The current policies base families' eligibility for assistance on their incomes and their contributions toward their rent on a share of their adjusted incomes. While the current, rather complicated system is designed to ensure that the most accurate estimate of family income is calculated and that families' financial circumstances are fully captured, it can also lead to confusion among recipients as well as difficulties for local program administrators. This report provides answers to some of the most common questions about the income and rent policies in federal rental assistance programs, including questions about where these policies came from and how they compare to other federal assistance programs that serve the same or similar purposes or populations. It is intended to help answer commonly asked questions, as well as provide information to policymakers seeking to understand and evaluate proposed changes to the current system. This report discusses the five main Department of Housing and Urban Development (HUD) programs that subsidize rents for low-income families. Together, these programs serve more than 4 million families and make up well over three-quarters of HUD's budget. These rental assistance programs are
Public Housing —housing developments owned and operated by local Public Housing Authorities (PHAs) for which the federal government provides capital and operating assistance; Section 8 Housing Choice Vouchers (HCVs) —rent subsidies that tenants can use to subsidize their rents in the private market housing of their choice; Section 8 project-based rental assistance —subsidies provided directly to private owners of multifamily housing to subsidize the rents of specific units; Section 202 Supportive Housing for the Elderly —multifamily housing developments owned by private nonprofit organizations for which the federal government provides capital grants and project-based rental assistance; and Section 811 Supportive Housing for Persons with Disabilities —similar to Section 202, but serves persons with disabilities. And non-HUD programs, such as the Department of Agriculture Rural Housing Service rental assistance programs and the Low Income Housing Tax Credit, also have different policies for eligibility and assistance. It is important to note that even though a family may be eligible for assistance, they are not guaranteed to receive it. Housing assistance programs are not entitlements, thus, due to funding limitations, they serve only roughly one in four eligible households. Families wishing to receive assistance are generally placed on waiting lists. What Counts as Income?29

In general, the statute and regulations governing HUD rental-assistance programs define income by what is excluded , rather than by what is included; most common sources of income from all family members count in determining a family's eligibility for HUD-assisted housing, unless they are otherwise excluded by statute or regulation. What Is the Origin of the Income-Based Rent Setting Standard? HUD operates additional housing programs, and the Departments of Agriculture and the Treasury also administer housing programs targeted to low-income families. These other housing programs serve similar populations as the five HUD rental assistance programs, and while there may be some differences in eligibility and benefit structures, they also use many of the same income and rent standards as the five HUD programs. This is important to note because if changes were to be made to the income and rent policies governing HUD's rental assistance programs, those changes may also affect other programs. This section of the report provides brief comparisons of HUD's five main rental assistance programs to other federal housing programs as well as other federal benefits programs that serve low-income populations. These programs are the Homeless Assistance Grants, the Housing Opportunities for Persons with AIDS (HOPWA) program, and the HOME Investment Partnerships program. The regulations governing income and adjusted income for the five HUD rental assistance programs and discussed in this report apply. How Do These Income and Rent Policies Compare to Non-HUD Housing Assistance Programs? USDA uses the same basic standards as HUD for determining family income, adjusted income, and rent. The LIHTC program uses the HUD definition of income. Families are eligible for SNAP benefits if they meet income eligibility standards based on federal poverty guidelines that generally apply to the entire country, rather than the local area median income limits used in the HUD rental assistance programs.
The Department of Housing and Urban Development (HUD) administers five main rental assistance programs that subsidize rents for low-income families: the Public Housing program, the Section 8 Housing Choice Voucher program, the Section 8 Project-Based Rental Assistance program, the Section 202 Supportive Housing for the Elderly program, and the Section 811 Supportive Housing for Persons with Disabilities program. Together, these programs serve more than 4 million families and make up well over three-quarters of HUD's budget. All five programs provide rental assistance in the form of below-market rent available to low-income individuals and families. While the programs vary in some important ways—how assistance is provided, who administers the assistance, whether the assistance is restricted to certain populations—they use many of the same or similar standards when establishing tenants' income eligibility and their minimum contributions toward rent.
Families are generally eligible for HUD assistance if their incomes are below certain income standards set by HUD. Unlike the poverty measurement used by some other federal benefits programs that target low-income populations, income eligibility for HUD-assisted housing varies by locality and is tied to local area median income. Income, for the purposes of eligibility, is defined as income from all sources earned by all members of the family, with some exclusions (e.g., income earned by minors). Although a family may be eligible for assistance, they are not guaranteed to receive it. Housing assistance programs are not entitlements, thus, due to funding limitations they serve only roughly one in four eligible households. Families wishing to receive assistance are generally placed on waiting lists.
Once a family is determined eligible for HUD assistance and is selected to receive assistance, the rent they pay is generally based on 30% of their adjusted income. Those adjustments include deductions for elderly and disabled families, certain medical costs, and certain child care costs. Families' incomes, adjusted incomes, and contributions toward rent are typically recertified annually.
The laws governing both income eligibility and tenant rents were standardized in the early 1980s, although the origins of the current policies date back earlier and are derived from experiences with the public housing program, which was the first federal rental assistance program.
The income and rent policies in the five primary HUD rental assistance programs are also used to some extent by other HUD programs such as the homeless assistance programs and the HOME Investment Partnerships program. Looking at non-HUD housing programs, the Department of Agriculture's rural rental assistance program largely uses HUD's income and rent policies, and the Department of Treasury's Low-Income Housing Tax Credit program uses some HUD standards, but not all of them. Comparing HUD's primary rental assistance programs to other federal assistance programs that serve similar populations, HUD's programs differ in important ways; most notably, other assistance programs devolve more decisionmaking about income determination and eligibility to state administrators, whereas the HUD policies are largely set by federal statute and regulation.
While the income and rent policies that govern HUD's five main rental assistance programs are designed to accurately calculate and capture family incomes and financial circumstances, they can also lead to confusion among recipients as well as difficulties for local program administrators. In response to the rather complicated rules, stakeholders and some policymakers have called for changes to the current system; in fact, several laws were enacted in the 114th Congress to streamline income and rent calculations and those policy changes are in various stages of implementation.
This report provides answers to some of the most common questions about the income and rent policies in federal rental assistance programs, including questions about where these policies came from and how they compare to other federal assistance programs that serve the same or similar purposes or populations. It is intended to help answer commonly asked questions, as well as provide information to policymakers seeking to understand and evaluate proposed changes to the current system.