Affordable Housing typically refers to homes with reduced or subsidized rents made possible through government funding and incentives for housing providers.
Affordable housing is defined as housing where the cost to the tenant is less than 30% of their household’s income.
The most well known affordable housing programs, such as the Section 8 and Low Income Housing Tax Credit programs, use the Area Median Income (AMI) as a metric to determine income eligibility and rent restrictions. Rents and eligibility requirements are set relative to the Area Median Income so that a household earning a lower percentage of the AMI would be eligible for homes with cheaper rents.
HUD and affordable housing providers will often refer to AMI Bands, or ranges of income, when communicating income eligibility and rents. HUD defines these bands as:
|Income Classification||Area Median Income (AMI) Band|
|Extremely Low Income||Income at or below 30% of AMI|
|Very Low Income||Income between 31 and 50% of AMI|
|Low Income||Income between between 51 and 80% of AMI|
|Moderate Income||Income between 81 and 120% of AMI|
Housing providers may use terminology like "affordable at 50% of AMI" which means that the home is affordable to Very Low Income households who earn between 31 and 50% of area the median income.
Low Income Housing Tax Credit apartments have cheaper than market rents and amenities similar to what you find in a market rate apartment community.
Housing providers participating in the LIHTC program are required to charge reduced rents for low- and moderate income tenants. Low income housing created through the LIHTC program are required to remain affordable for 15 years, though in practice many agreements extend for 30 or more years.
By law, a Federally funded low income housing project (including LIHTC) may not refuse to rent to a Section 8 voucher holder. To learn more, read the Low Income Housing Tax Credit section of the Low Income Housing Guide.
The Project-based Section 8 Program creates or rehabilitates income based rental housing for Low-, Very Low-, and Extremely Low income households. Unlike the tenant-based Section 8 Housing Choice Voucher program, the rental assistance is tied to the individual apartment or home.
For most Project-based Section 8 tenants, rent is set at 30% of their household’s income. In some cases, minimum rents of up to $50 may be set.
To learn more, read the Project Based Section 8 section of the Low Income Housing Guide.
The Section 811 program sets aside units for persons with disabilities, their families, and in some cases live-in caretakers. Like the project based Section 8 program, Section 811 sets rents at 30% of their household’s income.
To learn more, read the Section 811 section of the Low Income Housing Guide.
The USDA Rural Rental Housing Program makes loans available to non- or limited-profit organizations for the creation of affordable rental housing in rural communities. The program aims to serve populations facing critical housing issues in rural communities such as overcrowding, maintenance deficiencies, and a growing disparity between housing costs and earned income.
Rents for Section 515 units are set by the size and operating costs of the unit. Typically, tenants will pay between a basic minimum rent and a higher - but below market rate - ceiling rent based on their income.
An additional USDA rental program, Section 521, may be used to provide rental assistance to some units for very low income tenants. Rents for units with Section 521 Rental Assistance will be no higher than 30% of an eligible households monthly adjusted income.
HUD's Public Housing program is used to provide federally funded and locally managed affordable housing to low income households, seniors, and persons with disabilities.
Similar to Section 8 housing, Rents for public housing units are determined by the tenants adjusted income so that most qualified tenants will pay no more than 30% of their adjusted monthly income. Public Housing Authorities may establish a minimum rent of $25 to $50.
To learn more, read the Public Housing section of the Low Income Housing Guide.