How Rent Is Determined For Low Income Housing

Friday, December 18th, 2015

The United States Department of Housing and Urban Development (HUD) funds low income housing programs across the country. Eligible tenants are granted rental subsidies for qualified rental properties. As the Section 8 Housing Choice Voucher Program does not limit subsidies to specific properties, qualified renters are able to choose their own home or apartment.

Once you are qualified for low income housing, you may wonder how your rent is determined. The local housing authority in your area will first use area median income and income limits for low income housing to determine your rent. Next, fair market rent for low income housing, deductions, and tenant rent will be used to determine this amount.

Area median income and income limits for low income housing

The area median income (AMI) sets the income limit level for a given county within the United States. To determine the AMI, the housing authority takes the incomes for a specific area and finds the middle range. Some housing authorities are required to grant priority to extremely low income families who fall in the 30% AMI range. Families with extremely low incomes will be awarded housing in high demand areas before families with higher incomes.

Calculating fair market rent for low income housing

Each year HUD uses the mid-range of rental rates to set a fair market rent (FMR) for each county in the United States. Once the fair market rent is set for the year, tenants cannot be charged more than the set rate in that specific area. The larger the home or apartment, the higher the fair market rent will be. Renters who receive assistance must find rental properties within the fair market price range to receive subsidies. The HUD website lists the latest FMR figures for the country.

Taking out deductions to determine rent for low income housing

There are a some deductions that must be taken into consideration when determining rent for low income housing. For example, a family can take a dependent deduction for each household member that is 17 or younger. Deductions are also granted for families with household members who are full-time students, elderly, or have disabilities. Finally, eligible tenants can deduct a percentage for their unreimbursed medical expenses, child care, and disability assistance.

Determining tenant rent for low income housing

When rent is determined for a low income housing tenant, the total annual income for every member of the household age 18 and older is included. The administrator will annualize the monthly earnings and then subtract any necessary deductions. The final figure is the amount that the tenant must contribute toward the rent each month. The tenant is responsible for paying their part of the rent to the property owner, while HUD will cover the remainder of the rent.

Hope Housing Foundation (HOPE) is a Texas based nonprofit organization focused around creating affordable housing for individuals and families with low to moderate incomes. We are committed to furthering activities and programs that we believe enhance the lives of residents and communities that we serve. The local initiatives that we are involved with include resident services, community development programs, and educational scholarships. To learn more, call us at (214) 842-8075. You can also Contact Us by email for more information or to partner with us.