An income restricted apartment is an apartment unit or building only available to those with an income under a certain threshold. These units could be owned and controlled by the local city government or owned by a private landlord who has opted to participate in an affordable housing program. Income restricted apartments are designed to give low-income individuals and families greater access to affordable housing.
While seeing a property listed as an income restricted apartment means prospective tenants must meet specific income related criteria to qualify for the apartment, this can be a great way to get an affordable unit in an otherwise expensive city or neighborhood.
Income restricted apartments are different than income-based housing. Typically, income-based housing refers to buildings that are part of the US Department of Housing and Urban Development (HUD) initiatives. These communities are specifically designed for low-income residents and are funded by the government and non-profits.
There is also income-based subsidized housing, which refers to privately owned buildings that have opted to offer affordable accommodation. Private landlords typically receive tax breaks for participating in these types of programs. These buildings could be entirely income-based, or they could mix affordable housing units and regular market value units.
To qualify for an income restricted apartment, you must meet specific financial criteria. The exact income requirements will vary depending on the city and state, and HUD sets the standards based on the median income of the metropolitan area and the size of your family. To qualify, families must have a low or very low income as defined by HUD.
Low income is defined as 80% or less of the median income in the metropolitan area, and very low is defined as 50% or less. So, if the median income in an area is $50,000, low income would be an annual income of $40,000 or less, and very low would be an annual income of $25,000 or less. Certain buildings may require very low income to qualify, while others may show a preference for those with very low income. HUD will also consider the age of the applicants and whether or not they have disabilities.
Income restricted apartments are not free; however, they are often much cheaper than the market value. The rent charged on an income restricted apartment is dependent on the median income in a particular area.
The rent will be capped at a certain percentage of that number, depending on the state and size of the unit. The rent cannot exceed the current market value of a similar apartment and can fluctuate based on current economic conditions.
Income-based housing works a bit differently. The median income is not factored in, and the rent is solely based on the tenant’s annual income. HUD caps the rent on income-based apartments at 30% of the tenant’s income. So, if you make $40,000 per year, the rent cannot exceed $12,000 or $1000 per month.
The official HUD website is the best place to find an income-restricted apartment. There you will find a directory of buildings that participate in the program and instructions on how to apply.
Another way is to ask friends and family who live in income-restricted housing. They can often connect you with a property manager or landlord who can help provide you with more information.
If you’re having trouble looking on your own, you can also go to a broker who specializes in affordable housing. They can help you find an income-restricted building and walk you through the application process, which can be helpful to many tenants. In some cases, the government will even pay the broker fee. However, be sure to double-check before you begin working with a particular agency.
- Find a Property
- Speak to a Representative
- Complete the Application
- Provide the Necessary Paperwork
- Be Patient
1. Find a Property
The first step is to decide where you want to live. Depending on where you are, there may or may not be a lot of affordable housing options. It helps to narrow in on a particular area and search for eligible buildings through one of the above methods. Eventually, you should find a specific building or community and inquire about the application process.
2. Speak to a Representative
Next, you should try to speak to a representative about the requirements and application process. This person could be a representative from a public housing authority or someone from the management company if it’s a private landlord. Either way, you should verify that you meet the income requirements and determine how much they are charging in rent so you know you can afford it.
3. Complete the Application
After speaking to a representative, ask them to send you the application. You will be asked to provide basic information about everyone who will be living in the unit and your household income. Typically, one member of the household will apply on behalf of everyone, although in some areas, all tenants must also pass a background check to qualify.
4. Provide the Necessary Paperwork
Besides filling out an application, tenants will need to provide documentation to be approved. Although active employment isn’t always required, tenants will need to provide a tax return or proof of participation in other government programs like welfare or unemployment to show that they do not exceed the maximum allowable income. They may also be asked to provide identification and proof of citizenship.
5. Be Patient
Once you’ve sent in your application, all that’s left to do is be patient. Unfortunately, there never seems to be enough affordable housing units available to keep up with demand. So, you may be put on a waitlist, even if you qualify. But if you remain patient and open-minded about the size and features of the apartment, eventually, you’ll find a place to live.
Affordable housing in the United States first began with the development of the Federal Housing Administration after the Great Depression. The first public housing was established in 1937 with the US Housing Act, which sought to increase housing stock for low-income citizens.
In the 1950s and 60s, Congress created a series of programs that offered incentives such as lower interest rates and subsidies to private landlords willing to provide affordable housing. Then, in 1965, the Department of Housing and Urban Development consolidated the five existing federal housing and community development agencies and elevated housing to a cabinet-level agency. This was the beginning of much of the legislation that created income-restricted housing.
The Housing and Community Development Act of 1974 made several adjustments to the existing housing programs and created the Section 8 rental assistance program. Then, the Tax Reform Act of 1986 created the low-income housing credit, which offered tax breaks to investors and developers engaged in the creation of affordable housing.
Beginning in the 1970s, the federal government began to allocate affordable housing responsibilities to agencies at the state and local levels. Today, various programs across the country cater to low-income Americans.
Although you need to meet specific requirements to qualify for an income restricted apartment, they are a great option for low and median income earners that are looking for affordable housing. If you plan on looking for an income restricted apartment, be sure to plan ahead and give yourself enough time to find an apartment and get approved for it since the proces can take longer than renting a free-market rental.