Editor’s note: This story originates in the Lede, a daily curated news product for local readers. For more information, visit https://www.alabamalede.com.

On Thursday, the city of Mobile announced its new “Homeownership Provides Equity” (HoPE) program, which will provide Mobile County residents who qualify for housing choice vouchers (sometimes called Section 8 vouchers) a path to homeownership.

Here’s how city officials say it will work: the city will provide a mortgage for a new home on an empty lot in one of the city’s infill neighborhoods. The resident will use the voucher for mortgage payments, paid to the city, instead of rent. Once the mortgage has been paid off, the voucher holder will own the home outright.

There’s no down payment required on the home, as the city will forgive part of the mortgage in place of the down payment, part of an existing down payment assistance program the city has in place.

The interest rate on the mortgage is at 2%, below market rate. As is typical with housing choice vouchers, the voucher holder will pay no more than 30% of their income toward the mortgage payment; the voucher will cover the difference. And the city will work with the voucher holder to lower the interest rate if it’s needed, James Roberts, senior director of the city Neighborhood Development Department, says.

Anyone in Mobile County who receives a housing choice voucher is eligible to apply for the program. However, not every housing authority allows housing choice vouchers to be used for homeownership; check with the housing authority that you receive your voucher from to see if it’s allowed. The Mobile Housing Authority and the Prichard Housing Authority allow vouchers to be used for homeownership programs such as this.

In order to be eligible for the program, you must be able to pay one percent of the mortgage, to be used for building the home. In addition, you must also have a satisfactory payment history.

Once the city underwrites the loan, the developer, Affordable Homes Gulf Coast, will then build the home on an available lot. The lots are provided by the city or a partner, such as a church or nonprofit. The homes will be built to “Fortified Gold” standard, which means they are built to withstand natural disasters. This lowers insurance costs on the home, developer Terry Harbin says. The city pays the developer fee.

There will be 50-75 homes built in the next three years through this program. The program is being paid for through $10 million from the federal American Rescue Plan Act (ARPA). The city hopes to continue the program once that money runs out through residual funds from the program and additional federal funds, Roberts says.

If you are interested in applying for this program, contact your housing authority case manager. For more information on the program, you can contact the city of Mobile Neighborhood Development Department, either online or by calling (251) 208-6294.