State and local homeowner rehabilitation (rehab) assistance programs provide low- and moderate-income homeowners with grants or low-cost loans to improve the physical condition of their home. The primary goal of rehab assistance programs is to enable income-eligible homeowners to make critical repairs to improve the safety and health of their living environment. Owner-occupied single-family homes, condominiums, manufactured homes and homes with four or fewer rental units (with one unit occupied by the owner) are generally eligible for assistance from typical programs.
State and local homeowner rehabilitation (rehab) assistance programs provide low- and moderate-income homeowners with grants or low-cost loans to improve the physical condition of their home. The primary goal of rehab assistance programs is to enable income-eligible homeowners to make critical repairs to improve the safety and health of their living environment. Owner-occupied single-family homes, condominiums, manufactured homes and homes with four or fewer rental units (with one unit occupied by the owner) are generally eligible for assistance from typical programs.
Structure of Home Rehab Assistance Programs
Most states and local governments provide homeowner rehab assistance through either deferred payment and non-interest bearing loans or grants and in-kind assistance. Interest subsidies and loan guarantees are other forms of financial assistance occasionally used to support homeowner rehab efforts.
Deferred Payment Loans and Non-Interest Bearing Loans
Deferred payment loans and non-interest bearing loans are low-cost loans to homeowners that enable the borrower to defer repayment with no or very-low interest, typically upon sale of the home.
- In Minnesota, the HOME Consortium, a coalition of five counties that distributes HOME funds to participating jurisdictions, offers a homeowner rehabilitation deferred loan, a no-interest, deferred loan of up to $20,000 for households earning below 80 percent of area median income. The funds can be used for priority home improvements that are critical to the safety of the home, such as roof or window replacements and plumbing repairs. The homeowner has no monthly payments and the loan is repayable upon sale or transfer of the property so long as they reside in their home for the 10 year period of the loan.
- The Rural Nevada Development Corporation, one recipient of the state’s trust fund resources, provides deferred loans for home rehab assistance to households in rural Clark County, Nev. The deferred loan does not accrue interest or require monthly payments, but must be repaid when the property is sold or is no longer the primary residence of the homeowner.
Grants and In-Kind Assistance
Unlike borrowers who benefit from low-cost loans to make repairs to their homes, grant recipients are not expected to repay funds. Grants can take a number of forms, including forgivable loans that do not need to be repaid if the borrower remains in the home for a set period of time. Providing in-kind assistance, including donation of materials and labor, is another common approach to making critical home repairs. The national nonprofit organization Rebuilding Together is a leading organization that provides volunteer-based homeowner rehab services for low-income families in communities across the U.S.
- The City of Lake Charles, La., uses HOME funds to provide rehab or reconstruction grants to eligible homeowners through its Homeowner Rehabilitation/Reconstruction Grant Program. When the cost of repairs exceeds the available grant funding, the homeowner may supplement the grant award with private funds they secure independently. The grant program funds are available to elderly, disabled and single-parent households.
- Irvine, Calif.’s Residential Rehabilitation Program offers low-interest deferred loans to low-income homeowners (up to $25,000) to make critical health and safety improvements to their homes. The program also issues emergency grants up to $5,000 for emergency code-related repairs that are necessary to prevent injury to occupants, such as leaky roofs, faulty wiring or plumbing.
- Through its Homeowner Rehabilitation Program, the Kansas Housing Resource Corporation (KHRC), a subsidiary of the Kansas Development Finance Authority, distributes HOME funds to localities to provide no-interest loans to income-eligible homeowners. Local municipalities distribute the assistance in the form of deferred loans for emergency and exterior repairs. The loans are non-interest bearing and require repayment only if the property is sold within three years.
Community Benefits of Home Rehab Assistance
Homeownership rehab assistance programs can help achieve other community goals. Homes that have been repaired, improved or upgraded can improve overall neighborhood conditions or create safer neighborhoods. For example, homeownership rehab assistance or emergency repair funds can encourage safe aging in place by reducing or eliminating the cost of modifications necessary for residents to stay in their home. For low- and moderate-income families that live in older, less-efficient homes, energy-saving improvements — such as installing energy efficient windows, sealing air leaks, adding insulation and other general weatherization measures — can yield significant long-term utility savings. Homeowner rehab programs can target upgrades to mitigate damage to homes in areas vulnerable to weather-related hazards. A range of building, rehab and retrofitting options can make homes more resilient to high winds, heavy rains and floods.