What is Affordable Housing? A Step-By-Step Guide for Renters

Illustration of an instructor standing in front of a chalkboard in a classroom full of renters sitting at their desk. The chalkboard has "Housing 101" written on it.

If you’ve never lived in or applied for affordable housing, understanding how it works can feel like a challenge. There are many different parts to providing safe and quality housing, and this guide makes all the different parts easy to understand to everyone, no matter your background.

We’ll explore who qualifies for affordable housing, how it works, who manages it, and the different types of affordable housing available. Each section helps give you a complete overview of affordable housing in the United States. To start, let’s dive into the basics:

  1. What is affordable housing?
  2. Why is there a need for affordable housing?
  3. What are the different types of affordable housing?
  4. Who qualifies for affordable housing?
  5. Who manages affordable housing?
  6. How does affordable housing work?

1. What is affordable housing?

Affordable housing is a type of home with a monthly rent or mortgage cost that is reduced by the government. There are many different types of affordable housing programs, which help individuals and families with low and moderate incomes.

The term is also sometimes used to generally describe housing that is affordable without the help of a government program. However, housing costs that are affordable for one household may be too high for others.

All of the housing options on Affordable Housing Online are supported by government programs.

Now that you know what affordable housing is, let’s go into why we need this type of housing in our country.

2. Why is there a need for affordable housing?

While some politicians and communities are against the building of affordable housing, these concerns are often based on unfortunate misconceptions and stereotypes. Over many years, research has proven that affordable housing helps not only people, but also the communities where they’re located.

Affordable Housing allows those in need to pay reasonable rents.
There’s a growing gap between income levels and the cost of housing. Many people’s earnings have not kept pace with the rising costs of rent or homeownership, making it difficult for them to find housing within their budget.

Affordable Housing supports our local economies.
Affordable housing is crucial for the overall economic stability of communities. When people spend a reasonable portion of their income on housing, they have more money available for other essentials like food, healthcare, and education; which in turn supports local economies.

Affordable housing reduces poverty and homelessness.
Access to affordable housing is a fundamental step in reducing poverty and homelessness. It provides stability for vulnerable populations, including low-income families, the elderly, and the disabled, helping them to improve their living conditions and access opportunities for betterment.

Affordable Housing makes communities and their residents healthier.
Having safe and secure housing — especially for children and seniors — helps improve the quality of life for individuals and the community. There are many health benefits, including stress reduction, improved living conditions, safety standards, and access to supportive services like health and child care. Also, the U.S. Environmental Protection Agency promotes smart, intentional creation of housing to reduce commutes and increase the quality of life.

Affordable Housing gives our children opportunity.
Secondary benefits of affordable housing — like an increase in the family budget for food, healthcare, and leisure — contribute to the healthy development of children and young adults. For example, safe and healthy living conditions are linked to higher test scores in math and reading, according to Habitat for Humanity.

3. What are the different types of affordable housing?

There are many types of affordable housing, ranging from vouchers that can be used in the private market to public housing that is owned and operated by government agencies.

A. Housing Programs

Section 8 Housing Choice Vouchers: This program provides vouchers that tenants can use to rent housing that they find in the private market. The household’s rent is adjusted, based on their income.

Public Housing: Public Housing is one of the nation’s longest running housing programs. Public Housing properties owned and operated by a local Public Housing Agency.

Section 8 Project-Based Vouchers: These vouchers are tied to specific units, unlike Housing Choice Vouchers. When a tenant moves out, the voucher stays with the unit.

Section 8 Project-Based Rental Assistance (PBRA): In this program, private owners enter into contracts with HUD to provide rental assistance for some or all of their units so low-income tenants can afford the rent.

Low-Income Housing Tax Credit (LIHTC): This program provides tax credits to developers to build affordable housing. In exchange, they must set rent at specified levels affordable to low-income renters in the area.

HOME Investment Partnerships Program: The HOME provides grants to states and localities to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership.

Section 202 Supportive Housing for The Elderly: Section 202 provides housing and services for persons age 62, and up.

Section 811 Supportive Housing for Persons with Disabilities: Section 811 Supportive Housing for Persons with Disabilities provides housing and services for persons with documented disabilities.

USDA Section 515: This program provides loans to build apartments for low-income residents in rural areas.

USDA Section 521: This program provides rental assistance for tenants in properties financed under the Section 515 Rural Rental Housing program or the Section 514/516 program.

USDA Section 514/516 Farm Labor Housing: This program provides housing for rural farm workers.

Section 236: This program provides loans to build affordable housing and subsidies to help tenants afford the rent.

