Living Independently: Federal Housing Assistance Programs

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Federal Housing Assistance Programs:

The U.S. Department of Housing and Urban Development (HUD) funds a variety of programs designed to provide “decent, safe and sanitary” housing for families with low incomes. HUD’s rental-subsidy programs make housing affordable by allowing families to pay a percentage of their adjusted income (usually 30 percent) for housing, while HUD funds make up the difference between the family’s contribution and the total rent. Generally, when a family’s income increases, so does their portion of the rent. Conversely, if family income decreases, their share of the rent usually goes down as well.       NOTE: HUD’s rental subsidies don’t count as income for SSI, and they have no impact on Title II disability benefits. Some HUD programs include incentives for families to pursue employment or economic self-sufficiency. These incentives take three forms: Allowing certain family members to work without the family’s rent increasing immediately. Rent increases are phased in; Setting aside the increased rent a family pays when a member goes to work into a special account, and allowing the family to use those funds to pursue a self-sufficiency goal; or (after achieving the goal) Enabling a family to use its HUD subsidy to buy a home rather than rent it. HUD funds a variety of rental-subsidy programs. The three primary programs are:
  1. Public housing
  2.  Project-based Section 8
  3.  Housing Choice Voucher (also known as tenant-based Section 8)
All three programs apply very similar rules to determine the amount a family will pay for housing. The major difference among the programs involves whether the family must live in a particular housing project or may choose where to live. Public housing and project-based Section 8 provide “project- based” assistance — families must live in particular housing projects, and if they move out, they lose their housing subsidies. Housing Choice Vouchers provide “tenant-based” assistance — families can choose where to live, and they may take their subsidies with them if they move. Local agencies called “public housing agencies” (PHAs) generally administer HUD programs at the local or state level, using HUD funds. HUD rules govern the programs, but PHAs may set some rules as well. HUD programs don’t have sufficient resources to serve all families who need and want assistance. As a result, programs usually have long waiting lists. Families often need to wait even to be included on waiting lists, and they should take certain measures to ensure they will be admitted to HUD programs once they have been added to the lists.

Basic HUD Rental Subsidy Programs and Eligibility Requirements

The three basic HUD rental subsidy programs are:
  1. Public housing;
  2. Project-based Section 8 rental subsidies; and
  3. Housing Choice Voucher (and Project-Based Voucher)

Public Housing

PHAs own and operate public housing, although the funding comes from HUD. It takes a variety of forms, including high-rise apartment buildings, smaller groups of apartments, or even detached single-family homes. Families can only use the rental subsidies that come with public housing in public housing; if a family moves out, they lose the subsidy. To be eligible for public housing, a family must have “low income.” However, 40 percent of public housing units newly rented each year must go to “extremely low income” families. More information about public housing is available at HUD’s website Click Here

Project-Based Section 8 Rental Subsidies

Project-based Section 8 rental subsidies make housing affordable in privately owned and operated housing projects. The subsidy applies to a specific unit in the project, so if the family moves, they usually lose the subsidy. A family must have “very low income” to be eligible for a project-based Section 8 subsidy, although projects that began receiving rental assistance before October 1, 1981 may admit families with “low income”. Forty percent of new admissions each year to project-based Section 8 subsidies must go to “extremely low income” families. More information about Project-Based Section 8 Rental Subsidies is available on HUD’s website Click Here

Housing Choice Voucher (also known as Tenant-Based Section 8)

Housing Choice Vouchers subsidize rent in privately owned housing units other than housing projects. Generally, a family may use a Housing Choice Voucher to rent an apartment or house if the landlord is willing to participate in the program. Housing Choice Vouchers are portable. This means that a family may move and bring the subsidy with them, and can live anywhere in the United States. Only families with “very low income” may qualify for Housing Choice Vouchers. Each year, “extremely low income” families must receive 75 percent of the vouchers. More information about Housing Choice Vouchers is available on HUD’s website Click Here PHAs can use up to 20 percent of their Housing Choice Voucher funding to provide Project-Based Vouchers, which apply to particular units in privately owned housing projects. A family that receives a Project-Based Voucher must live in the unit for at least a year, or else they will lose their subsidy. If the family moves out of the unit after a year, they may request a tenant- based rent subsidy in the unit to which they move. HUD Income Definitions:
  1. Low income: At or below 80 percent of the median income for a family of a given size in the local area.
  2. Very low income: At or below 50 percent of the median income for a family of a given size in the local area.
  3. Extremely low income: At or below 30 percent of the median income for a family of a given size in the local area.
Because median income in a local area determines income eligibility for HUD programs, actual income dollar limits will differ widely from one area to the net. Find income limits online Click Here In addition to meeting income limits, a family must meet these criteria:
  • Constitute a “family,” as defined by the PHA; Prove that at least one member is a U.S. citizen or eligible immigrant. Click Here
  • Provide Social Security numbers for all members of the family aged 6 or older
  • Complete a satisfactory background check that considers rental history and criminal background.

Who Is Included in a “Family”?

