The purpose of the HOME Program is to increase the supply of safe, decent, sanitary, and affordable housing for low and very-low-income households. Through HOME, public funds combine with other sources of financing to subsidize the development of affordable housing.

Public funds, like those supplied by the HOME Program are necessary because affordable housing developers face unique challenges that can discourage outside investors. These challenges include:

• Profitability - For-profit lenders and equity providers require a market level of return on the money they invest in housing.
  
  
• Risk - When undertaking any type of project, the developer takes on risk. Potential areas of risk include changes in the costs and timing of construction, the state of the affordable housing market, and the possibility that investor's money could be put to better use elsewhere.
  
  
• Availability of Private Financing - Most housing deals require the contributions of multiple investors. Potential investors want to be sure that developers have access to sufficient funds to complete the project.

HOME funds help developers address the challenges identified above by:

• Reducing the cost of financing - Public lenders can help make affordable housing feasible by providing loans at below market interest rates.
  
  
• Increasing availability of financing - Public lender's can offer support that will enable private lender's to make loans they otherwise wouldn't be willing to approve.
  
  
• Decreasing development costs - Another way to address the need to ensure sufficient property returns is to make the overall cost of the project less. Thus, the developer needs to take on less debt and has more money left over each month to cover property operations and profits.
  
  
• Taking on some risks - Lastly, public lenders can reduce the risk to the developer of building the project. This, in turn, may assist him or her to obtain better private financing or may create more of an incentive for him/her to create affordable units.