Section 8, or the Housing Choice Voucher Program, is a federal government housing program that allows low-income families and disabled and elderly individuals to rent housing in the private market based on eligibility criteria such as income and family size.
In the United States, almost 4.5 million residents live in Section 8 housing, and nearly 2 million of these individuals are children. Research shows that more than 50% of these residents will remain there for more than five years. This article will discuss Section 8 housing, what it is, who can qualify for it, and how to apply.
How Section 8 housing works
While Section 8 housing is a federally-funded rental assistance program, the vouchers are administered by local PHAs or Public Housing Agencies. They also set eligibility requirements for Section 8 housing in each state. Typically, a person’s gross annual income cannot exceed 50% of the median income for that area to qualify for Section 8 housing. Additionally, each PHA must ensure that 30% of all vouchers go to families with a gross income below 30% of the median income. Research shows that 80% of households under Section 8 housing earn less than $20,000 annually.
Individuals who qualify for Section 8 housing must pay 30% of their monthly income toward rent and utilities. The balance is paid directly by the PHA to the landlord. Here’s how it works in a nutshell:
- An individual or family can apply for the Section 8 Housing Choice Voucher (HCV) program through their local PHA. To find your local PHA, visit the U.S. Department of Housing and Urban Development (HUD) website.
- The applicant is placed on a waiting list. Section 8 waiting lists are often long, and it can sometimes take more than a year or two to have an application approved. Depending on need and urgency, applicants may be moved up the waiting list. In most communities, PHAs will give preference to the homeless, people living in substandard housing, or families paying more than 50 percent of their income in rent. Special preference is also given to victims of domestic violence and child abuse.
- Once the application is approved, the individual or family will receive a limited supply of vouchers that can be used to secure private housing units outside of public housing. These include apartments, single-family homes, condos, multi-family apartment buildings, group homes, mobile homes, or single rooms in a house or apartment. The applicant is solely responsible for any security deposits.
- Only properties that accept Section 8 vouchers can be rented. For a property to be leased under Section 8, the landlord must meet specific criteria. Depending on the housing authority, the applicant has 60 to 120 days to find a home. An extension can be provided if they cannot secure housing during that time.
- Once the landlord has screened and accepted the applicant, the PHA will pay a portion of the rent directly to the landlord.
While there are many upsides to the Section 8 program, it can be a challenge to get. Aside from the extensive amount of paperwork and years-long waiting lists, it’s important to remember that not all property owners accept Section 8 tenants. While some landlords will accept Section 8 vouchers, they are not required by law to do so and since conventional rental housing rates have outpaced fair housing market rents in many areas over the last few years, many landlords are hesitant to do so.
Types of Section 8 housing
There are two main types of Section 8 housing:
- Tenant-based: Tenant-based housing is the Section 8 Housing Choice Voucher program, which is linked to the applicant. As long as an applicant qualifies for Section 8 housing, they can use the voucher to rent any property in the U.S. that accepts the vouchers and meets the Department of Housing and Urban Development’s Housing Quality Standards (HQS). The porting family can then use their housing voucher in a new rental unit.
- Project-based: Project-based housing is attached to the property, not the applicant. This means that the private property owner receives the vouchers from the PHA to reserve units for Section 8 tenants. While tenant-based vouchers have portability, that is, voucher holders can use them anywhere in the United States, project-based vouchers stay with the property and are used by the next tenant once someone moves out of the property
Eligibility criteria for Section 8 housing
The local PHA determines an applicant’s eligibility for a housing voucher based on their annual income and family size. During the application process, the PHA will collect the necessary information on income, assets, and family composition and make verifications through other agencies. Some of the things the PHA will look at are:
To qualify for Section 8 housing assistance, the renter’s income must be less than 50% of the median income for the local area at the time of the application. This can differ widely by region; therefore, it’s a good idea to research the median income in your local area before applying. All income, including overtime, child support, retirement funds, welfare, and disability benefits, is included in this calculation. Suppose the family’s income rises during the process of receiving the subsidy. In that case, they will still be eligible to receive the support as long as it remains below 80% of the median income for the local area.
The local PHA reviews the income eligibility for Section 8 assistance each year.
