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Housing - Federal Public Housing Programs - 515 Mortgage Guarantees For Low-Income Rural Populations

Public Health & Welfare Law:Public Housing & Public Buildings:Design, Construction & Accessibility

The United States Rural Housing and Community Development Service, formerly known as the Farmers Home Administration, guarantees mortgages for housing developed for low-income populations in rural areas. Many of the terms of tenant leases are legally set, and eligibility for tenancy is restricted based on applicants' income.

How Is Assistance Is Provided And What Are The Terms Of Assistance?

Properties are developed, owned, and operated by private entities or nonprofit corporations, and the federal government guarantees the loans taken out for development of the properties. In exchange for lowering the interest rate on the loan to one percent, the owners must provide low-income housing in the properties for at least 20 years.

Who Is Eligible To Live In 515 Housing And What Is The Rent?

Tenants in 515 properties may include the elderly, the handicapped, or even families, but all tenants must meet income requirements to establish eligibility. Incomes must be very low, low, or moderate. Owners may consider not only the applicant's current income, but also any prior income or employment, credit reports, and landlord references. Owners of 515 housing may choose to give preference to elderly applicants, as well.

The rent for 515 housing is based both on the tenant's annual income and on the value of the rental unit. First, the government determines a range from basic rent to market rent. The tenant's contribution to rent is usually set somewhere in that range, at 30 percent of his or her adjusted annual income. Income includes, for all adult household members, not only wages, tips, commissions, and dividends but also Social Security payments, retirement pensions, unemployment or disability payments, and alimony and child support. It does not include the income of minors, gifts, foot stamps, insurance payments, or student loans. Elderly applicants may deduct $ 400 from their income, and they may also deduct medical expenses that exceed three percent of their gross annual income.

The federal government may subsidize rent in 515 properties under § 8 of the U.S. Housing Act of 1937. If a family is approved for such a subsidy, the tenant contribution is set at 30 percent of the family's adjusted income.

Other Than Rent, What Terms Of The Lease Are Legally Determined?

Several terms of 515 leases are set by law, starting with the lease term, which is set at one year, as well as the rules regarding pets, security deposits, and lease terminations. First, a 515 lease must state any provisions relative to pets, and neither the elderly nor the handicapped may be prohibited from having common domestic pets. Additionally, no monthly pet fee may be charged, and any additional deposits to cover pet damage must be reasonable. Second, security deposits may not exceed the greater of the tenant's monthly contribution or the established basic rent, and they may be paid gradually in installments. Finally, leases may be terminated by the owner only for good cause.

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