What Assets Does Section 8 Count?

With rent prices skyrocketing across the country, there’s never been a better time for affordable housing. For more than 80 years, the government has given relief to households through a housing program called Section 8. In order to qualify, though, you’ll need to meet income limits and other requirements.

Section 8 is designed to help low-income households with rent rates they can afford. For that reason, you’ll find that you need to meet certain criteria in order to qualify. Although there aren’t Section 8 housing asset limits specifically, the income you derive from your assets will count toward your annual income and therefore affect whether you qualify. Your rent amount is also determined based on your income.

In order to determine if you qualify, you’ll need to take a look at the median annual income for the area where your desired housing is located. You’ll have to earn less than 80 percent of that amount. The U.S. Department of Housing and Urban Development maintains a spreadsheet that lists the income limits for various cities and counties across the country. You can find this spreadsheet at https://www.huduser.gov/portal/datasets/il/il15/Section8_IncomeLimits_Rev.pdf.

Your bank balance is one of your assets, but if it’s less than $5,000, HUD isn’t interested in what you have in the bank. What the department is interested in is how much you earn off that money each year. If you have an interest-bearing bank account or any investments, the money you earn on those assets each year will be counted toward your annual income.

If, on the other hand, your assets total $5,000 or more, HUD will take a closer look. In this case, HUD will look at your annual income and compare it to a percentage of your total assets. If the percentage of those assets, as determined by HUD’s current passbook savings rate, is greater than your annual income, HUD will go by that amount to determine eligibility.

Those who receive alimony or child support may wonder if this counts toward income. Requirements on Section 8 housing asset limits mean if the court has ordered that you receive alimony or child support, you must include that income when you apply. If you aren’t receiving the payments that were ordered, it’s on you to prove that a) you aren’t receiving the payments and b) you’ve exhausted all possible legal measures to get the payments.

When a Section 8 tenant has child support or alimony issues, the landlord may request documentation proving those problems exist. If the tenant receives child support or alimony, and there was no court order mandating it, the landlord may request a signed certificate from all involved parties verifying the amount being paid to the tenant every month.

Two people receiving the same monthly income likely won’t have the same economic standard, primarily because everyone’s expenses are different. As with your taxes, you’ll be able to take credits for certain expenses as outlined by both state and local authorities. At the federal level, those credits include:

• Elderly and disabled family deduction – You’ll get a credit of $400 every year if your family has either a head of household or spouse who is 62 years of age or older or has a disability.
• Dependent deduction – A credit of $480 per year applies for each dependent as long as they’re under the age of 18, a full-time student or they have a disability.
• Medical or disability deduction – If you spend a great deal of money on medical expenses each year, you’ll probably qualify for this credit. This applies the amount over 3 percent of your income that you’re likely to spend on medical care for someone who is 62 or over or suffers from a disability.
• Childcare deduction – You may qualify for a deduction for childcare expenses for any children under age 13.

If you live in state-provided public housing, in addition to their own Section 8 bank account limits, you may be eligible for credits on that side of things. Those credits can include:

• Elderly and disabled deduction – You may qualify for $400 a year if the person signing the lease is age 60 or older or has a disability.
• Family deductions – With this deduction, you may qualify for $300 per year for every child under the age of 18 living with you. You may also qualify for $300 per resident adult whose income exceeds her deductions.
• Heat deduction – Some communities offer a discount to Section 8 residents who pay heating expenses.
• Medical deduction – This applies to medical expenses in excess of 3 percent of your gross household income.
• Child and family care – As with federal housing, this credit applies to the money you spend on childcare for children if necessary. It may also apply to sick or incapacitated household members.
• Child support or alimony payments – If you’re the one paying child support or alimony, you may be able to take a credit for that expense.
• Education deduction – If you have a household member who is a part-time student in college, you may be able to deduct any nonreimbursable tuition and fees.
• Disability deduction – For households that spend money on housekeeping, personal care or travel for a disabled family member, there may be a deduction. When it comes to travel, this applies to necessary travel expenses for activities that cannot be performed by someone in your household.

