By Jared McKinney
Finding a new home is an important and often stressful decision. For low-income families, this process can be even more difficult to navigate. Rent can take a large chunk out of people’s income. This can stretch an already tight budget for renters with a lower income. Fortunately, there are programs out there that can make housing more affordable. There are a variety of options - and because the information isn’t always easy to find, it helps to know just where to look.
Income-restricted apartments can provide relief for low-income families searching for affordable housing. Income-restricted apartments are privately owned apartments that receive subsidies from the government when they rent to low-income tenants.
Two different rents are calculated for income-restricted apartments.
First is the market value, which is ultimately how much private owners will receive from their property in total. This can be roughly calculated by checking the current value of apartments in that neighborhood while taking their size, location, and condition into account.
The tenant does not pay the full market price when renting an income-restricted apartment. Instead, the amount owed by the tenant is determined by the area’s median income. The renter will pay more if their income is close to the area’s median income, and they will pay less if their income is much lower.
Renters with average income for the area will therefore pay a higher percentage of the market value, while renters with low incomes will pay a lower percentage.
Government subsidies pay the remainder of the rent. These subsidies can take the form of vouchers given to renters or a federal tax credit given directly to rental companies.
Whether or not you qualify for an income-restricted apartment depends on how your income measures up to the local median income.
The local housing authority sets income guidelines for tenant eligibility. Oftentimes, the tenant’s income will be classified into different tiers: low-income, very low-income, or extremely low-income.
According to REthority, low-income is typically classified as being lower than 80% of the local median income; very low-income is considered to be lower than 50% of the local poverty level, and extremely low-income means that it is below 30% of the local poverty level.
Approval for income-restricted apartments often prioritizes renters with extremely low adjusted gross income.
income-restricted homes are privately owned. While you would deal with government programs to see if you qualify for eligible apartments, you would be signing a lease with an individual landlord or rental company.
One of the advantages of income-restricted apartments being privately owned housing is that they are intermingled with apartments marketed to renters with higher monthly income.
Because of this, you can potentially find affordable housing options in attractive apartments buildings close to desirable amenities.
Income-restricted apartments can be found in the same buildings as non-subsidized units, so landlords are incentivized to keep all of their units in good condition to attract renters of all income levels.
Another benefit of having income-restricted apartments in apartment buildings with private owners is that they tend to be kept in good condition. Even though they receive government subsidies, private landlords still rely on the market value of each housing unit to determine their maximum income for the month.
If they let an income-restricted apartment fall into disrepair, then the market value would drop, causing the landlord to receive less income from the property. To check the condition of apartments during your search, you can see photos and reviews on apartment listing sites such as Rentlingo.
Income-based apartments provide affordable housing with government-owned housing units. Also known as Section 8 housing, income-based apartments charge rent based on a percentage of the renter’s income.
For income-based apartments, monthly rent is capped at 30% of the tenant’s income. As with income-restricted apartments, income-based apartments complete their housing costs with government subsidies.
Eligibility for income-based housing depends on your annual gross income, family size, citizenship status, and other factors that you can find here.
When renting income-based apartments, you will be dealing directly with a government-run housing authority. Income-based apartments are owned by the government and are often referred to as public housing.
Income-based apartment buildings are often built as part of housing and urban development initiatives. Because of this, entire buildings are sometimes entirely comprised of low-income units.
Income-based apartments are run by government agencies with limited funds. Because of this, they can receive fewer upgrades and contain older appliances than privately owned properties. However, don’t let that discourage you from seeing apartments in person, as there are still options that are kept up to date.
When comparing income-restricted and income-based housing, here a few key differences to consider:
For income-restricted housing, rent prices are dependent on the average income of the area. Because of this, your eligibility is determined based on how much you earn compared to others in the area - so is the price you will pay.
For public housing, rent prices are capped at 30% of your income, so you’ll know earlier in the process what you can expect to pay.
Income-restricted apartments are owned privately. The advantages of this are that units are mixed with higher income rentals, so the amenities and upkeep conditions are usually superior.
Income-based apartments are owned by the government and are operated by government agencies with limited budgets. Sometimes this leads to less appealing conditions. However, it is still best to see available units for yourself to decide what’s best for you.
Your eligibility for low-income housing can depend on your area’s median income. Knowing this number is essential during your application process.
Information regarding the median income and low-income requirements of your area can be found at the Department of Housing and Urban Development. Median incomes vary widely from city to city, so be sure to find areas where your income qualifies.
Be sure to follow the requirements of your application, so it doesn’t get delayed. When you are ready to start applying for subsidized housing, take the following steps:
The Public Housing Authority will help guide you through the apartments you qualify for as well as the availability of apartments in your area.
When filling out your application, you may be required to provide the following information:
Affordable housing offers great benefits to many low-income families. However, there are usually fewer units than there is demand for.
Both income-restricted and income-based apartments are in high demand. Because of this, there is a waiting list in most areas. If you are considering these options for affordable housing, start the process as early as you can so you can get further ahead in line.
Once your application is approved, you will need to sign a lease with either a private owner or a government agency. If you’ve rented before, then you’re familiar with signing a lease.
Leases detail a building’s regulations - whether pets are allowed, open flame policies, quiet hours, etc. They also document the apartment’s condition at the time of moving in.
Don’t let this next part surprise you, as it adds an extra cost to your new home. You will need to put down a security deposit, which can be up to one and a half times the monthly rent. If you damage the property, then the cost of repairs will be taken out of your security deposit.
Some landlords and agencies may also require a criminal background check before signing the lease. Make sure you are familiar with all of the contract’s expectations, so there are no surprises.
As you move through the process of finding subsidized housing, it can help to have a caseworker who knows the area’s requirements. Even with the added steps, income-restricted and income-based housing can change the lives of many.
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