The Department of Housing and Urban Development's (HUD) two main rental programs – public housing and the Section 8 Housing Choice Voucher program – both use government funds to subsidize rents for low-income households. While HUD uses relatively straightforward methods to calculate what a tenant pays in both programs, the way the subsidy works differs. Public housing rents are simply set at a rate affordable to low-income families. Section 8 rent is market rate. HUD and the renter household share in making the rent payment to a private market landlord.
Documents Required for a Public Housing Application
To make a public housing application, gather your tax returns, paycheck stubs and other documents that will help you determine your annual household income. HUD considers income earned by all household members, 18 years of age and older. HUD uses your gross income, that is before taxes and other deductions, to calculate your rent for a public housing unit.
Run the Public Housing Calculations
Subtract $480 for each dependent and $400 for each elderly or disabled household member from your annual gross income. Contact your local public housing agency for assistance on how they define these terms and to see if they allow deductions for certain medical issues. As HUD's public housing program website notes, the housing authority staffer who processes your application will determine eligible deductions based on the information you submit.
Divide your adjusted annual income by 12. This gives you your monthly adjusted income. For example, if your adjusted annual income is $12,000, your monthly adjusted income equals $1,000.
Multiply your monthly adjusted income by 0.3. Generally, HUD requires public housing residents to pay rent equal to 30 percent of their monthly adjusted income. If your adjusted monthly income is $1,000, your public housing rent, or Total Tenant Payment, is $300.
Determine Income for Section 8 Housing Choice Voucher Program
If applying for Section 8, start by determining your monthly gross income. For the Section 8 program, HUD does not, in most cases, allow for the same deductions it uses in the public housing program. If you rent a unit at or below the fair market rent HUD sets for your area, your household pays 30 percent of its income in rent.
For example, if your household earns $1,000 a month and is renting a $700 two-bedroom in Fresno, California, where the fair market rent for a two-bedroom is $855, you pay $300 in rent and HUD pays your landlord the remaining $400, based on HUD's 2011 fair market rent data.
Section 8 Fair Market Rent Rules
Calculate any rent in excess of HUD's fair market rent for your area. HUD allows Section 8 families to rent a unit that exceeds the fair market rent, however, the family must pay the rent amount that exceeds HUD's fair market rent as long as their total share of the rent is not greater than 40 percent of their household income.
If you decide to rent a two-bedroom in Fresno for $900, you are responsible for the $45 over HUD's fair market rent.
Add $45 to $300, which your share of your Section 8 rent based on 30 percent of your income. Divide $345 by $1000. The result – 34.5 percent – represents the percentage of your income you will put toward a $900 apartment in Fresno under the Section 8 program. HUD will allow you to rent this unit. You would not, however, be able to rent a two-bedroom apartment that costs more than $1,000 in Fresno, as it would eat up more than 40 percent of your monthly household income.
At times, HUD uses different calculations to determine public housing rent. For example, if you are on public assistance, the agency providing you with aid determines the amount of rent you should pay, based on the amount of assistance you receive. In some situations, particularly with extremely low-income households, HUD charges 10 percent of income or a minimum of between $25 and $50 a month for public housing rent. HUD gives local housing authorities latitude to make rent decisions on a case-by-case basis, as long as they adhere to general HUD guidelines.
- HUD: Housing Choice Vouchers Fact Sheet
- HUD: Public Housing
- United States Census. "Who Can Afford to Live in a Home?" Accessed Oct. 9, 2019.
- Consumer Financial Protection Bureau. "What Is a Debt to Income Ratio? Why Is the 43% Debt-to-Income Ratio Important," Accessed Oct. 9, 2019.
- Zillow. "U.S. Rent Growth Accelerates as Home Values Stabilize (June 2019 Market Report)," Accessed Oct. 9, 2019.
- Board of Governors of the Federal Reserve System. "2017 Economic Well-Being of U.S. Households in 2016 - May 2017: Education Debt and Student Loans," Accessed Oct. 9, 2019.
- NACE Center. "Salary Survey: Final Starting Salaries for Class of 2018 New College Graduates Executive Summary," Accessed Oct. 9, 2019.
- At times, HUD uses different calculations to determine public housing rent. For example, if you are on public assistance, the agency providing you with aid determines the amount of rent you should pay, based on the amount of assistance you receive. In some situations, particularly with extremely low-income households, HUD charges 10 percent of income or a minimum of between $25 and $50 a month for public housing rent. HUD gives local housing authorities latitude to make rent decisions on a case-by-case basis, as long as they adhere to general HUD guidelines.
As a writer since 2002, Rocco Pendola has published numerous academic and popular articles in addition to working as a freelance grant writer and researcher. His work has appeared on SFGate and Planetizen and in the journals "Environment & Behavior" and "Health and Place." Pendola has a Bachelor of Arts in urban studies from San Francisco State University.