More than 9 million Americans participate in Section 8 housing, a program intended to aid low-income Americans. It is a complex qualification process, with many criteria for applicants and property owners alike, such as providing fair rent. It can be difficult to sort it all out.
If you are a property owner interested in participating in the Section 8 program, keep reading. This article explains how fair rent is calculated, and goes over some of the other basic information about the program.
What Is Section 8 Housing?
"Section 8" refers to a segment of the Housing Act of 1937. It established a rental assistance program for low-income American households.
The program is currently administered by the U.S. Department of Housing and Urban Development (HUD). About 70 percent of the program's beneficiaries are seniors, children, or people with disabilities.
Section 8 allows participants to choose any housing unit they like. Property owners then receive payments in the form of vouchers. These come from a local public housing authority (PHA), which administers the program.
What Are Section 8 Qualifying Criteria?
To be eligible for the Section 8 housing choice voucher program, a family's income must not exceed 50 percent of the median income for the county or metropolitan area in which they live. Also, the income of 75 percent of any given PHA's Section 8 participants must not exceed 30 percent of the area's median income. HUD publishes median income levels on a regular basis.
During the application process, a PHA will collect information about the applicant's family income and assets. They will verify that information by contacting employers and banks, if necessary.
What Are Section 8 Housing Standards?
Landlords who wish to participate in the Section 8 housing program must meet certain requirements as well. First, they must do their own tenant screening, then complete a request for tenancy approval form, which details information about the unit, including the address, rent amount, and utility costs.
Once the application is received, the PHA will schedule an inspection of the rental unit. It must meet HUD's suitable housing standards. These include an environment that is safe, clean, and appropriate for the number of occupants.
Finally, the PHA must review the proposed rent and other costs. It must be considered "reasonable" and "fair" for the application to be approved and the lease signed.
How Is Reasonable Rent Calculated?
How rent is calculated depends on several Section 8 rent factors. First, the PHA calculates 30 percent of their monthly adjusted income and 10 percent of their monthly gross income. They also consider any portion of the family's welfare assistance that is designated for housing costs.
To qualify, "fair market rent" cannot exceed the highest of these three calculations. If it does, then the landlord's application for that resident is denied.
Learn More About Section 8 Payment Standards and Qualifications
Now that you understand the basics of Section 8 rent calculations, you are ready to move forward. An experienced real estate management company can further advise you on these and related Section 8 rules.
PMI of the Midlands provides comprehensive property management services in Council Bluffs and the eastern Omaha suburbs. We can help you navigate the complex world of Section 8 housing, so that you can get the most out of your investment property. Reach out to us today to schedule a free consultation.
