Everything You Need to Know About Affordable Housing and Its Types

You have probably heard about affordable housing or HUD housing. Wondering what it is? By definition, affordable housing refers to those housing units that are affordable by that segment of society whose household earnings are below or at par with the median household income. Also known as low-income housing, affordable housing essentially addresses the needs of lower-income households. But ‘affordable’ does not mean ‘low quality’ or ‘substandard’.  

Affordable housing is a crucial opportunity in the United States, impacting individuals and families nationwide. As a housing manager, understanding the various affordable housing programs available is essential to effectively serve your community and provide valuable assistance to those in need. Let’s understand how this type of housing can fulfill your dream of having a place to call home. 

What is Affordable Housing – The Basic Criterion 

In the United States, according to federal law guidelines, a unit falls under affordable housing when the housing costs (rent or mortgage plus utility payments) total only 30% or less of a household’s gross income. You should still have enough money left for necessities such as healthcare, food, and transportation. 

What is the Median Income for Affordable Housing? 

Area Median Income or AMI is determined by the United States Department of Housing and Urban Development (HUD) every year for every region in the nation. Your AMI is calculated based on where you live, your income, and what bare minimum amount you can afford to pay as rent. The AMI is lower in smaller counties and higher in large ones. For example, the AMI for Los Angeles County is $80,000 and the AMI for San Francisco County is $148,600.   

Who is Eligible for Low Income Apartments? 

People with low income, people with disabilities, and seniors are eligible to seek help from the HUD to get affordable housing. A household is considered ‘low income’ if its earnings are less than 80 percent of the AMI. Those households that earn less than 50 percent are considered ‘very low income’, and the ones earning less than 30 percent of the AMI are considered ‘extremely low income’. 

Types of Affordable Housing 

Section 8 

Section 8 incorporates a housing voucher system for prospective homeowners and renters looking for low-income apartments.  Those households earning 30% or less of the AMI are given priority for these vouchers and the government pays the rent for you. 

Public Housing 

The main difference between Section 8 and public housing is that while the property is owned by private landlords under Section 8, public housing consists of government-owned properties. 

HOPE VI 

Although HOPE VI is a type of affordable housing, it is designed to integrate seamlessly with the architecture of major cities. This program aims to demolish, upgrade, or revamp old public housing projects and provides homes for people of all income levels. 

Low-Income Housing Tax Credit Apartments (LIHTC) 

Unlike HOPE VI and Section 8, where the government invests money in providing subsidies, under LIHTC, the government provides tax credits for developers undertaking affordable housing developments. 

USDA Rural Development Housing Programs 

The USDA Rural Development Housing Programs, offered by the U.S. Department of Agriculture, aim to address the housing needs of individuals and families in rural areas. These initiatives improve rural residents’ quality of life by providing affordable housing, upgrading infrastructure, and promoting economic development.  

Property managers can use resources like Single-Family Housing Direct Home Loans and Multi-Family Housing Rental Assistance to support low-income families. 

HOME Investment Partnerships Program 

The HOME Investment Partnerships Program, a federal grant initiative administered by the U.S. Department of Housing and Urban Development (HUD), aims to address affordable housing needs at state and local levels. It allocates funds to states and local jurisdictions to support affordable housing activities for low-income households.  

The program’s primary goal is to increase the availability of quality, secure, and affordable housing, fostering collaborations among local governments, nonprofit organizations, and the private sector to develop housing units and promote homeownership and rental opportunities. 

Section 202 Supportive Housing for the Elderly 

This HUD program provides affordable housing for elderly individuals (62 years and older) with limited incomes. It supports the development and operation of housing communities that offer various services and amenities tailored to seniors’ needs. 

Section 811 Supportive Housing for Persons with Disabilities 

Like the Section 202 program, Section 811 targets individuals with disabilities. The Section 811 Supportive Housing for Persons with Disabilities program, administered by the U.S. Department of Housing and Urban Development (HUD), is a federal housing initiative in the United States. 

The main goal of the Section 811 program is to help individuals with physical, developmental, and mental health disabilities secure safe, decent, and affordable housing. Recognizing the unique needs of these individuals, the program provides housing with essential support services. It aims to foster community integration, independent living, and an enhanced quality of life for people with disabilities. 

Veterans Affairs Supportive Housing (VASH) Program 

Designed for veterans experiencing homelessness, VASH pairs housing vouchers with supportive services. As a manager, you can work with the Department of Veterans Affairs and local housing agencies to offer stable housing solutions for veterans. 

