Rent-to-Own Homes and Section 8: Compatible?

Categorized as Rent To Own Homes

Can I Rent to Own With Section 8?

Many low-income families on the Section 8 housing assistance program (or looking to join the program) dream of owning their own homes. Unfortunately, low finances and bad credit make it difficult for them to buy a home upfront.

While Section 8 provides a housing solution for low-income earners, does it also realize their dreams of buying a house? Yes, it does.

On the Section 8 housing assistance, tenants can participate in the Section 8 Homeownership program through Housing and Urban Development (HUD) federal-funded organizations.

Through these organizations, you can buy and own a public housing unit via a rent-to-own agreement.

The Homeownership program allows qualified tenants to rent-to-own by using the Public Housing Agency’s voucher to pay for part of the mortgage on a home of the prospective tenant’s choice.

Usually, the rent-to-own agreement that the HUD-funded programs offer to tenants is just like the regular agreements in rent-to-own programs. The agreement often contains the following:

  • Rent payments: The proposed buyer and the landlord of a public housing unit will decide on a monthly rental fee. Then a percentage from that rent will be deducted and kept in an escrow account as equity for the buyer’s future purchase of the home. This makes rent-to-own house rents just a little higher than regular rents.
  • Purchase price: Here, both parties will decide whether the purchase value and price of the home will be determined currently or in the future.
  • Other details: The agreement will also cover the duties and responsibilities of the rent-to-own tenant (such as maintenance of the home), the option fee, the duration of the lease term, and the process required to close the deal.

What Is Section 8 and How Does It Work?

The Section 8 Housing program is a federal-aid program designed to assist very low-income families. If you qualify for and receive a voucher from the PHA, you are eligible to pay the landlord 30% of your rent while PHA pays the landlord the difference between your payment and the rest of the Section 8-approved rent.

Here’s how Section 8 (Housing Choice Voucher program) works:

First, the program allows landlords who have applied and qualified for Section 8, to rent their private properties as public housing units. The rent rates for these homes are placed at a fair market price and low-income families apply to the PHA to qualify for a rent assistance voucher.

Typically, Section 8 provides different housing options for tenants to choose from — apartments, townhouses, single-family homes, and more. Because of the household income limit that is fixed based on location, it is advisable for those applying for a Section 8 voucher to apply and choose a prospective house within their location.

Every year, the HUD sets a standard income limit based on the percentage of median income in different areas of the country. The income limit ranges from moderate to very low and extremely low income.

These income limits are fixed to determine how low the average income in an area is because the PHA is mandated to give 75% of the available Section 8 vouchers to extremely low-income earners who earn 30% less than the average income in that vicinity.

How to Qualify for Section 8

Outside of the income limit, there are a few other requirements that help families qualify for a Section 8 voucher. They include:

  • Applicant must be 18 years and above
  • Family size
  • Citizenship status – you and your family members must meet the PHA documentation requirements of citizenship or immigration status, to qualify. Undocumented immigrants are ineligible.
  • Eviction status – If you have been previously evicted from any public housing unit due to drug-related or sex crimes, you may be ineligible for housing assistance.

How to Apply for Section 8

If you think you think you meet the minimum qualifications required to apply for Section 8 assistance, here are some steps to follow:

  1. Visit the local PHA in your area. You can find their location on their website and any contact information you need about them.
  2. Check to see that you meet the requirements that make you eligible and find out if there are any preferences or restrictions that may disqualify you from receiving help as soon as possible.
  3. Get a Housing Voucher (Section 8) application form from the PHA. They’re free and you can get them online or by mail, depending on the office. You can also get them at their office.
  4. Complete the application and submit it.
  5. Wait for the PHA to process your application. Note that this can take some months because there are many people on the waiting list. You should receive an approval or rejection by mail or via an online portal.

What Is Rent-to-Own and How Does It work?

A rent-to-own agreement is one where the prospective buyer is also the tenant. To make this work, the tenant and the landlord agree through a contract, that the tenant will live in the home as a renter but will pay a certain amount of money as rent towards buying the house.

