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Low Income vs. Affordable Housing: What's the Difference?

May 16, 2022
Low-income housing describes residences designed to support renters struggling to keep up with rising rental costs. Affordable housing defines properties that take up less than 30% of a renter’s income.

If you're struggling to afford rent, you're not alone. Research shows that 49% of Americans say the availability of affordable housing in their local community is a significant problem.

Relief could be within reach! Some programs, including low-income and affordable housing, could help you pay your rent without feeling financially burdened. Here's what to know about low income vs. affordable housing, the differences, and how to apply.

What Is Low-Income Housing?

Low-income housing helps renters who cannot keep up with rising rents and marketing changes. A household is considered low income if it makes below 80% of the median income in the local area.

Public housing and its related programs aren't new. The first public housing was created in Atlanta, GA, in 1935 as part of the New Deal initiated by President Franklin D. Roosevelt. Initially, public housing was segregated by race. However, a year after the Supreme Court invalidated "separate but equal" public education, the Eisenhower administration legally ended public housing segregation.

What Is Affordable Housing?

The Department of Housing and Urban Development (HUD) defines affordable housing or apartments as one a household can obtain for 30% or less of its income. The team at Apartment List also recommends using the 30% rule or spending no more than 30% of your take-home pay on rent to live comfortably.

Of course, this figure also varies from city to city. For example, many people in San Francisco and New York City spend more than 30% of their income on housing.

Some affordable housing programs incentivize developers to create a specific amount of rentals below market value. The developer receives tax credits to help bring their project costs down in exchange.

What's the Difference Between Low Income vs. Affordable Housing?

Although low-income and affordable housing sound the same, there are critical differences in these income-restricted programs.

Low Income

Low-income housing requires qualifying through your local housing authority. Here are some factors to consider:

  • Requires earning less than 80% of the median income in the local area, or AMI
  • Requires proof of income, including recent pay stubs, invoices, and IRS tax returns
  • Requires reporting income changes to the local housing authority, even after signing a lease
  • Includes Public Housing and Section 8 programs
  • Most low-income housing and apartments are rented directly through public housing authorities

Affordable Housing

Learn about some of the criteria and key factors of affordable housing:

  • HUD determines that paying more than 30% on housing qualifies renters as cost-burdened
  • Spending 50% or more of your income on rent qualifies you as severely cost-burdened
  • HUD provides federal funds to local public authorities (PHAs) through housing vouchers.
  • Renters who are eligible for affordable housing look for apartments and homes on their home
  • Housing that meets the requirements of the program qualifies for a landlord-paid subsidy by the PHA
  • The tenant pays the difference between the rent and the PHA subsidiary

Street of new affordable houses

Pros of Low Income Housing

Public housing has many pros, including fewer evictions and a path out of homelessness. Programs like public housing can also help ease poverty. When tenants pay below market value for rent, they can save more, stay healthier, and put more spending money back into their community.

Public housing programs must adhere to safety and property maintenance, and most have 24-hour security and video surveillance. Depending on the area, public housing may also lead to lower rents in its surrounding community.

Cons of Low Income Housing

Some say public housing burdens taxpayers and takes away from other projects the community wants. In addition, it can often be isolating. These buildings are usually found in a high concentration in specific parts of a city, which cuts off daily interaction with a broader community.

Despite the safety precautions in public housing communities, many are still considered dangerous. Crime tends to be higher in areas with public housing, and many residents are ostracized for living in the area.

It's also not uncommon to hear stories that buildings are not maintained as required. Despite the drawbacks, project housing still has a long waitlist, leaving many people vulnerable while waiting for accommodations.

Pros of Affordable Housing

There are many pros to affordable housing, starting with its distribution. Private landlords can accept housing vouchers and help reduce overcrowding in specific areas.

Developers who take advantage of affordable housing incentives can also help reduce overcrowding. For example, instead of concentrating their apartment and housing development in just one area, they can build in multiple neighborhoods.

