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Thursday, February 28, 2013

Income Eligibility and Rent in HUD Rental Assistance Programs: Responses to Frequently Asked Questions

Libby Perl
Specialist in Housing Policy

Maggie McCarty
Specialist in Housing Policy

The Department of Housing and Urban Development (HUD) administers five main rental assistance programs that subsidize rents for low-income families: the Public Housing program, the Section 8 Housing Choice Voucher program, the Section 8 Project-Based Rental Assistance program, the Section 202 Supportive Housing for the Elderly program, and the Section 811 Supportive Housing for Persons with Disabilities program. Together, these programs serve more than 4 million families and make up well over three-quarters of HUD’s budget. All five programs provide rental assistance in the form of below-market rent available to low-income individuals and families. While the programs vary in some important ways—how assistance is provided, who administers the assistance, whether the assistance is restricted to certain populations—they use many of the same or similar standards when establishing tenants’ income eligibility and their minimum contributions toward rent.

Families are generally eligible for HUD assistance if their incomes are below certain income standards set by HUD. Unlike the poverty measurement used by some other federal benefits programs that target low-income populations, income eligibility for HUD-assisted housing varies by locality and is tied to local area median income. Income, for the purposes of eligibility, is defined as income from all sources earned by all members of the family, with some exclusions (e.g., income earned by minors). Although a family may be eligible for assistance, they are not guaranteed to receive it. Housing assistance programs are not entitlements, thus, due to funding limitations they serve only roughly one in four eligible households. Families wishing to receive assistance are generally placed on waiting lists.

Once a family is determined eligible for HUD assistance and is selected to receive assistance, the rent they pay is generally based on 30% of their adjusted income. Those adjustments include deductions for elderly and disabled families, certain medical costs, and certain child care costs. Families’ incomes, adjusted incomes, and contributions toward rent are typically recertified annually.

The current laws governing both income eligibility and tenant rents were standardized in the early 1980s, although the origins of the current policies date back earlier and are derived from experiences with the public housing program, which was the first federal rental assistance program.

The income and rent policies in the five primary HUD rental assistance programs are also used to some extent by other HUD programs such as the homeless assistance programs and the HOME Investment Partnerships program. Looking at non-HUD housing programs, the Department of Agriculture’s rural rental assistance program largely uses HUD’s income and rent policies, and the Department of Treasury’s Low-Income Housing Tax Credit program uses some HUD standards, but not all of them. Comparing HUD’s primary rental assistance programs to other federal assistance programs that serve similar populations, HUD’s programs differ in important ways; most notably, other assistance programs devolve more decision-making about income determination and eligibility to state administrators, whereas the HUD policies are largely set by federal statute and regulation.

While the income and rent policies that govern HUD’s five main rental assistance programs are designed to accurately calculate and capture family incomes and financial circumstances, they can also lead to confusion among recipients as well as difficulties for local program administrators. In response to the rather complicated rules, some policymakers have called for changes to the current system. This report provides answers to some of the most common questions about the income and rent policies in federal rental assistance programs, including questions about where these policies came from and how they compare to other federal assistance programs that serve the same or similar purposes or populations. It is intended to help answer commonly asked questions, as well as provide information to policymakers seeking to understand and evaluate proposed changes to the current system.

Date of Report: January 4, 2013
Number of Pages: 21
Order Number: R42734
Price: $29.95

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