It’s different from a traditional home buying process where the buyer pays for the home with a downpayment and mortgage. Here, the tenant commits to leasing the home for a set amount of time while paying rent during the period of the lease, and the landlord accumulates a portion of the rent in an escrow account to build equity towards the house.

The rent-to-own tenant and the landlord agree on a purchase price that will be paid at the agreed date — usually at the end of the lease term.

As a rent-to-own tenant, you are responsible for taking care of the property bearing the full costs of maintenance, renovation, and any changes you may make on the property.

Benefits of a Rent-to-Own Deal

If you’re contemplating going for a rent-to-own deal, here are some benefits that you stand to enjoy:

  • It’s a great option when you want to own a home but can’t afford to get a mortgage due to poor funds or bad credit.
  • It’s a good way to try out a home for a while to see if you will be a good fit for the place before you buy it.
  • Rent-to-own deals are not binding on tenants, such that they cannot back out of the contract. The contract, however, compels a landlord to reserve the house exclusively for you as a prospective buyer while you rent it. If your financial situation changes, for instance, you are not under pressure to continue with the purchase. But you will not be eligible for a refund of the option fee and accumulated rent you have paid if you breach the contract.

Things to Know Before Signing a Rent-to-Own Agreement

Before you agree to a rent-to-own deal, there are a few things you should note:

  1. You are responsible for the repairs and maintenance of the home since you will likely own the house at the end of the lease.
  2. You must fulfill the terms of the agreement stated in the lease document. Because the landlord still owns the property until you buy the house, you must follow through with the rules and requirements of renting the house.
  3. It’s important to conduct an inspection of the home before you agree to rent-to-own. Although the PHA assistance will cover some of the costs, it’s important to check it out to see if you’re getting a good deal.
  4. Lastly, it’s necessary to know that the rent for rent-to-own homes is slightly higher than regular rentals. This is because of the portion of the rent a landlord has to take out and set aside for the eventual payment of the house. It’s important to know this in case the PHA has restrictions on the amount of rent a Section 8 voucher can cover.

Final Thoughts

If you’re considering renting-to-own a home while on the Section 8 program, that’s not bad thinking.

There are homeownership programs made available by the government that can help to make your dreams a reality. This article has provided more insight on how you can make the most of these programs to find you and your family your dream home at a low cost.


Does section 8 pay rent to own on land?

For those wondering whether Section 8 will also aid in rent-to-own agreements on land, the answer is somewhat nuanced. It’s important to understand that the Section 8 program chiefly exists to subsidize the cost of rental housing for low-income families.

However… certain exceptions and programs do exist which might allow for assistance in a rent-to-own scenario that involves land, under specific conditions. 

In general, the Section 8 voucher program offers aid for rental payments, whether it’s for standard housing or land.

FSS Program and Section 8

Have you pondered owning a home with Section 8? The answer is Yes, it’s possible! thanks to the FSS Program (Family Self-Sufficiency), which supports Rent to own opportunities.

Think of the FSS Program as your bridge to homeownership while you’re utilizing Section-8 benefits.

 Coordinators within this program mentor you, helping to set and reach achievable goals. However, it is not a cakewalk; dedication is required to meet certain eligibility criteria and guidelines. But all the efforts pay off when you achieve the dream of homeownership.


    1. Hello Deana, you can begin your search by contacting your local housing authority. They might have a list of available properties in your area. Another option is to search online for websites that specialize in listing these types of homes. (Zillow, and RentToOwnLabs are other popular websites). Avoid scams! and carefully read the contract before signing. Furthermore, some non profit ORG provide assistance in locating affordable housing options, so it’s worth checking with them as well. Keep in mind that Section 8 and Rent-to-own qualifying requirements may vary depending on factors such as income and credit score. I wish you luck in your search.

    1. Hello David. The Section 8 Homeownership Program may be able to assist you with the purchase. They offer financial assistance to people who want to become homeowners. The program can assist with down payment and closing costs while also providing homeownership counseling and education. A RTO program is different.
      A Rent to Own program allows you to rent a home with the option of purchasing it later. For more information, contact your local Public Housing Agency (PHA). I hope this helps!

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