The Section 8 program run by the U.S. Department of Housing and Urban Development (HUD) provides direct benefits not only to eligible low-income families, but also to landlords. Households with annual earnings considerably below their area's median income can use a Section 8 subsidy to cover a portion of the fair market rent on many apartments offered by private landlords in their community. Property owners receive HUD's share of a Section 8 tenant's rent every month, guaranteed, from their local housing agency.
HUD uses income to regulate entrance into the Section 8 Housing Choice Voucher program. Families who fall into HUD's "very low income" and "extremely low income" categories can apply for benefits. HUD considers households with earnings at or below 50 percent of their area's median income "very low income," while families with incomes at or below 30 percent of the median are categorized as "extremely low-income." HUD requires local housing agencies to provide three-quarters of their Section 8 subsidies to families in the extremely low-income group.
Income limits vary from place to place and by family size. For example, 50 percent of the median income in the Charleston, South Carolina metropolitan area for a three-person household equals $27,950, as of 2010. That number trends higher to $31,050 for a family of four. An extremely low income Charleston household of three -- at or below 30 percent of the median -- makes $16,800 or less.
Local housing agencies derive their Section 8 rent calculations from annually published HUD fair market rents. For instance, HUD sets the fair market rent for a Charleston one-bedroom unit at $739 for 2011. If a family chooses to rent a one-bedroom at or below this rate, HUD requires them to put 30 percent of their income towards rent. If, however, a family wishes to rent a unit above the fair market rate, they must pay the additional amount. For example, if a family desires a $900 one-bedroom in Charleston, HUD requires them to pay 30 percent of their income plus the $161 over the fair market rent. In total, HUD prohibits Section 8 recipients from spending more than 40 percent of their income on housing. If a family makes $1,000 a month, HUD would not allow it to rent the $900 apartment ,because their total share would equal $461, or 46.1 percent of their income.
Most Section 8 applicants run into waiting lists. At times, local housing agencies close their waiting list when demand for Section 8 vouchers surpasses a certain point or exceeds near-term supply. The Code of Federal Regulations mandates that local housing agencies advertise publicly via local media before they reopen a Section 8 waiting list.
Landlords do not have to accept Section 8 tenants, but in most states, they can't turn somebody down simply on the basis of the subsidy. Most landlords who actively solicit Section 8 renters note this in their vacancy listings. A landlord agreeing to rent a unit to a Section 8 family must correspond with the housing agency that manages the Section 8 program in the local jurisdiction. The housing agency approves the arrangement after reviewing the landlord's paperwork and putting the property through a HUD inspection.