Subsidized Housing Explained
There are many different kinds of subsidized housing programs. However, most of these programs work in the same way. People who have low-incomes pay 30% of their income towards rent, and the state or federal government pays the difference between this amount and the actual costs of the housing.
- Susan's Monthly Rent = $1,000
- Susan's Monthly Income = $750
- 30% of Susan’s Monthly Income = $225 (her share of the rent)
- Amount of Monthly Subsidy paid by state or federal government = $775 ($1,000 - $225)
Types of Subsidy Programs
There are two different types of subsidy programs:
Project-based assistance refers to apartments in which the subsidy is attached to the unit or units. When you move into the apartment you receive a rent subsidy. When you move out, the rent subsidy stays with the apartment and the next occupant receives the subsidy. An example of a project-based apartment is an apartment in a building owned by a housing authority.
Tenant-based assistance is often called rental assistance, or a voucher. A tenant-based subsidy is not attached to a particular unit. The rent subsidy follows the tenant wherever she or he moves. This is a very popular form of assistance because it provides more flexibility. However, because it is so popular, the waiting lists to receive this kind of subsidy are very long. An example of this subsidy is a Section 8 voucher. (See Rental Assistance FAQ.)
Who is eligible for subsidized housing?
Generally, you are eligible for subsidized housing if you are considered low-income. Low-income can have many definitions, but for most subsidized programs, it means that your income is at or below a certain level, called the Area Median Income.
Some subsidized housing programs set income eligibility standards at or below 80% (low-income) of the area median income. Some set it at 60% or 50% (very low-income). The U.S. Department of Housing and Urban Development (HUD) provides a website that breaks down each income category by household size and region of the state. To view the website for the most recent income eligibility standards click here.