The HOME Program allows many different forms of financial assistance (or subsidy) to be provided for eligible projects and to eligible beneficiaries. PJs can decide the forms of HOME assistance to be provided in their own communities.
The following forms of subsidy are eligible under HOME Program regulations at 24 CFR 92.205:
- Interest-bearing loans or advances: Amortizing loans with repayment expected on a regular basis (usually monthly) so that over a fixed period of time all of the principal and interest is repaid.
- Non-interest-bearing loans or advances: Loans where the principal is repaid on a regular basis over time, but no interest is charged.
- Deferred loans (forgivable or repayable): Not fully amortized loans where some (or even all) of the principal and interest payments are deferred to some point in the future.
- Grants: Grants are provided with no requirement or expectation of repayment.
Interest subsidies: Either an up-front discounted payment to a private lender in exchange for a lower interest rate on a loan, or a deposit in an interest-bearing account from which subsidies are drawn and paid to a lender along with the homeowner's monthly payment.
Equity investments: Investments made in return for a share of ownership.
Loan guarantees and loan guarantee accounts: Written promises (guarantees) or a reserve amount (account) of some percentage of the outstanding principal balance of a loan used to guarantee loan loss in the event a borrower defaults.
Other forms of assistance are also possible under the HOME Program, but they require specific HUD approval. If a PJ intends to use a form of assistance that is not included in the list above, the PJ's Consolidated Plan or Action Plan should describe the proposed form of assistance. HUD may then approve the form of assistance as part of the PJ's Consolidated Plan or Action Plan.
Regardless of the form of subsidy used, the HOME Program places limits on the amount of HOME subsidy that can be provided.