How Low-Income Renters Buy Homes. Housing Assistance Supply Experiment

摘要

Prepared for the Office of Policy Development and Research, this note reports on 250 home purchases made by low - income renters participating in HUD's Experimental Housing Allowance Program in St. Joseph County, Ind., and Brown County, Wis., during the first 4 years of the program. Although the long - term outcome of the renters is not examined, their participation in the Housing Assistance Supply Experiment (HASE) indicates their initial resourcefulness in obtaining loans and mortgages. Because the HASE program only provided allowances, the participants sought additional funding through Government - insured loans and commercial banks. Consumer loans used to obtain mobile homes or low - valued homes were less attractive than the Government loans because of the former's higher interest rates and short - term provisions. Some homebuyers were compelled to purchase properties jointly with other households or to obtain loans from relatives. Although a number of the buyers moved within a few years of their purchase, none of them defaulted on their loans. These facts imply that most of the buyers accurately predicted their ability to bear the cost of homeownership. Families with low income can buy houses if they follow such strategies as arranging land contracts with the seller, sharing the cost with others, obtaining Government - insured loans, and choosing lower - valued housing. Such strategies should be encouraged by official policies. Further research should consider the homeowners who became renters. Tabular data and references are provided.