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Section 5(h) Homeownership

The Section 5(h) homeownership program offers PHAs a flexible way to sell public housing units to low-income families.

Section 5(h) helps low-income families purchase homes through an arrangement that benefits both the buyer and the public housing agency (PHA) that sells the unit. It gives the buyer access to an affordable homeownership opportunity and to the many tangible and intangible advantages it brings. Homeownership can be an important part of self-sufficiency for low-income families, providing a way of building wealth as well as increasing self-esteem and security.

Section 5(h) works for PHAs as well: it permits public housing authorities to sell individual units and developments that may, due to their location or configuration, no longer be efficient to operate--while HUD continues to service the debt on the original acquisition, construction or modernization costs. PHAs retain and reuse the proceeds of sale of public housing units to meet other low-income housing needs.

Type of Assistance:
This program provides PHAs explicit authority to sell selected public housing units; no special funding is authorized. PHAs may use other HUD assistance to help finance the sale.

Eligible Grantees:
Public housing agencies can apply for this program. However, with the establishment of the Indian Housing Block Grant program on October 1, 1997, Indian Housing Authorities are no longer eligible to apply.

Eligible Customers:
Those low-income families who are able to purchase their homes under this program are its primary beneficiaries. Current residents of the units offered for sale have preference to purchase them.

Eligible Activities:
When PHAs sell housing units, HUD will continue servicing the debt on the original acquisition, construction, or modernization costs. PHAs can retain and reuse the proceeds from the sale of units for additional low-income housing needs. Both Turnkey III homeownership units and Mutual Help Indian housing units could be converted to Section 5(h) homeownership if current homebuyers voluntarily gave up their existing contractual rights.

A public housing authority can submit a plan to sell existing units under the Section 5(h) program to the Office of Public and Indian Housing's (PIH) Special Applications Center (SAC), with a copy to the HUD Field Office, at any time since the process is not a competitive one. Applications are approved by Director of the SAC. The postal address for the SAC is as follows:

Special Applications Center
US Department of Housing and Urban Development
Ralph H. Metcalfe Federal Building
77 West Jackson Boulevard, Room 2401
Chicago, IL 60604-3507.

Funding Status:
No funding is attached to this program. HUD expects to approve sale of up to 3,000 units per year under Section 5(h).

Technical Guidance:
Section 5(h) is authorized by Section 5(h) of the 1937 Housing Act. Regulations are found in 24 CFR Part 906 and 24 CFR Part 950, Subpart P. These regulations, as well as applicable handbooks and notices, are available electronically through HUDCLIPS. The program is administered by the PIH Special Applications Center (SAC).

For More Information:
Contact the Director of Public Housing at the nearest HUD Field Office. Or see Fact Sheet: Section 5(h), available from the Resident Initiatives Clearinghouse, (800) 955-2232. For detailed information on homeownership, visit HUD's website.