Section 221(d)(3): This program provides loans to build affordable housing.

Rental Assistance Demonstration (RAD): RAD allows Public Housing Agencies to renovate and redevelop deteriorating Public Housing properties. These rental assistance for these properties is converted from Public Housing to Section 8 Project-Based Rental Assistance.

B. Housing Locations

Affordable housing can be found in all types of communities, but there are important differences between urban, suburban, and rural areas.

What affordable housing looks like in urban areas: In urban areas, affordable housing may be located in high-rise buildings. Urban affordable housing is typically situated near public transportation, employment opportunities, and essential services, making it convenient for residents to access the resources they need.

What affordable housing looks like in suburban areas: In suburban areas, affordable housing may be located in low-rise buildings or single-family homes. Suburban affordable housing might be part of mixed-income communities, blending seamlessly with market-rate housing. The location in suburban areas often provides residents with access to good schools, parks, and shopping centers, contributing to a higher quality of life.

What affordable housing looks like in rural areas: In rural areas, affordable housing may be located in small apartment complexes, single-family homes, and also mobile home communities. These developments are typically spread out and may be surrounded by open land or agricultural fields. Rural affordable housing can face unique challenges, such as limited access to public transportation, and fewer nearby employment opportunities. However, these settings can offer a peaceful living environment and a strong sense of community.

4. Who qualifies for affordable housing?

Now, the biggest question on your mind probably is: “Do I qualify for affordable housing?” The answer to that question is unfortunately not a simple yes or no. Separate housing opportunities can have different income and background qualifications, even if they’re in the same area. Let’s review the basic requirements that you may have to meet for any type of housing assistance.

A. Income Requirements

Income is a key factor in determining eligibility for affordable housing. Income requirements for housing in every community is based on a figure called the Area Median Income, or AMI. This is the exact midpoint of the incomes earned by all households in the area. Households with incomes below, or near the AMI may qualify for certain types of housing.

What is an income limit?
Income limits tell households exactly how much they need to make to qualify for housing. Different types of affordable housing are available for households with incomes that range from “Extremely Low” to “Moderate.”

Extremely Low Income: Households earning less than 30% of the (AMI).

Very Low Income: Households earning between 30% and 50% of the AMI.

Low Income: Households earning between 50% and 80% of the AMI.

Moderate Income: Households earning between 80% and 120% of the AMI.

Why are there different income requirements in different areas?
Income limits vary by location to account for the cost of living and average wages in different areas.

Are income limits different between housing programs?
Yes, income limits can vary between housing programs. Some programs serve lower-income households, while others serve moderate-income households.

What is income tiering?
Income tiering is a method used in some housing programs to have multiple categories of qualification, based on a range of different incomes. The amount of rent that you pay depends on the income tier you qualify for.

B. Background Check Requirements

In addition to income qualification, housing agencies often require background checks on your rental and criminal history — and sometimes also a credit check.

Rental History: A record of past landlord history may be required, such as contact information, outstanding rent payments, and evictions.

Criminal History: A criminal record may affect housing eligibility, depending on the nature of the offense.

Credit History: A credit check is not part of the application process for many major housing programs, including Section 8 Housing Choice Vouchers and Public Housing. However, private landlords that accept Section 8 vouchers may require a credit check to live on their property. Also, properties with other major housing programs, like the Low-Income Housing Tax Credit, may do a credit check as well.

C. Housing for Special Populations

There are many different groups of people that have housing options specifically designed to meet their needs. Some properties are restricted to certain populations, while others may have priority tenant selection and special accommodations. The most common populations that have these opportunities include:

Seniors: This is housing for persons age 62 and above. Some properties also have a category called “Near Elderly,” which is for persons between 50 and 61. Many housing programs offer senior-specific housing, often with amenities and services tailored to the needs of an aging population. These can include accessibility features, on-site healthcare services, and community activities.

Persons with Disabilities: These are individuals with documented physical or mental impairments that substantially limit one or more major life activities. Housing options for persons with disabilities often include accessibility features and may offer supportive services.

Immigrants: Immigrants, regardless of their immigration status, may have access to certain affordable housing programs. Some programs may have specific eligibility requirements related to immigration status.

Families: Affordable housing programs often define a family as a household with at least one adult and one child. Family housing options are designed to accommodate households of various sizes and may include features like multiple bedrooms and family-friendly amenities.

Veterans: Veterans are individuals who have served in the military. There are specific housing programs, like the HUD-VASH program, that combine rental assistance for homeless veterans with case management and clinical services provided by the Department of Veterans Affairs.