The arrival of both low income and affordable housing also stimulates job growth. As a result, more people take jobs that they may otherwise not be able to due to high rents. In addition, there are fewer evictions with affordable housing, and renters have more disposable income to spend in their community.

couple standing with their backs towards camera. man pointing to apartment window for brunette woman

Cons of Affordable Housing

There may be push-back in communities about affordable housing, arguing that charging less than market value will slow revitalization efforts. But, like public housing, affordable housing programs have long waitlists and are income-restricted. So as you earn more, you may need to find a new place to live.

Developers participating in affordable housing incentives usually only receive tax credits for up to 10. years. However, the developer may decide to dump their units after this period by selling off the building or turning the units into condos for sale.

What Is Section 8 Housing?

Section 8 is an out-of-date name for the rental assistance program. Today, it is referred to as the Housing Choice Voucher Program (HVC).

Section 8 is a public housing program that offers vouchers to assist low-income families, the elderly, and the disabled. In addition, the program authorizes rental housing payments to private landlords on behalf of low-income tenants.

Section 8 is sometimes called the "Housing Choice Program" and requires tenants to pay a minimum of 28.% of their income towards their monthly rent. The program pays for the remainder of the rent directly to the landlord.

Despite the differences in how rent is paid, landlords still screen prospective Section 8 tenants the same way as other applicants. Tenants also sign a lease agreement, just like other renters.

What Is Section 42?

Section 42, or the Low-Income Housing Credit Program, encourages low-income rental houses for those who qualify based on income. Developers and investors who offer low-income rentals receive tax credits and other incentives.

Some of the units in the development can be rented at market value or above. However, a specific number of units must remain available for low-income renters for developers to continue claiming their credit.

couple managing expenses with laptop and checking accountancy and bills, panorama

How Do You Apply for Low Income and Affordable Housing?

Public housing, housing vouchers, Section 8, Section 42, and just about any income-restricted housing programs require an application process. Here's how to get started.

Learn Your Local Income Guidelines

The income guidelines for public housing and affordable housing may vary depending on your area. Learn more about income-restricted programs' housing eligibility requirements by visiting the HUD website.

Get in Touch with Your Local PHA

After determining your guidelines and eligibility, contact your local public housing authority to apply. The local PHA will help you determine your approximate rental costs, what size apartment you could qualify for, and guide you through what types of rentals are available.

Fill Out an Application for the Program

You can apply for government-owned apartments and related programs through your local PHA. However, you will need to apply directly with the landlord for privately owned properties qualifying for low-income and affordable housing.

If you plan to live with a significant other, family member, or friend, they will also need to qualify for income-restricted housing. In addition, background checks will also be performed, which could disqualify renters in some areas from income-restricted housing.

Collect Your Documentation and Proof

Applicants are required to provide documentation, including their verified income. This rule extends to everyone living in your household, including roommates. All adults are also required to provide a government-issued ID and birth certificates for any children.

Get on the Waitlist

Waitlists are the norm with income-restricted housing. These programs are competitive and attract many applicants. Try to stay open-minded to what type of apartment you receive and stay as flexible as possible to keep the process moving.

Keep Your PHA Updated with Any Income Changes

Careers and income change, so make sure you stay on top of your application. In addition, you must keep your PHA updated with any income changes, both during the waiting process and after you move into your affordable or public housing rental.

It could also benefit you to report income changes. For example, you might need to pay more for rent if you earn more, but you’re likely to stay in your current rental. However, earning less means you’ll have more assistance and cheaper rent.

Final Thoughts

Affordable apartments are within reach, provided your income qualifies. But, of course, waitlists and limited housing inventory are issues in many cities. To start looking for cheap apartments now, try Apartment List and narrow your filters to look for affordable options in your area.

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Susan Finch
Susan is an accomplished freelance writer whose passion for rental real estate, travel, and digital marketing has been the driving force behind her nearly 15-year career. Throughout her professional journey, Susan has become a seasoned veteran in creating compelling and informative content focused on the tenant/landlord relationship. Read More
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