If there is one commonality that links the entire nation right now, it is that affordable housing is becoming harder and harder to find.
In fact, the rent in many areas is so high that low-income individuals and families are being priced out of the market.
To augment that, many people are turning to income-restricted and income-based housing, not out of preference, but need.
The following is a summary of income-restricted housing, what it entails and what someone applying for it should expect.
What Are Income-Restricted Apartments?
An income restricted apartment is a planned development or unit that caters to low income tenants exclusively.
They are privately owned and the owners of the property receive benefits for making their property available to income-restricted tenants.
These are not technically considered public housing.
Generally, these types of housing units are zoned as income-restricted although in some cases, you can find a mix between income-restricted housing, income-based housing, and fair market housing.
All units, houses, apartments, condos, etc., are managed by private landlords and tenant eligibility is managed by local housing agencies and authorities.
There are no income limits but there are threshold criteria to qualify for the program.
The History Behind Income Restricted Housing
Income-restricted housing came out of The Great Depression.
Besides mass economic upheaval, this time of economic crisis created an immense housing crisis across the USA.
The need was so critical that the federal government stepped in and tried to provide affordable housing for anyone that needed it as part of rural and urban development recovery planning.
This effort became the HUD and eventually transitioned into the US Department of Agriculture’s Rural Development Department.
In 1937, the Affordable Housing Act was passed and that legislation helped develop and manage urban development affordable rental housing.
This housing was known as the Housing Choice Voucher Program or as Section 8 housing.
Today, affordable housing falls under the regulation and management of Section 42 housing, which was part of the Tax Reform Act of 1986 and included tax credits for developers and investors of affordable housing land development.
There are about 1.2 million households that qualify for income-restricted public housing, or fair housing in the USA.
Are Income-restricted Apartments the Same As Income-Based Housing?
The short answer is “No.”
Income-based housing refers to privately owned subsidized housing.
The owner or developer of these buildings receives tax credits in exchange for renting to low-income tenants.
Low Income Housing Tax Credits are allocated based on state population.
These credits account for 90 percent of affordable housing in the USA today and the eligibility of a renter to qualify for these types of low income apartments is based on a percentage of the renter’s income.
Rent for a low income unit is capped at 30 percent of the renter’s adjusted gross income, regardless of median rent or what is considered an affordable unit in the area in question.
With income-restricted housing, rent is determined by the median income for the area in question.
Rent is capped based on a percentage of this figure.
That percentage varies by state, municipality, and apartment size.
Who Qualifies For Income-restricted Housing?
There is no standard for eligibility for income-restricted housing.
This is because median income levels are so different from one area to the next.
HUD does the calculation that determines the median income for each metropolitan area of the US.
Once that is established, HUD defines the maximum incomes for an area and establishes qualifying criteria for income-restricted housing.
Each calculated area has qualifying categories of “Low,” “Very Low,” or “Extremely Low.”
Income-restricted apartments are usually reserved for those with incomes qualifying as Extremely Low.
If there are not sufficient numbers of qualified applicants in the Extremely Low category, those that fall into the low category qualify for income-restricted housing.
How Much Do You Pay In Rent For an Income Restricted Apartment?
The amount someone that qualifies for income-restricted housing will pay varies.
It is affected by location and unit size.
Additionally, in some areas, there are municipal caps on rent for qualified individuals, which can reduce the cost of rent even further.
The best way to find out how much income-restricted apartments cost is to contact a local housing authority.
Income-Restricted Apartment Requirements
All income-based rent programs are dependent on the structure of their program criteria.
Income-restricted requirements, for instance, are based on the HUD priority of the area median income as well as any local criteria or income limit.
There are no specific property criteria for income-restricted housing.
Eligibility is driven by the financial and income status of the tenant.
A tenant applies for the program and if they fall into the priority category for a specific area, then the owner of the property receives payment based on that determination.
In addition, to offset any financial losses by the owner, many municipalities offer subsidies in exchange for renting to income-restricted qualified applicants.
Criteria For Tenant Eligibility
With income-restricted housing, you must qualify in the Low, Very Low, or Extremely Low categories as determined by HUD.
Your priority will depend on the median income of the area you are applying to live in.
It will be adjusted in most cases to accommodate the number of people in a household.
There are other requirements to qualify for income-restricted housing.
- No Sex offenses that place you on a Sex Offender Registry
- No criminal conviction for producing methamphetamine on public property
- No pattern of habitual drug use as determined by Habitual User laws
- No drug or alcohol abuse that might threaten the well being of other income-restricted housing tenants
- You and any adult living with your or that has custody of your children passing a criminal background check
In addition, each Public Housing Authority (PHA) sets its own criteria for income-restricted eligibility.
