Homeownership Frequently Asked Questions

We hope this answers some of the questions you may have concerning getting a new home through the Housing Development Alliance. You may find other questions and answers you need here. If you have any other questions, or want a more specific answer, feel free to call 606-436-0497 and ask for Pam or Chris.

The Housing Development Alliance, Inc. is a nonprofit community-based affordable housing provider. Our mission is to assist low and very-low income persons with their housing needs, including homeownership. Over the past 27 years, we have helped over 300 families get a home of their own and over 800 families with home repairs.

The Housing Development Alliance has certified staff to work with you to improve your credit so that you will be eligible for a new home. Rarely is there a “quick fix," but we will help you devise a plan to improve your credit so that you can become eligible for a home loan.

The Housing Development Alliance can include the cost of buying land and developing it in the total loan amount. Land development costs can include: running water lines, putting in a septic system, graveling a driveway, and grading the land into a house seat.

The funding that we have available is intended to build new homes for our clients. However, other programs are 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.

It takes about 6 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. After that, if you need a piece of land on which to build your home, that part of the process takes about 2 months. It takes about 4 months for us to build a house. We tell people to expect it to take about a year. If you have to work on your debt or credit, the process would take longer.

The interest rate on your loan will be between 2.5% and 6%. 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 1% and 6%. The average interest on our clients' loans is currently between 1% and 2.5%.

The Housing Development Alliance attempts to put together financing so that the monthly payment will be between 20% and 29% of a family’s gross monthly income, usually around 25%. A portion of this payment, usually between $130 and $180, goes toward paying your property taxes and homeowner’s insurance.

No cash down payment is required. However, we require each homebuyer to invest “sweat equity” in their homes – working to help build the house. This can range from hammering nails, to painting, to spreading grass seed. If a person is unable to help in this fashion, other arrangements are possible, such as getting friends and family to help on the home. 

The total cost of a new home can include any of these:

1) Buying Land  
2) Water (city or well)      
3) Sewer (city or septic tank)
4) Grading, gravel, sidewalks, etc.
5) Costs of closing the loan
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, we sell our houses for no more than the appraised value, which is typically $125,000 to $150,000 for a 3-bedroom home.

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 deposit, and loan origination fee. Also, you will need to buy one full year of insurance before the loan closes. The cost of insurance is anywhere from $500-$900, depending upon the location and value of the house. You will need to save money to pay your utility deposits and service installation charges, roughly $400. In addition, you will need to purchase the appliances for your new home. HDA has a matched savings program to help with these costs.

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 from which to choose. 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.

Our houses are designed to be very energy efficient and low maintenance. Electric bills, including heating and air conditioning, range from $120-$150 with responsible energy consumption.

Your new house will be ready for you to move in once it is complete. It is ready for electricity and telephone service. You will be responsible for picking out the colors and style of things such as floor coverings, paint, siding, shingles, and light fixtures to personalize your home to your tastes. Additionally, it will have a driveway, sidewalk, and connections to water and sewage disposal (either public or private).