Obviously, if you win the Powerball, your financial situation will change overnight. But it may or may not count as an asset, depending on what you do with it. Say you receive a lump-sum payment from a lottery winning, inheritance or some other windfall and use that money to pay off all your bills with nothing left. That money was gone before it could be held as an asset and therefore wouldn’t count.

But if you take that lump-sum payout and drop it into your bank account, it then becomes an asset like any other money you have there. If your total amount of assets is then $5,000 or more, Section 8 will look at that amount versus your annual income and base your eligibility and rent on the greater of the two. Keep in mind if you put that money in the bank or invest it, you’ll then be earning interest on it, so your annual income will also increase.

HUD uses something called the Enterprise Income Verification system to determine a family’s income each year. Property owners and landlords participating in Section 8 have access to this system, but they must verify that the information is correct with the renter rather than just adjusting the renter’s monthly amount due based on what they see there.

The EIV has agreements with a variety of sources in order to collect data on participants. This includes the Social Security Administration and the Department of Health and Human Services. However, this is meant to be supplemental information. Property owners and landlords are expected to gather information from tenants to verify income, including recent pay stubs.

Approval for Section 8 doesn’t mean you’re free to rent anywhere. Landlords choose whether they accept Section 8 vouchers. There are benefits to being a Section 8 landlord, including:

• Reliable monthly payments of the majority of the person’s rent from the government.
• Allowable annual rent increases of 5 to 8 percent.
• Access to the many tenants looking for landlords who accept housing vouchers.
• Long-term occupancy rates, as Section 8 renters tend to stick around a while.

There are some disadvantages, though, including the bureaucracy involved in dealing with the government. The biggest detractor, though, is the extensive inspection required to participate in the program. Other than that, though, the process is similar to bringing on a regular tenant, so in addition to Section 8 housing asset limits, renters will also need to pass a landlord’s standard filtering system.

Regardless of Section 8 income reporting requirements, it’s important to note that your rent is based on that income. When your landlord agreed to accept Section 8 vouchers, he agreed to receive a payment from the government to cover a portion of your rent. Currently, that amount is about 70 percent in most areas. That means you’re expected to pony up the other 30 percent.

If your income changes, keep in mind your rent may increase along with it. You’ll be paying 30 percent of your rent, which means that any increase will up the amount that 30 percent is based on. If your income increases beyond the limit for your area, you also may find you lose your vouchers due to your change in eligibility.

You can apply for Section 8 through either your local housing authority or HUD. Once you’ve submitted your application, the next step will be an interview with a housing authority agent. This will either take place in your home or at the agent’s office, depending on local policies. During this interview, you’ll be asked questions designed to determine your general lifestyle.

In order to ensure you meet the income and Section 8 bank account limits, you’ll be asked to provide financial documents such as bank statements and pay stubs. At this point, the housing authority may also conduct background checks. After you get approval, which can take months, you can start shopping around for a landlord who accepts Section 8 vouchers.

Income isn’t the only factor in determining Section 8 eligibility. The public housing agency will conduct a background check, as well as researching whether you’ve been evicted from a previous rental situation. This is in addition to all Section 8 income reporting requirements that look at your financial eligibility for a housing voucher.

Even once you’ve received a voucher, you aren’t guaranteed to keep it. If you or a family member is convicted of a drug-related crime that occurred on Section 8 property, for instance, you could lose your eligibility for the program. If you or a family member refuse to cooperate with requirements to sign consent documents related to issues like citizenship, you could lose eligibility even if you otherwise qualify.

Even when you meet all Section 8 income reporting requirements and get approved, you may still have a tough time finding a place that will accept your vouchers. This is especially true if you live in an area where demand for housing well outpaces supply. For this reason, a few selected areas have enacted laws prohibiting landlords from discriminating against tenants based on their payment methods.

If you’re having difficulty finding housing with your vouchers, get in touch with the local housing authority. Sometimes they have fairs where they match tenants up with landlords willing to accept Section 8 renters. This gives you a chance to meet those landlords and property owners in person and make a connection that may be the answer to your housing dilemma.