Key Responsibilities of Affordable Housing Managers 

Managing affordable housing involves a range of responsibilities beyond standard property management tasks: 

• Eligibility Determination: Assessing and applying specific program criteria to evaluate prospective tenants’ eligibility. 
• Compliance: Ensuring properties comply with program requirements, pass inspections, and adhere to regulations to maintain funding and uphold living standards. 
• Community Engagement: Working with residents, local organizations, and agencies to build a vibrant community and address any issues. 
• Documentation: Keeping accurate records and reports for tenants and program administrators. 
• Tenant Support: Linking tenants to supportive services like financial counseling, job training, and healthcare resources. 
• Communication: Effectively communicating program changes, updates, and resources to tenants and stakeholders. 
• Problem Solving: Addressing conflicts, maintenance issues, and other challenges promptly and compassionately. 

How to Apply for Affordable Housing 

Let’s understand the steps to owning affordable housing apartments or houses: 

Step 1: 

Get your income proof in order. Qualifying for housing for low-income is mainly about showing how much money your household makes v/s what the AMI of your county is. Your proof of income is the first thing that the HUD asks for. 

Step 2: 

Once you get the proof of income sorted, you can now approach your local housing authorities. These authorities have a record of all the available housing options in the area of your choice. They also help you understand whether you qualify for income restricted housing, housing vouchers, public housing, etc. You might end up on a waitlist at this step. 

Step 3: 

Congratulations! At this step, you have now qualified for affordable housing. You are super close to moving into a house you can fondly call home. Now, all you need to do is take a look at available affordable housing options in your area and select the one that feels most like the home of your dreams. You can check with your local housing authority for the list of available options, or you can find property management companies that can help you with the search. 

Policies Impacting Housing Affordability 

Housing affordability is a key concern for millions across the nation, influenced by federal, state, and local policies. By understanding these policies and their effects, you can work better towards improving housing affordability for everyone, as explained below: 

• Rent Control 

Rent control is a policy that limits how much landlords can increase rent each year, helping to stabilize housing costs for low-income households not in regulated affordable housing. It also aims to prevent speculation and rising rents that lead to gentrification and displacement in low-income neighborhoods. However, in California, the Costa-Hawkins Act undermines rent control by allowing landlords to raise rent when a new tenant moves in. This incentivizes landlords to evict tenants from rent-controlled units. To prevent this, Just Cause eviction protections are necessary alongside rent control. 

• The Costa-Hawkins Rental Housing Act 

The Costa-Hawkins Act passed in 1995, is a California law that restricts local communities from implementing or strengthening rent control measures. It prevents cities and counties from: 

• Limiting rent on vacant units (though future rent increases can be controlled) 

• Applying rent control to single-family homes or condos 

• Regulating units built after 1995 (or earlier in some cases) 

Housing justice advocates have been actively working to improve local rent control laws affected by the Costa-Hawkins Act. Although two recent ballot measures (Prop 10 in 2018 and Prop 21 in 2020) did not pass, the efforts to close these gaps continue to gain support and attention. 

• Eviction Protections 

Eviction is the process of removing a tenant from their home or business. There are five stages in the formal residential eviction process. It begins with a landlord issuing a notice to the tenant, warning them that they must leave. This progresses through a legal trial called an “unlawful detainer” (UD) case and ends with law enforcement physically removing the tenant and their belongings. In California, the reasons a landlord can legally evict a tenant are limited by state and local protections known as Just Cause for Eviction. 

Evictions often increase with gentrification, displacing low-income residents and communities of color. They are also common among renters who struggle to afford high market-rate housing. The costs of eviction, both individual and communal, are high. Tools like rent control, Section 8 vouchers, subsidized affordable housing, and eviction moratoria help reduce the likelihood and impact of evictions. 

Conclusion 

Increasing access to affordable housing is crucial for shaping residents’ future. To achieve this, we need housing and land use reform, along with investments to enhance safety and quality of life. Recent state housing legislation has positioned California cities to make significant strides toward more affordable homes. This progress will help more residents achieve housing security and stability, ensuring California remains welcoming to the new residents. 

We at BFPM are committed to helping you with your home search. Apart from successfully managing affordable housing properties throughout Southern California, we also schedule site visits and give detailed information about a property that can help you with making a decision. To do it the right way, check our Affordable Housing Services or talk to our consultants at BFPM. 

Read our related blogs here:

Pros and Cons of Affordable Housing Investment

Tackling California’s Housing Crisis: 6 Innovative Solutions for Affordable Housing