Homeless: Individuals who lack a fixed, regular, and adequate nighttime residence are considered homeless. There are numerous housing programs aimed at preventing and ending homelessness, including emergency shelters, transitional housing, and permanent supportive housing.

5. Who manages affordable housing?

Affordable housing is a collaborative effort of government agencies and private organizations, and each plays a crucial role in ensuring access to safe and affordable homes. In this section, we will explore the different entities involved in managing affordable housing, highlighting their roles, responsibilities, and the impact they have on the communities they serve.

A. Government Agencies

Several government agencies are involved in the funding and creation of affordable housing.

HUD: The U.S. Department of Housing and Urban Development, also known as HUD, is a federal agency that focuses on helping all Americans have access to safe, fair, and affordable housing. HUD also works to improve communities through development projects and offers support to homeowners and renters.

USDA: The U.S. Department of Agriculture, or USDA, makes housing more affordable and accessible for those living in rural areas. The USDA helps build, buy, and improve homes and essential community facilities that are outside of urban areas.

Treasury: The U.S. Department of the Treasury makes more affordable homes available for renters in need. The Treasury gives tax credits and bonds to housing developers to support building new affordable homes.

State Housing Finance Agency: Every state has its own State Housing Finance Agency (HFA) with a mission to give residents a chance to live in a safe and affordable home. They offer loans, grants, and tax credits to make it easier for households to buy or rent houses in their state at lower prices.

Local agencies: Local city and county agencies also have a role in the development, management, and support of affordable housing in their area. These agencies help with funding, policymaking, administration, and community development on the local level. These opportunities, however, are not as widespread as federal and state housing efforts.

B. Housing Providers

Both public and private organizations perform the day-to-day management of affordable housing in various roles.

Government Agencies:

Public Housing Agency
A Public Housing Agency (PHA), commonly called a housing authority, is a local organization that oversees affordable housing in a city, county, or even a whole state. They work directly with renters to get them qualified and moved into HUD housing, including the Section 8 Housing Choice Voucher program, and Public Housing.

Many housing authorities also have other supportive services for help with utilities, employment, homelessness, and more. These services may be provided by HUD, and also local programs.

PHAs operate under HUD’s rules and oversight, and both organizations work closely together to provide low-income housing options for those in need.

Other local agencies
In addition to PHAs, other local government agencies may also manage housing programs. This can include city or county housing departments, redevelopment agencies, or housing finance agencies. These agencies may own and operate affordable housing, administer local housing programs, or work to finance and promote affordable housing development.

Private Property Owners:

For-profit owners, such as real estate companies, may own and operate affordable housing properties. They often use subsidies and tax credits, like the Low-Income Housing Tax Credit (LIHTC), to make renting to low-income tenants financially viable.

Non-profit organizations, such as community development corporations or housing nonprofits, often own and operate affordable housing. They work to fulfill a mission of providing affordable housing and may offer additional services to residents, such as job training or after-school programs.

Mom and Pop Landlords
Mom and Pop landlords are also “for-profit” owners, but unlike large companies or non-profit organizations, they typically own and manage a small number of properties, such as single-family homes, duplexes, or small apartment buildings. Their approach to property management is often more personal and hands-on, as they may handle all aspects of the rental process themselves, from tenant screening to maintenance.

6. How does affordable housing work?

There are many different parts that work together to make affordable housing work. This section includes topics from subsidies that help bridge the gap between market rent and what residents can afford, to tenant services that support the well-being and success of residents. Let’s dive into each part to gain a better understanding of how affordable housing functions and the impact it has on individuals and communities.

A. Subsidies

Housing subsidies funded by the government help make housing more affordable for low-income individuals and families. To put it simply, there are two basic types of subsidies that provide affordable housing in different ways:

Renter subsidies: These subsidies go directly to renters to help them afford housing by paying a portion of their monthly income for rent. For example, Section 8 Housing Choice Voucher households typically pay 30% of their income towards rent, and the housing authority pays the rest of the balance to the landlord.

Owner subsidies: These subsidies are given to owners of affordable housing to cover building and maintenance costs. Renters do not get a direct subsidy, and must pay the full monthly rent amount. However, these properties have affordable rents that are lower than what’s available on the private market.

B. Rent Limits

Rent limits are an important part of affordable housing that make sure rents are kept in check for renters with low-incomes. These limits are set based on a percentage of the area’s median income and are adjusted for family size. They ensure that rent does not exceed a certain threshold, making housing accessible to those who need it most.

