Government Grants For Affordable Housing
You may have heard the term “affordable housing” and you might also know that it’s an area that gets a lot of attention for government funding. Whether it’s new to you or you’re familiar with it, we’re going to take a close look at exactly what affordable housing is, and what it means to you when you’re seeking government grants and loans.
Now you may be interested in affordable housing for your own residence or else as a real estate investor, and this information will help you in either case.
What Is Affordable Housing?
First, let’s define affordable housing. What makes it affordable is a combination of the factors of what it costs to live there, the income of the target resident, and the median cost of living for the area. The exact definition varies from place to place, but virtually every location uses variations of this basic formula. Other factors can come into play too, such the demographic of the resident and how many children are in the family.
What I mean by taking the demographic into account, is that some groups such as elderly persons, indigenous residents, or single mothers may have priority for affordable housing, as long as they also meet the income guidelines.
What Are Affordable Housing Properties?
The housing itself may be single-family properties, garden apartments, high-rise units, duplexes, four-plexes, or any other type you can think of. It’s the pricing structure that puts it into the affordable housing category. Affordable housing usually is in the marketplace as rental units, but there are programs too that help with affordable home ownership too, which we’ll cover shortly.
Affordable Housing Government Funding Programs
There are many different government funding programs to promote affordable housing. Some programs are for government entities like municipalities, some are for non-profit companies, some are available to for-profit companies and individuals, and many are a combination of these. Sometimes funding that is provided to municipalities is then allocated to private investors, until provisions from the local government.
Who Qualifies For Funding Grants?
The government is eager to work with groups or individuals who are able to increase the available housing stock, and they have lots of funding programs to help it happen. They can be bonds, loans, grants, matching funds, tax incentives, technical assistance, land grants, and many other forms of assistance. The funding is often available for either building new housing or for renovating existing housing stock.
The reason the government want to make these funds available is that the wellbeing of a community’s residents is strongly tied to its housing situation. A lack of affordable housing has a detrimental effect especially on the lower and middle classes, so government officials are motivated to assist with ensuring that housing is available for all income levels.
Realtionship Between Investors, Grants & Investments
Now let’s talk about some forms of affordable housing. For those who want to own, there may be a price cap on the property, down payment assistance, a low subsidized interest rate, or a combination of these.
In the vast majority of cases, these programs are available only to people who will be owner-occupants for a given number or years. In other cases, there is a growing trend in many areas to help people who are living in subsidized rental housing to be able to afford to purchase their dwellings. The benefits for the buyers are that they will gain equity and enjoy homeownership. For the government, the benefit is to no longer have the responsibility to maintain the physical property or administer the rental program for it.
For rental properties, the government may either own the property or else pay a private owner, such as you, a subsidy to establish and maintain affordable rents. This can be a good opportunity for you if you are a real estate investor, because you get your rental income dependably from a government check and the tenants typically have to abide by standards of good behavior to stay in the program. You do have to have property that meets government standards to qualify for these programs.
So if your target investments are in line with the creation or ownership of affordable housing, be sure that you check into all the available government funding that can help your bottom line as an investor.