This means that the PHA can impose stricter requirements about admitting people with criminal histories than is required by federal law.
Conviction of a violent crime, for example, can result in a prohibition from qualifying for income-restricted housing.
PHA policies for any low income apartment are written down and available to the public.
If you are denied admission, the PHA must provide you with a copy of the criminal records check and an explanation of why you are not eligible.
Applicants With A Criminal Record
If you have a criminal record, you should apply for low income families income-restricted housing anyways, unless you qualify for one of the federal prohibitions (sex offenses, selling or making drugs on public property, etc.)
The best approach for any applicant with a criminal record is to be upfront from the beginning.
Document any mitigating factors that help your case that your criminal behavior is in your past.
This includes providing proof if you have a stable job or have completed rehabilitation or treatment programs.
Document other positive changes you have made since your conviction.
Provide letters of recommendation from any law enforcement you maintain contact with as well as any other publicly respected community members, including your:
- Probation Officer
- Parole Officer
- Social worker
- Treatment counselor
- Minister or spiritual counselor
Anything that can prove you have moved on in a positive direction should be presented with your application.
How Income Restricted Apartment Rent Is Determined
Income-restricted rent is determined by location and median family income in that area.
Additionally, the size of the apartment is factored in.
Finally, fair market rent for the unit in question is calculated and considered.
Rent for an income-restricted apartment is prohibited from exceeding the market value of apartments in that area.
Rent, can, however, adjust, be increased, or fluctuate.
The difference between the assigned rental value of an apartment and the market value is covered by a subsidy from the government.
The amount of subsidy an apartment qualifies for can be calculated via tools from the local housing authority.
The local housing authority can be found on HUD’s Public Housing Authority locator website.
How To Find And Apply For Income-restricted Housing
To find eligible income-restricted housing, you should start by learning the guidelines for your area at your local PHA.
This will give you a better idea of whether you qualify for income-restricted housing or fall into another housing assistance category.
The local PHA will take applications for income-restricted and other housing assistance programs.
It will also maintain a list of eligible apartments and rentals.
A PHA caseworker can provide options for any specific situation based on annual income, any applicable income restriction, family size, and the urgency of a housing situation.
Fill Out An Application
Restricted-income property applications can be picked up and filed with your local PHA.
Their staff can assist you in filling out the application and answer any questions you have.
You also can apply through your landlord.
As part of the application process, you will be required to provide a lot of documentation.
At a minimum, you will need to provide:
- Government Issued Identification Card
- Secondary form of identification (birth certificate, Social Security card, utility bill, etc.)
- Birth certificates for any children that live with you
- Financial statements for anyone that lives with you as well as your own financial statement, including annual and monthly income
- Tax documents (if applicable) proving annual income for the prior year
There might be other, locally required personal information, including, but not limited to:
- Rental history
- Landlord application for rental assistance
- Proof of assets
Prepare To Be Waitlisted
Any type of affordable housing tends to have a waitlist in most areas.
More than likely, you will be put on a waitlist.
If your situation is urgent (you will be homeless,) there might be short-term options or programs available to you.
If you can be flexible in the apartment size you need while maintaining any occupancy limits (maybe request a two-bedroom versus a 3-bedroom apartment,) you might be able to rise up the waitlist.
Things to Know Before Renting an Income-restricted Apartment
The following are some general informational points pertaining to income-restricted housing and eligibility.
As with any “tips,” always verify that the advice given matches the scenario where you are applying.
As with many aspects of income restricted housing rules can vary from state to state and even within states.
Income-restricted Apartments Are Designed To Be Affordable
The entire purpose of income-restricted apartments is to make housing possible for those that need it.
This means the rent should be affordable for those that qualify, particularly if they are in the Extremely Low category of income, as determined by HUD.
The Landlord Of An Income-restricted Property Will Check Your Background
Your local PHA will run a criminal background check on you and any adult living with you.
Additionally, your landlord will likely run a background check on you as well.
They are allowed in most areas to have stricter criteria for admission.
They can also deny access to you or anyone associated with you as well as prohibit them from entering the property.
Income-restricted Apartments Aren’t Public Housing
It is a common misconception that income-restricted apartments are Section 8 housing or public housing.
They are not.
Income-restricted housing is privately owned and managed.
Your rent is also calculated differently than income-based housing.
Income-restricted Apartments Often Look Like More Expensive Apartment
Income-restricted apartments are often located in a nicer neighborhood than public housing and have a higher market value for the average rental unit.
In many cases, there is no difference between a fair-market apartment and one that is income-restricted.
Income-restricted apartments are a way for an applicant to get into a rental unit even if they are struggling financially.
There is a specific criterion to qualify that applicants must meet.
Even if you have a criminal record, you should still look into this method of getting affordable housing.