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Demystifying Low-Income & Affordable Housing in 2022

You’ve probably heard about affordable housing and low income apartments, but what does that mean, exactly? More importantly, how does affordable housing work? First, it's important to understand the disparity between income and the cost of rent. According to a recent study by Harvard University, 10.9 million renters (one in four) spend more than half of their income on housing. The government sets an income affordability standard for housing at 30 percent. This means anyone paying more than 30 percent of their income on rent is cost burdened and could need affordable housing assistance. Affordable housing means that, after paying rent, you should still have enough money for necessities like food, health care, and transportation.

Cost-burdened renters may be eligible for a variety of affordable housing programs provided by the government. The terms surrounding affordable housing and how it is determined can be confusing, so let’s review the process.



“AMI” stands for Area Median Income. Basically, it’s a way to determine, based on where you live and your income, whether you can afford to rent an apartment. Every year, HUD (Housing and Urban Development) determines the AMI for every region in the country.

The AMI tends to be higher in large cities. For example, what is considered affordable in San Francisco is quite different from what is considered affordable in Wichita. The AMI for San Francisco is $119,000. By comparison, the AMI for Wichita is $51,000. The average rent for a one-bedroom apartment in San Francisco is $2,780, which is roughly 30 percent of the AMI for the area. In Wichita, the average one-bedroom apartment is $650, slightly less than 30 percent of the area’s AMI.

Once the median income is established for an area, households earning less than 80 percent of that amount are considered low income. Those earning less than 50 percent are considered very low income, and anyone making less than 30 percent of the AMI is considered extremely low income.


According to HUD, anyone paying more than 30 percent of their income on housing is cost burdened, and anyone paying more than 50 percent of their income on rent is severely cost burdened. This income threshold was established by Senator Edward Brooke, co-author of the Civil Rights Act of 1968, a landmark law that included fair housing regulations. Brooke wrote an amendment to the National Housing Act, a law originally passed in 1934, known as the Brooke Amendment. The Brooke Amendment set the threshold for what households could affordably pay for housing. At the time, the cap was 25 percent, but it was raised to 30 percent in 1981.

Those earning less than 50 percent of the AMI might be eligible for a housing voucher. This is called the Housing Choice Voucher Program, or Section 8.


HUD provides federal funds to local public housing authorities, or PHAs. Those who are accepted into the program are able to find their own housing. This can include apartments, townhouses, and single-family homes. As long as the housing meets the requirements of the program, the applicant is able to select it and they are not limited to traditional subsidized housing. The landlord is paid a subsidy by the PHA on behalf of the applicant, and the applicant pays the difference between the actual rent charged by the landlord and the amount the program subsidizes.

30 Percent AMI

Those earning 30 percent of the AMI are considered extremely low income. Those considered extremely low income are usually granted priority by HUD for Section 8 vouchers.

50 percent AMI

Households earning 50 percent of the AMI are considered very low income. Those in this group will likely be given priority over those considered low income.

80 percent AMI

Those earning 80 percent of the AMI are considered low income. This group is given the lowest priority for Section 8 vouchers and will therefore likely spend more time on the waiting list.


Where affordable housing is simply housing that is affordable based on the AMI, low-income housing encompasses several federally funded housing programs. In addition to the Housing Choice Voucher Program, options include Section 42 and public housing.

Section 42

The Low-Income Housing Credit Program, also known as Section 42, was enacted to encourage the designation of low-income rental housing for those below specified income levels. In exchange for offering low-income rentals, the developers and investors receive tax credits and incentives. The housing can be newly constructed or rehabilitated older buildings, and it may be mixed (offering some units as low income and others at market rate). As long as a certain number of units remain available for low-income renters, the developers and investors can continue to claim the tax credit.

Public housing

Usually, public housing is owned by the local PHA. The PHA receives federal funds to build and operate these rentals. Traditional public housing is fading out in favor of Section 8 vouchers, but many housing authorities are still building new housing. However, instead of constructing housing independently as in years past, many PHAs are now partnering with private investors and developers. These investors and developers get tax credits in exchange for providing equity. Much of the public housing that was built before 1980 is still owned and managed by local PHAs.


The term “social housing” is fairly new to the US, but it is a common term throughout the rest of the world. Social housing is often owned and operated by a non-profit organization, sometimes along with the state. Social housing is considered permanently affordable because it isn’t subject to the price fluctuations that can drive up the cost of the real estate. This is because these properties are owned by a public entity (the state) or by a non-profit organization, taking them off the speculative market.

These rentals are often cooperative or democratically controlled, which gives residents a say in how their rentals are operated and maintained.


To apply for the Housing Choice Voucher Program, find and contact your local PHA. Those who qualify are placed on a waiting list. Some of the waitlist times are quite long, so it’s a good idea to try and get on more than one.

Applicants for housing vouchers have to meet certain criteria. HUD only grants vouchers to US citizens and those with eligible immigrant status. HUD also restricts those with an eviction for drug-related criminal activity within three years of applying. The government doesn’t look at credit history, only at your income and assets.

An application must be written, and the housing authority will want information such as the names of everyone in the household, dates of birth, and relationships to the applicant. Include family characteristics and circumstances that might help you qualify (i.e., veteran, living in substandard housing). Provide the names and addresses of current and previous landlords and other references.

After an application is submitted, a representative from the housing authority may visit for an in-person interview. During this interview, applicants are encouraged to ask questions.

Once the voucher is issued, HUD encourages participants to consider several options before deciding on a rental. The voucher will cover whatever amount is left after the 30 percent of income is applied to the rent. So, for example, if the rent is $1,000 and 30 percent of your income would be $600, the voucher would cover the other $400.

When an agreement is reached between the renter and the landlord, the PHA will inspect the property in question to ensure it meets health and safety requirements and to make sure the rent requested is reasonable.

If you’re applying to a LIHTC (Low Income Housing Tax Credit) apartment, you only have to fall within the unit’s income limits (usually 50 or 60 percent of the AMI). Unlike HUD housing programs, there are no immigration restrictions unless the property receives funding from an outside source. Rent in an LIHTC apartment isn’t based on income. The rent is tied to the unit itself, so the rent won’t change if your income increases or decreases.

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Alecia Pirulis original title and article Link

Credit: Article title and article cover photo: SMZ - Rural News Today

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