Picture of Subsidized Households 2016
The U.S. government has subsidized housing for renters with low incomes since the Housing Act of 1937. All programs covered in this report offer subsidies to reduce rents. Households generally pay rent equal to 30% of their incomes, after deductions, and the Federal government pays the rest. To enter the programs, people must have incomes below an income limit, which varies by household size and location. They apply, and wait until their name rises to the top of the waiting list for the limited number of Subsidized Units. Most of the programs are paid for by the Department of Housing and Urban Development (HUD). The bibliography lists reports which have more information on particular programs. Some more detail is in the "Description of Major Programs" section.
The Low Income Housing Tax Credit is a program of the Internal Revenue Service, where landlords obtain tax benefits for renting to low income households.
In Public and Indian Housing, local and tribal governments get HUD money to build and operate housing. The housing is owned by the government.
In Section 8 Certificates+Vouchers, local and state governments get money to pay to private landlords to supplement the rent that low income households pay. The housing is owned by the private landlord. The household may move and take the subsidy with them, if they are able to search for and find a rental they like better (so these programs are often called "tenant based" or "finders keepers"). The difference between Certificates and Vouchers is primarily that Certificates have a maximum rent which the unit may not exceed. This maximum is published by HUD, the "Fair Market Rent," set by HUD at roughly the 40th percentile of the rents of adequate quality units in the area. Vouchers have no specific maximum, but the low income household has to pay any excess over the Fair Market Rent.(2)
In all the other programs the housing is owned by private landlords who apply for HUD subsidies. The subsidies pay the difference between tenant rents and total costs. These are called private subsidized projects (or "project based"). The main such program is Section 8 of the Housing Act of 1937 (this section was added in 1974). An older program is Section 236 of the National Housing Act (added in 1968), which has the distinction of requiring households to pay full operating costs and cover what the landlord's mortgage costs would be if the interest rate were one percent ("basic rent"). This requirement keeps out many low income households, who cannot afford the rent, so Section 8 subsidies have been added to two thirds of the Section 236 units (LMSA "Section 8 Loan Management Set Aside"). These LMSA units have the more usual rule that tenants pay 30% of their adjusted income. Data do not reliably distinguish LMSA households from others, so we only distinguish projects with LMSA, not the units.