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Income calculations for Freddie Mac using Section 8 - Homeownership Voucher

Hello everyone,

Hopefully someone here has experience and guidance regarding the recognition of a Section 8 - Homeownership Voucher through Freddie Mac. Specifically how is the income from the voucher calculated. For specifics, this is for a place in San Francisco / California.

My understanding: Payment Standard (Three Bedroom, $4,495) - Total Tenant Portion ($1,399) = $3,096 Housing Assistance Payment (HAP). The HAP is added to income under the HAP as Income model. During underwriting, the lender is _still_ supposed to use this HAP amount as income. This helps determine the _maximum_ loan value based on income.

My lender's understanding: Based on the PITI ($2,600) of the unit in question, PITI - TTP = $1,201 is the HAP that is included in the income calculation.

The language of Section 8 says that the HAP payment is the lower of Payment Standard - TTP, or PITI - TTP. _This makes sense_, Section 8 won't give you $3,096 when your PITI payment is only $800. What doesn't make sense is why the lender continues to believe that the _appropriate_ amount to use as income is $1,201. This creates a circular effect in the calculation. With less income, you must put more down, thereby decreasing PITI, thus lowering the voucher amount, and thus repeats the cycle.

It doesn't make sense that based on a _cheaper_ (or less PITI) property, the lender would penalize the borrower by lowering the maximum loan amount.

Can someone point me in the right direction regarding Freddie Mac lending guidelines specific to Section 8 - Homeownership Vouchers? The guidance regarding documentation doesn't help, as we already provided the documentation with the terms. However, the lender continues to believe that they should be using the smaller voucher value for underwriting, thereby negating the need for the voucher completely...

submitted by /u/Earthofperk
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/ikdauz/income_calculations_for_freddie_mac_using_section/
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