Yes, you can use Section 8 to buy a house. I just helped a long time Section 8 renter buy a house under the guidance of the lady at Marin Housing Authority who worked with my clients for the past years.
Not only were my clients able to use the section 8 voucher to pay part of the mortgage, Marin Authority has their own inspector to come out and inspect the house as well as study the area to make sure this is a good area for their client.
This and the fact that the house was a short sale were the only reasons why my clients were able to own a home in Marin. They are a wonderful, hard working couple with three very accomplished kids. They were ecstatic.
One of the most satisfying sales I have ever done!
This happened in Marin, CA; but I heard since Section 8 is a federal program, it should have similar rules everywhere.
Thank you from Ohio
The key to getting this to work is to find a knowledgeable case worker involved with the process. As Corey mentioned, the PHA is a great place to find one of those case workers. S/he will help guide everyone else involved in the transaction through all of the paperwork (which I'm sure that Sylvia can affirm there's a lot of it). Some communities (including the 3 above) also have various non-profit agencies that specialize in providing this help. They're a great resource for us investors and low income buyers alike, because they pair the ones with the properties with the ones with the needs.
Another possible problem would be your employment income if any. I presume you work in the Virginia area thus it would be hard to believe you would be commuting to work from New Jersey. This point may not apply to you though.
There was absolutely no issue with the lender.
Bank of America is the lender for my clients. Jodi Fischer (415) 897-9103 is the VP at BofA Mortgage division who helped my client with the loan http://www.northbaybiz.org/directory/index.html .
She worked nicely with Marin Housing Authority http://www.marinhousing.org/housingOpp.htm and is a big part in getting this through.
I'm a member of NAEBA (National Association of Exclusive Buyer Agents) (http://www.naeba.org) and this kind of information is something we all look for.
Housing choice vouchers are administered locally by public housing agencies(PHAs). The PHAs receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.
A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family's choice where the owner agrees to rent under the program. This unit may include the family's present residence. Rental units must meet minimum standards of health and safety, as determined by the PHA.
A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. Under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home.
For more information, you can visit the website directly at http://www.hud.gov.