Housing Development Alliance, Inc.
Building Homes, Building Community
Since 1993
Frequently Asked Questions
About Homeownership
What is the Hazard-Perry County Housing Development Alliance, Inc.?
The Hazard-Perry County Housing Development Alliance, Inc. is a non-profit community based housing provider. Our mission is to assist low and very-low income persons with their housing needs, including homeownership. Over the past few years we have helped over 75 families get a home of their own and helped over 150 families with home repairs
What if I have bad credit?
The Housing Development Alliance is prepared to work with you to improve your credit so that it will not keep you from qualifying to own a home. All of the different programs we work with have different credit standards. We do not provide clients with loans to pay off bad debts, but we will help you devise a plan to improve your credit so that you can become eligible for a home loan.
What if I do not own land, or there is not a well or septic tank on my land?
The Housing Development Alliance can include the cost of buying land and developing it in the total loan amount. Land development includes: drilling a well, putting in a septic system, graveling a driveway, and grading the land into a house seat.
Can I buy a house that is already built?
The funding that we have available is intended to build homes. However, there are other programs available that may be able to help you purchase an existing home. If you find a home you want to buy, we will be happy to refer you to them.
How long will it take before I know if I am approved?
It takes about 5 months for us to build a house. It takes about 2 months for us to buy a piece of land. And it takes about 3 months for us to work with your lenders to set up an affordable home loan package, submit your paperwork to the funding sources and get you qualified for a loan. If you have to work on your debt or credit, the process could take longer.
Is there an application fee?
No. However there are some other fees associated with processing your application. These fees vary depending on who finances your mortgage. Every applicant will be charged a $2.50 credit report fee.
What is the interest rate?
The interest rate on your loan will be between 5% and 8%. However, most of our clients receive an interest subsidy which lowers the monthly payment to an affordable level. Based on your income and the program guidelines the interest you pay will be between 0% and 8%. The average interest on our client’s loans is currently between 1% and 3%.
How much will my payment be?
The Housing Development Alliance attempts to put together financing so that the house payment will be between 20% and 29% of a family’s gross monthly income, usually around 25%. However, under certain circumstances, a family’s payment may be as high as 33% of their gross monthly income. A portion of this payment, usually between $90 and $120, goes toward paying your property taxes and home owner’s insurance.
How much will it cost?
The total cost of a new home can include any of the following –
1) Buying Land 4) Grading, gravel, sidewalks, etc.
2) Water (city or well) 5) Costs of closing the loan
3) Sewer (city or septic tank) 6) Construction of the house
The cost of the first five varies greatly from project to project and it is difficult to estimate an average cost. However, most of our clients pay between $75,000 and $90,000 for their homes.
Is there a down payment required?
Most of our houses include money through the Self-Help Housing Opportunity Program, also known as SHOP. Through the SHOP program, people invest sweat equity in their homes, which allows them to get their home without a down payment. One of the requirements of this program is that the new home owner assists in the construction of the new home. This can range from actually hammering nails, to painting, to spreading grass seed. However, if a person is unable to help in this fashion, because of age or physical disability alternate arrangements are possible, such as getting friends and family to help on the home.
What other costs are there?
There are many costs associated with closing a mortgage loan. While you could pay these in cash when the loan closes, most of them can be financed into your total mortgage. Costs include, but are not limited to: attorney fees, survey, appraisal, recording fees, escrow start up, loan origination fee. Which of these can be financed is determined by which funding sources are used. You will need to buy one full year of insurance before the loan closes. The cost of insurance is anywhere from $400-$900, depending upon the location and value of the house. You will also need to save money to pay your utility deposits and service installation charges, roughly $400.
How big will my house be?
The Housing Development Alliance has a variety of 3 bedroom plans that range in size from 1,000 to 1,250 sq. ft. There are many floor plans that you can choose from. Most are single story homes with a covered front porch and a small stoop for a second exit. Each plan can be customized to your needs including making the home fully wheelchair accessible (ADA compliant). The size of the house depends greatly on the household size and monthly income.
What are the utility costs?
Our houses are designed to be very energy efficient and low maintenance. Electric bills, including heating and air conditioning, range from $70-$90 with responsible energy consumption.
What is included in the new home?
Your new house will be ready for you to move in once it is complete. It is ready for electricity and telephone service. If you choose we can include the cost of a modest refrigerator and range. You will be responsible for picking out the colors and style of things such as carpet, paint, siding, cabinets, and light fixtures to personalize your home to your tastes. Additionally, it will have a driveway, sidewalk, and be connected to city and sewage disposal (either public or private).
I hope this answered some of the questions you may have concerning getting a new home through the Housing Development Alliance. If you have any other questions, or want a more specific answer, feel free to call 436-0497 and ask for Leslie or Chris.
Building Homes,
Building Community
Since 1993
HDA, Inc.
P.O. Box 7284
Hazard, KY 41702
606.436.0497