Subsidized housing is when a government agency or nonprofit pays part of your rent, and you pay the rest based on your income

In subsidized housing, you do not pay the full market rent for your apartment. Instead, a program pays your landlord a portion of the rent, and you pay the difference — usually 30 percent of your monthly income, though this varies by program. The subsidy goes directly to the landlord, not to you. Your actual rent payment shrinks as your income drops, and rises if your income increases.

The most common form is Section 8 Housing Choice Vouchers, run by the U.S. Department of Housing and Urban Development (HUD). You receive a voucher that lets you rent from a private landlord who agrees to accept it. The voucher covers the difference between what you pay and the fair market rent for your area. Other subsidized programs include public housing (apartments owned and operated by local housing authorities) and project-based subsidies (where the subsidy is tied to a specific building rather than to you).

Subsidized housing is different from public housing. Public housing is owned by a local housing authority; subsidized housing lets you choose a private apartment and the subsidy follows you. Both are funded by HUD, but the landlord and the building itself are different.

Key Takeaways

  • You pay a percentage of your income (usually 30 percent) toward rent, and a government program pays the landlord the rest.
  • Section 8 vouchers are the largest subsidized housing program and let you choose any private apartment where the landlord accepts the voucher.
  • Your rent payment changes if your income changes, because the subsidy is calculated based on what you earn.
  • Waiting lists for subsidized housing are often years long, and many local housing authorities are not currently taking new names.

How the rent calculation works

Your monthly payment is usually 30 percent of your gross monthly income. If you earn $1,200 a month, you would pay $360. The subsidy covers the rest up to the fair market rent for your area. Fair market rent is set by HUD each year and varies by bedroom count and location — a one-bedroom in rural Iowa costs less than a one-bedroom in New York City.

If your income drops, your rent payment drops. If you lose a job and your household income falls from $1,200 to $800 a month, your rent payment falls to $240. The program makes up the difference to the landlord. This is why subsidized housing is valuable during income loss — your housing cost automatically adjusts downward.

If your income rises above a certain threshold, you may lose the subsidy or be moved to a waiting list. The income limit varies by program and by area. Some programs allow you to keep the voucher even if your income exceeds the limit, but you will pay more of the rent yourself.

Section 8 vouchers versus project-based subsidies

Section 8 Housing Choice Vouchers are portable — the subsidy moves with you if you change apartments. You find your own place, the landlord agrees to accept the voucher, and HUD pays them directly. You can move to a different apartment or neighborhood while keeping the same voucher, as long as the new place meets HUD standards and the rent does not exceed the fair market rent for that area.

Project-based subsidies are tied to a specific building. The subsidy stays with the apartment, not with you. If you move out, you lose the subsidy. Project-based apartments are usually in older buildings or purpose-built affordable housing complexes. The advantage is that the rent is often lower than Section 8 fair market rent. The disadvantage is that you cannot take the subsidy with you.

Public housing is a third form — the local housing authority owns the building and you rent directly from them. Rent is based on your income, and you stay on a waiting list to get in. Public housing is not the same as subsidized housing, though both are affordable housing programs.

How to get on a waiting list

You contact your local public housing authority or housing agency and ask to be added to the waiting list for Section 8 vouchers or public housing. The address and phone number are on your city or county website, or you can call 211 (a free referral service) and ask for the housing authority in your area.

Many housing authorities are not currently taking new applications because their waiting lists are full. Some have closed lists for years. When a list reopens, it usually stays open for only a few weeks or months. You will need to provide proof of income, residency, and citizenship or legal immigration status. Requirements vary by location.

Once you are on the list, you wait. Waiting times range from months to over a decade, depending on your area and the program. Some housing authorities prioritize people experiencing homelessness, people with disabilities, or families with children. Ask your local authority what their priority order is.

Income limits and how they affect you

To be on a waiting list for subsidized housing, your income usually must be at or below 50 percent of the area median income (AMI). Area median income is the middle income in your county — half of households earn more, half earn less. In a county where the median income is $60,000, 50 percent AMI would be $30,000. Income limits are higher for larger households.

Once you are on the waiting list, your income can rise without removing you from the list. When you are offered a voucher or apartment, your income at that moment determines whether you can take it. If your income has risen above the limit, you may be turned down or placed on a second waiting list.

Income limits are recalculated each year by HUD. If you are already in subsidized housing, your income can exceed the limit and you keep your subsidy — you just pay a higher percentage of rent. The program does not evict you for earning too much.

What subsidized housing costs you

Your out-of-pocket cost is typically 30 percent of your gross income. If you earn $1,500 a month, you pay $450 in rent. If you earn $2,000 a month, you pay $600. This is much lower than market rent in most areas, where a one-bedroom apartment might cost $800 to $1,500 depending on location.

You are responsible for utilities unless they are included in the rent. Some subsidized apartments include water and trash; others do not. Ask before you sign a lease. You also pay for renters insurance, which is usually $10 to $20 a month.

There is no fee to be on a waiting list or to receive a voucher. The subsidy itself is free — it is funded by federal and local tax dollars. Some nonprofits offer help filling out applications, and that help is also free.

What happens if your income changes

You must report income changes to your housing authority or voucher administrator. If your income rises, your rent payment rises. If your income drops, your rent payment drops. The change usually takes effect the next month or the next lease renewal, depending on the program.

If you get a job and your income rises significantly, you may eventually earn too much to stay in the program. Some programs allow you to keep your voucher even if you exceed the income limit, but you will pay the full market rent instead of the subsidized amount. Other programs will not renew your voucher. Ask your housing authority what their policy is.

If you lose a job or your hours are cut, report it when ready. Your rent payment will be recalculated and will drop. This is one of the main reasons subsidized housing is valuable — it protects you during income loss.

Frequently Asked Questions

Is subsidized housing the same as public housing?

No. Public housing is owned by a local housing authority and you rent directly from them. Subsidized housing usually means Section 8 vouchers, where you rent from a private landlord and a program pays part of your rent. Both are affordable housing programs, but the landlord and how the subsidy works are different.

Can I choose any apartment with a Section 8 voucher?

No. The landlord must agree to accept the voucher, the apartment must pass a HUD inspection, and the rent cannot exceed the fair market rent for your area. Many landlords do not accept vouchers. You will need to search for apartments where the landlord is willing to participate in the program.

What happens to my subsidy if I move to a different state?

Section 8 vouchers can be transferred to another state, but you must request a transfer from your current housing authority and be approved by the authority in the new state. The process takes time and the new area may have a waiting list. Project-based subsidies do not transfer — if you move, you lose the subsidy.

Can I lose my subsidized housing if my income rises?

Not when ready. If you are already in subsidized housing, your income can exceed the limit and you keep your subsidy — you just pay a higher percentage of rent. If your voucher is not renewed, you will have notice and time to find other housing. The rules vary by program, so ask your housing authority.

How long does it take to get subsidized housing?

Waiting times vary widely. Some areas have waiting lists that are closed and not accepting new names. Others have lists that are years long. A few areas have shorter waits of months to a year. Call your local housing authority to ask how long the current wait is in your area.