Does Section 8 Housing Allow People to Rent to Own?

Public housing agencies oversee HUD's Section 8 Homeownership Voucher Program.

People across the U.S. are being helped by HUD's Housing Choice Voucher Program, or Section 8. Administered locally by public housing agencies (PHAs), Section 8 vouchers are accepted by landlords agreeing to participate in the HUD voucher program. Typically, Section 8 vouchers are used by eligible recipients to find suitable housing for rent. PHAs in states such as California may allow Section 8 recipients to use their vouchers to purchase homes listed as rent-to-own.

Purchasing a Home

Section 8 voucher recipients wishing to use their vouchers to enable their home purchases fall under HUD's Homeownership Voucher Program. In the Golden State, the California Housing Finance Agency, working through local PHAs, administers the HUD homeowner voucher program. If you're a Section 8 recipient and interested in purchasing a rent-to-own home, for example, your first stop is a participating PHA. Remember, rent-to-own homes usually are rented first and then eventually purchased.

Homeownership Voucher Program

HUD's Section 8 Homeownership Voucher Program is administered by participating PHAs throughout the country, and there's an extensive list of HUD-approved PHAs in California that participate in this voucher program. Golden State PHAs, though, have the final say when it comes to HUD's Section 8 homeownership vouchers. Homes being purchased under the Section 8 Homeownership Voucher Program must meet HUD qualifying standards and be inspected by the local PHA before purchase.

What Vouchers Pay

California Section 8 homeownership vouchers are applied to a qualified recipient's home-related expenses, such mortgage payments and insurance. California's program requires eligible Section 8 homebuyers to pay at least 30 percent of their income toward their homeownership with Section 8 paying the rest. If you're going to try purchasing a rent-to-own home using a Section 8 homeownership voucher, the process may be a bit complicated. Keep in mind that you're actually not purchasing your rent-to-own home for about one to three years.

Two-Step Process

When you purchase a rent-to-own home, you're doing so in a two-step process that involves a leasing period followed by a purchase. While you're in your leasing or "tenancy occupancy" period in a rent-to-own home, you're paying rent. A portion of the rent you're paying will be set aside to accumulate for your future down payment. Unfortunately, Section 8 recipients wanting to purchase rent-to-own homes could have difficulty in finding willing sellers.

Other Alternatives

The two-step process involved in a rent-to-own home process is complex because of purchase requirements. If you're a Section 8 recipient wanting to purchase a home, it might make sense to consider other home-purchase alternatives. California's Section 8 homeownership vouchers can be used in conjunction with other homebuyer assistance programs, especially for lower income first-time homebuyers. For instance, eligible California Section 8 recipients may be able to use the state's first-time homebuyer down payment assistance loans to purchase homes.