What are Fair Market Rents (FMRs)?
Fair Market Rents (FMRs) are estimates of the cost of renting a standard-quality apartment in a particular area. The U.S. Department of Housing and Urban Development (HUD) sets these rates, which are used to determine the maximum amount of housing assistance that can be provided through programs like Section 8 vouchers. FMRs reflect the cost of rent and utilities, ensuring that families using vouchers can afford decent housing in the private market.

What are Small Area FMRs (SAFMRs)?
Small Area FMRs (SAFMRs) are a variation of FMRs that apply to smaller geographic areas, typically at the ZIP code level. The purpose of SAFMRs is to provide a more accurate reflection of rental prices in specific neighborhoods, allowing for more precise housing assistance. This approach helps to promote housing choice and mobility by enabling families to access housing in a wider range of areas, including those with better schools and employment opportunities.

How are FMRs determined?
FMRs are determined based on a combination of factors, including rental market data, surveys, and statistical models. HUD collects data on rents and utility costs from various sources, including the Census Bureau and private market surveys. The data is then analyzed to establish the 40th percentile rent level for standard-quality rental units in each area, which becomes the FMR. This ensures that FMRs reflect current market conditions and provide a fair basis for housing assistance.

C. Waiting Lists

Due to high demand, there is often a wait to get affordable housing, and applicants are commonly placed on what is called a waiting list.

What is a waiting list?
A waiting list is a list of individuals or families who have applied for an affordable housing unit, and are waiting for available housing.

Why are there waiting lists?
Due to rising housing costs, there is an extremely high demand for affordable housing. But there are many more people who need affordable housing than there are available units. So, waiting lists help people get in line for a future housing opportunity, even if there isn’t anything available right now.

How do you get on a waiting list?
If you want to get on an affordable housing waiting list, you’ll usually have to complete an application with the housing provider. These are called “preliminary applications,” and are used to determine if the household meets basic requirements for housing.

How long can a waiting list be? Wait times vary greatly in different areas of the country. In high-population areas or for popular programs, the wait can be several years. In less populated areas or for less popular programs, the wait may be shorter or non-existent.

D. Fair Housing

Fair housing laws protect people from discrimination when they are renting, buying, or securing financing for any housing.

Basics of fair housing policies:
The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, or disability.

Source of income discrimination laws:
In most areas of the country, landlords have the legal right to refuse tenants whose rent payments are assisted by a Section 8 Housing Choice Voucher. To combat this, some cities, counties, and states have created laws that prevent landlords from refusing to rent to someone because they will be paying rent with the help of a voucher.

What to do if you experience discrimination:
If you believe you have been discriminated against, you can file a complaint with HUD. There are options available for non-English speakers, including help in Español, and more.

E. Property Conditions

Affordable housing must meet certain standards to make sure that the home is not only safe to live in, but also provides a quality standard of living.

How do different housing projects differ in living conditions:
The quality of housing can vary based on factors such as the age of the property, the location, and the resources of the housing provider.

How does the government monitor affordable housing conditions?
HUD and other agencies conduct inspections to ensure that properties meet health and safety standards.

What to do if you have a concern over the condition of your home:
If you have concerns, you should first contact your housing provider. If that doesn’t resolve the issue, you can contact the agency that oversees the housing program. If there is still a problem, you can send a complaint to HUD.

F. Tenant Services

Many affordable housing providers offer services to help tenants maintain their housing, improve their quality of life, and build a sense of community. These services are designed to address various needs and challenges that low-income families and individuals may face. Here are the most common tenant services that affordable housing providers offer for residents:

Job Training:
These programs provide residents with skills and training necessary to secure employment or improve their current job prospects. They may include resume writing workshops, interview preparation, and vocational training in specific fields.

Financial Education:
These services teach residents about budgeting, saving, credit management, and other financial skills to help them manage their money effectively and work towards financial stability.

Health and Wellness Programs:
Affordable housing providers may offer health-related services, such as fitness classes, nutrition workshops, mental health counseling, and access to healthcare resources to promote the overall well-being of residents.

After-School and Childcare Services:
To support families with children, some properties offer after-school programs that provide educational support, recreational activities, and a safe environment for children while parents are at work. Childcare services may also be available for younger children.

Resident Activities:
These activities aim to foster a sense of community among residents. They can include social events, community gardens, volunteer opportunities, and other initiatives that encourage residents to connect and support each other.

Transportation Assistance:
Some affordable housing providers offer transportation services or assistance to help residents access employment, education, healthcare, and other essential services.

Legal Aid:
Residents may have access to legal aid services to help them navigate legal issues related to housing, employment, immigration, and other areas.

Food Assistance: To address food insecurity, some properties may offer food pantries, meal programs, or connections to local food banks.