mortgage payment
Underwriters use the full HAP to
offset PITI payments. First, they
qualify applicants for a monthly
PITI payment using qualifying
ratios of gross income, then add
the full amount of the monthly
HAP to the borrower’s monthly
cash portion to get the total
monthly resources available to
pay the PITI.
Two mortgage model
This is a variant of the HAP as
offset model in that it applies the
entire HAP towards paying down
the mortgage. The HAP is used to
determine and pay towards a
second mortgage while the
borrower’s income is used to
determine and pay towards the
first mortgage.
*PITI is Principle, Interest, Taxes and Insurance
