Are you eligible for Section 8 if you own a home or other real estate?


You may or may not be eligible for Section 8 if you own a home or other real estate, depending on the income you earn from these assets.

Section 8 Housing Choice Voucher eligibility is based on income, not assets. So, it is possible to own a house or other real estate and still qualify for Section 8.

However, income for the purposes of determining Section 8 eligibility must include the income you earn from these assets. So, if you have equity in the house (meaning you owe less on the mortgage than the house is worth) or generate rental income in excess of your expenses, a certain amount of annual income is generated by the equity. This income is counted toward your income eligibility limit.

The HUD Section 8 HCV handbook addresses how a housing authority should treat equity in real property on page 5-26.

Let's say you own a house worth $150,000 and you have a mortgage on it of $155,000 (this is actually pretty common since the foreclosure crisis began), the house is not an asset, it is a liability and will not account for any income when calculating eligibility.

However, if you have a mortgage of $130,000 on the same house, you have $20,000 of equity in the house. Then, the housing authority must allocate income from this asset. HUD uses a passbook savings rate of 3.5% to calculate income on assets. So, the equity in the house would add $700 per year to your other income when calculating eligibility.

The actual rules on this are a little more complex. You are allowed credit for the costs to liquidate an asset. So, if in selling that same house you would incur a real estate commission of 7%, or $10,500, then, the income from the asset would actually be calculated on an asset value of $9,500, in effect, lowering the amount of income the housing authority would consider when determining eligibility.

This policy applies to many assets including cash, stocks, bonds, jewelry, coin collections and other liquidatable assets. The policy doesn't apply to necessary personal property and interests in an active business. To read more take a look at Exhibit 5-3, Summary of Asset Inclusions and Exclusions in the Housing Choice Voucher Program Guidebook.

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