To be eligible for HUD rental subsidy programs, the household members must meet the definition of a “family.” Each PHA provides its own definition of “family,” using HUD guidelines. Generally, a family is a single person or a group of people, with or without children. A child who is temporarily out of the home due to placement in foster care remains a member of the family. All residents of a single dwelling count as part of the family, except live-in aides.
HUD also provides these definitions:
Disabled or elderly family: A family whose head, co-head, spouse, or sole member is disabled or at least age 62; two or more persons living together who are all disabled or at least age 62; or one or more persons living together who are all disabled or at least age 62 and who live with one or more live-in aides.
Person with a disability:
A person who: Meets Social Security’s adult definition of disability (see Section 223, Social Security Act); or Is determined by HUD regulations to have a physical, mental, or emotional impairment that:
  • Is expected to be of long, continued, and indefinite duration;
  • Substantially impedes his or her ability to live independently; and
  • Is of such a nature that such ability could improve with more suitable housing conditions; or
  • Has a developmental disability as defined in Section 102 of the Developmental Disabilities Assistance and Bill of Rights Act.
The disability must not be based solely on drug or alcohol dependency. HUD programs may exclude a person who would pose a direct threat to the health or safety of others, or who would cause substantial damage to the property of others. A student in higher education can’t qualify for HUD Section 8 assistance if she or he:
  • Is under age 24;
  • Isn’t a U.S. military veteran;
  • Is unmarried;
  • Doesn’t have a dependent child;
  • Isn’t a person with a disability who was receiving Section 8 assistance as of November 30, 2005; and
  • Isn’t otherwise individually eligible, or has parents who aren’t eligible for Section 8 on the basis of income (24 CFR 5.612)

Basic Rent and Utility Payment Calculation

A family in a HUD rental subsidy program generally pays the highest of the following for rent and utilities (“total tenant payment”):
  • 30 percent of adjusted family income;
  • 10 percent of gross family income;
  • If the family receives welfare assistance payments, the amount of that assistance designated for housing; or
  • The minimum rent for some programs ($25/month to $50/month), unless the family is exempt from the minimum rent due to financial hardship.
  • For most families, the rent and utility payment is 30 percent of adjusted income. PHAs can choose different calculation methods to set total tenant payment, so long as they don’t yield amounts higher than the standard method.
NOTE: If a family with a Housing Choice Voucher rents a unit whose gross rent exceeds the “payment standard” – an amount set by the PHA based on average market rental costs for a unit with a given number of bedrooms – they must pay the difference between the gross rent and the payment standard PLUS the amount they would otherwise pay (usually 30% of adjusted income). When the family first chooses the unit, they will only be allowed to rent it if their total payment is no greater than 40% of adjusted income. However, if rent rises after initial occupancy, a family with a Housing Choice Voucher may pay more than 40% of adjusted income.
Calculating Adjusted Income
To compute adjusted income, the PHA:
  1. Adds all included income;
  2. Doesn’t include any excluded income; and
  3. Subtracts income deductions.
Included Income
Income includes, but isn’t limited to: Earned income of employees (before taxes or other payroll deductions). Self-employment earnings, after subtracting:
  1. Business expenses (but not expenses used to expand the business or capital improvements);
  2. Interest paid on loans for the business (but not loan principal, or interest on loans used to expand the business or make capital improvements);
  3. Depreciation computed on a straight-line basis; and Interest and dividends.
  4. Most periodic payments, including Social Security, SSI, public assistance, annuities, insurance payments, pensions, retirement funds, disability and death benefits, unemployment and workers compensation, alimony and child support received, etc.
  5. Income deriving from assets.
Assets
HUD programs don’t have asset limits. However, HUD counts any income that a family derives (or could derive) from assets during income determinations. If total assets are $5,000 or less, HUD counts only the actual income (interest, dividends) the family receives from the assets. If total assets are more than $5,000, HUD counts the larger of: The actual income received from the assets, or A percentage of the value of the assets based on the current passbook savings rate established by HUD.
Excluded Income
HUD doesn’t count some types of income under HUD mandatory rules. The following types are especially relevant to family members who are working for pay and for people with disabilities:
  • Earnings from work of children under age 18.
  • Earnings in excess of $480 per year for each full-time student 18 years or older (excluding the head of household and spouse).
  • Amounts received in training programs funded by HUD, and in qualifying state or local employment training programs, including payments for job-related expenses.
  • Reimbursement for expenses incurred to participate in publicly assisted programs.
  • Resident service stipends up to $200 per month. Income used to pay expenses under a Plan to Achieve Self Support (PASS).
  • Payments received for providing foster care.
  • Income of a live-in aide.
  • Funds paid by state agencies to a family to offset services needed to keep a family member with a developmental disability living at home. Reimbursements for medical expenses.
  • Lump sum SSI and Social Security benefits.
  • Amounts withheld from public benefits to recover overpayments.
  • SNAP and other food assistance program benefits.
  • Earned Income Tax Credit (EITC) refunds.
  • Personal needs allowances received by people in intermediate care facilities for people with developmental disabilities and assisted living units.
Mandatory Income Deductions
  • HUD deducts these amounts from family income under mandatory HUD rules:
  • $480 per year ($40 per month) for each dependent who is under age 18, disabled, or a full-time student.
  • $400 per year ($33.33 per month) for a disabled or elderly family. Child care expenses for a child under age 13 to enable a family member to work, seek work, or further his or her education.
  • The amount of the following two expense types that exceed 3 percent of gross family income:
    1. Unreimbursed medical expenses for all members of a disabled or elderly family.
    2. Unreimbursed reasonable attendant care and assistive technology costs needed by a family member with a disability to enable any family member to be employed. Attendant care “includes but isn’t limited to reasonable expenses for home medical care, nursing services, housekeeping and errand services, interpreters for hearing-impaired, and readers for persons with visual disabilities.”
Optional Income Deductions
PHAs may adopt optional deductions for public housing, but only if they are willing to absorb the costs (i.e., the PHA must provide funds to offset the reductions in rent resulting from the optional deductions). As a result, most PHA’s don’t offer optional deductions. Written by: Iris Neil[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text] [/vc_column_text][/vc_column][/vc_row]