The U.S. Department of Housing and Urban Development provides a large chunk of the nation's affordable rental housing through its public housing and Section 8 Housing Choice Voucher programs. Both programs involve taxpayer-funded subsidies that effectively lower the amount of rent program participants must pay. To direct assistance to the families who need it most, HUD uses income as the main qualifying criterion for both initiatives.
HUD restricts access to both its public housing and Section 8 programs. As it stands, HUD notes that waiting lists in some cities often produce waits of months, if not years. In fact, some housing agencies close their waiting lists when demand for low-income housing significantly outstrips available resources. To limit the number of applicants and ensure that the neediest families have the best chance of securing benefits, HUD sets up a system of income limits to uses with all of its programs.
HUD places families into one of three categories, based on a metropolitan area or county's median income. If a family earns an annual wage that is at or below 80 percent of its area's median income, HUD labels the family "low-income." Yearly earnings at or below 50 percent of its area's median puts a family in HUD's "very low-income" category, while income at or below 30 percent of the median prompts a classification of "extremely low-income." For public housing, HUD takes applications from all three groups. For Section 8, it only accepts applicants from the last two.
Each year, HUD sets limits that vary by metro area or county. For example, $52,100, $32,500 and $19,500 represent 80, 50 and 30 percent of the Houston, Texas metro area's median income, as of 2010 for a family of four. In less-affluent places such as El Paso or Laredo, Texas, those numbers drop to $37,200, $23,250 and $13,950, respectively, for a four-person household.
HUD sets its income limits based on the American Community Survey data produced by the U.S. Census Bureau. HUD concedes that its income limits do not always coincide with present-day reality. For example, HUD uses American Community Survey figures collected between 2006 and 2008 to calculate its 2010 income limits. This two-year "lag" time may not take into account recessions and other factors impacting incomes and overall economic conditions.