Safety and accessibility are two important things you need to consider when looking for a home for a senior. We all want to retire and spend our golden years in a house we can call our own.
Luckily, US government agencies have devised housing programs that cater to the elderly. Two of which are intended exclusively for them. There are 21 others that either target the elderly and the disabled or have special features for this individuals.
Let’s discuss these three federally-backed loans and grants designed for seniors. You will learn about each program’s overview, its respective eligibility requirements and the why each loan was designed with the elderly in mind.
The Home Equity Conversion Mortgage (HECM)
Federal Housing Administration’s (FHA) reverse mortgage program is called the HECM. If you have grown your property’s equity over the years, you can this into readily usable cash.
How it works
Unlike conventional loans, in a reverse mortgage, the lender pays you. A part of the properties equity will be converted to cash by a lender. Instead of you paying monthly, it is the lender who pays you with the principal and interest. This is why it is called a “Reverse Mortgage.” The loan is repaid only when the borrower decides to move out, sell the home or dies.
Who is eligible?
- The borrower has to be 62 years of age by the time the loan application is closed.
- A reverse mortgage counselling is required during the start of the loan process. It has to be done by an HUD-approved counselor.
- The borrower’s home/property must be the primary home. This means a secondary home and an investment home cannot be eligible.
- The property must be a single-family unit; or a multi-unit (maximum of 4 units) and one occupied by the borrower.
- The borrower must own the property outright. If it hasn’t been paid off yet, it should be paid down considerably.
Other responsibilities include:
- Property taxes, real estate taxes, homeowners fees, and other utility and property insurances must be made current.
- The house should also remain in a reasonably livable condition.
- The borrower must undergo a financial assessment to determine if he/she keep up with the taxes and insurance during the course of the loan.
Single Family Housing Repair Program (Section 504 Home Repair Program)
The provider of this grant is the USDA Rural Development. It aims to help very low-income borrowers to make necessary improvements and repairs. This home rehabilitation loan shall be used to make the home safe and conducive to health.
How it works
The lifetime maximum amount of the grant is $7,500. This is only given to seniors 62 years old or older. It has to be established though that the household will not be able to repay a home repair loan.
Aside from the grant, Section 504 also provides loans to fund home repairs. The maximum loanable amount is $20,000. The loan, unlike the grant, is not exclusive to the elderly borrowers. The loan and grant can be combined for up to $27,500 as funding.
The grant shall be used to remove any health and safety hazard. The loan, however, can be used to modernize, rehabilitate, and improve the property aside from removing the aforementioned hazards.
Who is eligible?
Of the Grant:
- The Home Repair Grant will only be given to you if you are 62 years old or older; and
- You will not be able to repay a repair loan. This will be established after a budget analysis is done showing that the household cannot afford to pay the loan for the amount needed in 20 years time.
Of the Loan:
- You have to live in and own the property.
- You have to come from the very-low income bracket. This means that the combined family income must not be equal to or higher than 50% of your area median income.
- You are left with no other home repair options.
There are certain conditions when applying for this program:
- If after the budget analysis it shows that the applicant will be able to repay a part of the amount, the part he/she can repay must be issued as a loan. The remainder of which shall be issued as a grant.
- The total grant shall not exceed the cumulative lifetime amount of $7,500.
- If by any chance, the property will be sold with the first 3 years after the issuance of the grant, the total amount of grant received must be repaid.
Single Family Housing Direct Home Loans (Section 502 Direct Loan Program)
In the desire to help very-low to low-income households in eligible rural areas, The USDA designed this housing loan program. This direct financing from the USDA can be used to purchase, build, repair or make improvements in a home. Under certain circumstances, home loan refinancing is allowed.
What is in it for the seniors?
Because this loan is intended for those families with low income. Income eligibility is required. USDA income eligibility depends on the area. For elderly families, $400 and some medical expenses may be deducted from the household’s annual income.
The program helps these families afford and stay in decent homes where elderlies remain safe, and far from health-jeopardizing conditions.
Who is eligible?
- The household must have an adjusted family income which is not greater than or equal to the applicable low-income limit of the area.
- They must be able to demonstrate the ability to repay the loan.
- The property must become your primary residence and must be occupied.
- The borrower must not be able to avail of any financing elsewhere.
- Their credit history must meet HUD-acceptable standards.
What are the property specifications?
- It must not be meant to be an income-generating property.
- It must remain modest, no in-ground swimming pools allowed.
- The property’s market value must not exceed the area’s applicable loan limit.
- It cannot be bigger than 2000 square feet.
These are just 3 of the 23 federal housing programs where elderly can benefit of. If you want to learn about all the rest, the “Federal Housing Programs That Offer Assistance for the Elderly” document of the United States Government Accountability Office gives you this information. It ranges from programs no home loans to mortgage insurance for nursing homes.
Doing your homework, learning more about loans and shopping for lenders, will help you find a program that will provide you with adequate assistance. Our government strives to give opportunities to individual and families who want to have a decent dwelling place. If you think you are eligible for any of these assistances, do not hesitate to call the agency’s local representative.