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Government Money


OBJECTIVES: (1) To expand the supply of decent and affordable housing, particularly rental housing, for low-and very low-income Americans; (2) To strengthen the abilities of State and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing; (3) To provide both financial and technical assistance to participating jurisdictions, including the development of model programs for developing affordable low-income housing and; (4) To extend and strengthen partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing.


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USES AND USE RESTRICTIONS: For use by participating jurisdictions or Indian tribes for housing rehabilitation, tenant-based assistance, assistance to first-time homebuyers, acquisition of housing and new construction of housing. Funding may also be used for other necessary and reasonable activities related to the development of non-luxury housing, such as site acquisition, site improvements, demolition and relocation. Ten percent of a participating jurisdiction's allocation may be used for administrative costs. Funds may not be used for public housing modernization, matching funds for other Federal programs, operating subsidies for rental housing, Annual Contributions Contracts, or activities under the Low Income Housing Preservation Act. Applicant Eligibility: States, cities, urban counties and consortia (of contiguous units of general local governments with a binding agreement) are eligible to receive formula allocations; Indian tribes are eligible to receive competitive grants.


Regional or Local Office: Contact appropriate HUD field office or regional office.

Headquarters Office: David M. Cohen, Director, Office of Affordable Housing Programs, Community Planning and Development, Department of Housing and Urban Development, 451 7th Street, SW, Washington, DC 20410. Telephone: (202) 708-2685.


HUD passes most of their housing programs through state and local governments.
The examples below are from Michigan State Housing Development Authority (MSHDA), but are typical of programs in every state.

Rental Housing for families and senior citizens

The Direct Lending Program, or the “70/30" program, offers low-interest mortgage loans for new construction and for substantial rehabilitation of existing buildings. interest rates vary by location with lower rates in distressed areas. Financing is through the sale of tax-exempt bonds. Income limits also vary by location, but at least 20 percent of the units must be occupied by households with incomes less than 50 percent of the area median and 10 percent of the units by households with incomes under 30 percent of median; rents are restricted on these low Income units. (517) 373-6880; (313) 256-2860

The Taxable Bond Program, financed with $50 million in taxable bonds, provides loans for rental housing in which all tenants will have incomes at or below 60 percent of the area median and rents will be restricted. The program is designed to be used in conjunction with the federal Low Income Housing Tax Credit (LIHTC). (517) 373-6880; (313) 256-2860

The 1% Tax Exempt Bond, Family Housing Program offers developers 1 percent interest rate loans for constructing or rehabilitating 50-120 units of rental housing for families in distressed areas. Owners can then apply for federal Low Income Housing Tax Credits on any of the units that meet the criteria. (517) 373-6880

The Pass Through Program allows MSHDA to sell tax-exempt bonds on behalf of developers who supply their own credit enhancement; the bonds are not obligations of MSHDA or of the State of Michigan. Interest rates are determined by the private market based on the security of the credit enhancement. Twenty percent of the units must be occupied by households with incomes less than 50 percent of the median, or 40 percent of the units by tenants under 60 percent of median. (313) 256-2860; (517) 3734880

Low income Housing Tax Credit (LIHTC). MSHDA administers a federal tax credit established in 1987 as an incentive for owners and developers of low income housing. (517) 373-6007

Moderate rehabilitation loans to landlords. In certain localities that receive grant funds from various federal rental rehabilitation programs, MSHDA offers loans at 8 percent interest to help landlords bring residential rental property to code, add energy improvements and make other types of renovations. (517) 373-1974

Section 8 Existing Rental Allowance Program. This federal program provides rent subsidies for low income people who find their own housing in private homes and apartment buildings. Approximately 11,000 Section 8 existing certificates and vouchers are administered by MSHDA. (517) 373-9344; (313) 256-1465

Contractor Assistance Program (CAP). In conjunction with First Independence National Bank of Detroit, MSHDA provides working capital loans of up to $50,000 to small contractors (with special outreach to female and minority owned firms) which have been selected to work on MSHDA rental housing projects. The program also provides training to the participating contractors in the areas of estimating, budgeting, cash management, cost control and financial reporting. (517) 373-0327

Home Purchase

Single family home mortgages. The Authority issues lower-interest mortgage loans for new and existing houses, certain new and used multiple-section and new single-section mobile homes on permanent foundations, and some condominiums. Down payments can be 5 percent or less. income and purchase price limits apply. Applications are made through participating lenders. 1-800-327-9158; (517) 373-6840

The Michigan Mortgage credit certificate. MSHDA and private lenders offer a federal income tax credit that gives home buyers more income to qualify for a mortgage and make monthly payments. Loan terms and interest rates are set by each lender; loans can be fixed rate, adjustable, FHA, VA, or privately insured. Income and purchase price limits apply. 1-800-327-9158; (517) 335-2039

Acquisition Rehabilitation. Low interest rate mortgage loans are made to eligible home buyers for acquiring and rehabilitating single family homes. Loans rates vary according to household income, and purchase price may not exceed $60,000. (517) 373-6840 Home Improvement

Home and neighborhood Improvement loans. With an interest rate of 1 to 9 percent, loans of up to $15,000 can be used to improve homes over 20 years old; in newer homes, the homeowner may add energy conservation improvements, make the home more accessible to a handicapped family member, repair serious hazards to health and safety, and repair damage from a declared natural disaster. Maximum household income is $36,500. Applications are made through participating lenders and communities. (517) 373-8017

Community Development

Neighborhood Preservation Program. This program offers $25 million in MSHDA funds to finance loans for small apartment buildings in distressed neighborhoods targeted by cities and/or local groups for revitalization. (517) 373-1974

Small Cities community Development Block Grants. The federal Small Cities program is administered by the Michigan Department of Commerce, with MSHDA handling the housing component. Many localities leverage Small Cities block grants with MSHDA's home improvement loans. (517) 373-1974

Housing for the handicapped. The Authority works with the state Department of Mental Health to finance smaller group homes for profoundly handicapped individuals. (517) 373-6880

Neighborhood Housing Grants. MSHDA awards funds to neighborhood and nonprofit housing organizations for home improvements, Urban homesteading, and other local housing programs and offers some development training for nonprofit groups. (517) 373-1974

HOME Passed by Congress in 1990, this Act authorizes the HOME Investment Partnership Program which provides funds for a variety of housing activities, including rehabilitation, new construction, home ownership assistance, rental assistance and housing for the handi-capped. MSHDA administers the state's allocation of HOME funds to communities and nonprofits - approximately $14 million in 1993. Several local units of government have qualified to receive their own allocation of HOME funds directly from HUD. (517) 373-1974

Housing for the Homeless. MSHDA administers state, federal and MSHDA funds that finance a variety of programs to expand the supply of housing for the homeless and to pay certain operating expenses. (517) 373-1974

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