Grants for Flipping Old Houses

Capital Magnet Fund

The Department of Treasury's Capital Magnet Fund provides low-cost financing for affordable housing development. Funding can be used to develop affordable owner-occupant housing. Nonprofit agencies that apply for funding must be able to demonstrate that 33 percent of its budget or staffing is dedicated to affordable housing development to qualify for financing. Twenty percent of the funding must be spent to house families with incomes that do not exceed 80 percent of the area's median income.

The Home Investment Partnerships Program provides grant funding to local governments and nonprofit agencies to rehabilitate homes. Each year HUD provides $2 billion in HOME funding for affordable housing development. These rehabilitated homes provide housing for low-income owner-occupants. Developments that use HOME funds to finance a portion of the project must reserve at least 90 percent of the homes for households with incomes at or below 60 percent of the area's median income. The rest of the homes can be sold at market rate.

Bank of America works with Federal Home Loan Banks across the country to provide Affordable Housing Program subsidies to housing developers. Gap financing is provided in the form of direct subsidies or subsidized advances. The average subsidy amount per single-family home is $10,000. The developer must restrict up to 60 percent of the rehabilitated homes to families with income at or below 50 percent of the area median income.

Local governments also provide financing for housing development projects. The County of Los Angeles' City of Industry Funds provides funding primarily for site acquisition and permanent financing of detached or attached single-family homes. This loan program is intended to be used in conjunction with other financing sources, which can include funding needed for rehabilitation work. The developer must restrict a minimum of 20 percent of the homes to families with income at or below 120 percent of the area's median income. The remaining housing units can be sold at market rate.