A family or individual’s income is an important consideration when applying for Section 8 assistance, but that income limit also depends on family size. The local PHA will consider many factors, such as the number of people in an applicant’s household and whether there are any minor children, disabled people, and individuals over the age of 62. Of course, individuals can apply for rental assistance, too, and their personal and living circumstances are also looked into.
An applicant must be a legal U.S citizen or an immigrant who meets specific requirements to receive the Section 8 housing voucher. You will be required to provide evidence of citizenship or legal immigration status, and each family member must sign a form stating that they meet all citizenship requirements. Undocumented immigrants are not eligible for housing assistance.
Anyone who has been evicted from public housing or any Section 8 program for a serious lease violation, such as criminal activity related to drugs, is ineligible for the Section 8 housing program for at least three years from the date of eviction. It’s best to check the individual requirements for your local PHA if you have any prior evictions, especially from public housing authorities, on your record.
Individuals are required to undergo a criminal background check when applying for a Section 8 housing voucher. Having a record won’t automatically disqualify you from receiving assistance, but it’s worth checking with your local PHA to understand their specific criteria and how they may affect you.
Advantages of being a Section 8 landlord
Renting to Section 8 tenants offers several compelling benefits that can make it an attractive option for property owners:
- Guaranteed rental income: One of the most significant advantages of renting to Section 8 tenants is the assurance of regular rental payments. HUD directly pays a portion of the tenant’s rent, providing a reliable and consistent source of income for property owners. Landlords may also be able to increase the rent each year based on the property’s fair market value as determined by HUD.
- Income reduction protection: If a tenant’s income is reduced, they have the right to request a rental payment re-evaluation. HUD may elect to increase the rent they pay directly, protecting the tenant and the property owner from income fluctuations.
- Reduced vacancy rates: With many individuals and families relying on Section 8 assistance, there is often a high demand for rental properties that accept these tenants. This can lead to lower vacancy rates, ensuring a steady stream of occupancy and minimizing income loss due to empty units.
- Long-term tenancy: Section 8 tenants tend to stay in their rental homes longer. This stability can benefit rental home investors, reducing turnover costs such as advertising, screening, and preparing the property for new tenants.
- Property maintenance: Section 8 tenants must maintain their rental homes in good condition, as per HUD regulations. This can result in better care and upkeep of the property, reducing the landlord’s maintenance expenses and preserving the property’s value.
- Access to support services: Section 8 tenants often have access to various support services provided by local housing authorities. These services can include counseling, job training, and assistance programs, which can contribute to the overall stability and success of the tenant, ultimately benefiting the rental property owner.
Buying a house through Section 8
Since 2000, the HUD has made it possible for Section 8 tenants to put their vouchers towards purchasing a home through the Section 8 Housing Choice Voucher HomeOwnership program, which allows qualified tenants to rent to own.
While local PHAs have no obligation to participate in the program, many do. That said, there are few opportunities for tenants to take advantage of this program, mainly because landlords can frequently rent at higher than market value rates and are often unwilling to sign agreements to sell to anyone under a Section 8 Homeownership program.
If your PHA offers a rent-to-own assistance program, you’ll need to meet the following additional criteria to be eligible:
- You must be a first-time homeowner.
- At least one person in the household must be employed full-time.
- You must have a certain amount of money in a savings account.
- You must attend and complete a pre-assistance homeownership course as well as a housing counseling program.
A vital factor to consider is that since Section 8 housing is limited to 15 years, if your mortgage is for 20 or 30 years, you will only have assistance for 15 of those years.
Another variation of Section 8 is the HUD-Veterans Affairs Supportive Housing (HUD-VASH) program, which combines HUD’s Housing Choice Voucher rental assistance for homeless veterans with clinical services provided by the Department of Veterans Affairs. You can find additional information and FAQs about the program and affordable housing opportunities on the program website.
The bottom line
One of the most significant advantages of Section 8 housing is that instead of relying exclusively on public housing, Section 8 gives low-income households the ability to get safe and sanitary accommodation in the private rental market. Further, it allows many eligible families to partake in the rent-to-own program and get on the property ladder.
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