What Is Section 8 Housing? Everything You Need To Know

If you're looking to rent or buy a home of your own, but you have limited resources, you might be looking into public assistance options. You may have even heard of Section 8, but that leaves a whole host of questions: How does Section 8 work? Who qualifies? What are the alternatives? Read on for answers to all these questions and more.

The Housing Choice Voucher Program (also known as Section 8) is a federal government program meant to provide rental or homeownership assistance for those with a low income. The assistance is administered by a local Public Housing Authority (PHA) on behalf of the U.S. Department of Housing and Urban Development (HUD).

Although this is often thought of as rental assistance, PHAs also have the ability to provide homeownership assistance if they choose through one of two options: a one-time grant that can be used toward a down payment or monthly assistance toward a mortgage payment.

What Is A Section 8 Voucher?

A Section 8 voucher lays out the amount of one-time or monthly homeownership or rental assistance you’re getting. This can be presented to a landlord, or, in the case of homeownership, a mortgage lender.

If the landlord agrees to accept your voucher as a form of payment, they’ll typically be paid directly by the PHA and get the balance of any remaining monthly rent from you. Homeownership assistance payments are either paid to you and your family or the lender directly at the discretion of the PHA.

What Is Section 8 Housing?

Section 8 housing is a bit of a misnomer. It’s true that there are housing projects that are largely publicly subsidized, but you can use your Housing Choice Voucher as income to help you negotiate rent with a landlord or to qualify for a house payment.

That’s not to say there are no rules to where you can live. Your living arrangements have to meet basic housing quality standards for health and safety. These standards are set by your local PHA. They are intended to make sure the type of home you’re occupying is in livable condition.

Section 8 vouchers are meant to act as a subsidy to income and offer low-income families an option outside public housing. The funds are either paid directly to the landlord or lender or given to you to be used toward your payments.

The homeownership option in particular has some special eligibility requirements that are different from what they would be if you were to use the funds for rent. It gets a little bit complicated, but there may be a minimum down payment requirement of 3% with at least 1% of those funds coming from the individual or family receiving assistance. Alternatively, they might require the loan to be federally backed through the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), for example.

If you're looking to apply for Section 8 assistance, you’ll do so through your local public housing authority. You’ll share information on your citizenship or residency status, income level and family composition. They may also run a background check on you to find any eviction history or criminal record that might exist.

Depending on demand and the mix of families whose needs are being served in the area, you may be placed on a waiting list, higher or lower based on your level of need. For this reason, you may choose to look at several different PHAs. One might have a shorter waiting list than another.

Additionally, if you’re buying a home and have a preference for a grant toward your down payment over monthly housing assistance or vice versa, you’ll want to choose the PHA that offers your preferred option.

In order to qualify for a Housing Choice Voucher, there are several criteria you need to meet. We’ll run through a few of them here.

Income

Because this program is meant to serve low-income individuals and families, the program is means tested, so you won’t qualify if you make over a certain amount of income depending on your area.

The program is first intended to serve those who have the greatest need. Federal law requires that 75% of the vouchers approved by local PHAs go to families whose income doesn’t exceed 30% of the area median. To be eligible for the program at all, you can’t make more than 50% of the area median income where you choose to live.

Local median incomes are published by HUD. The limits are based on gross (pretax) income and your county or metropolitan area.

Citizenship/Immigration Status

If you're a citizen of the U.S., you're eligible for a Housing Choice voucher. You’re also eligible if you’re part of a territory or possession of the U.S. (for example, Guam or the Marshall Islands). Also eligible is anyone who has immigrated here and been admitted for permanent residence or granted asylum. Finally, certain types of temporary residency may also be eligible.

This is a short list of categories. We could start listing statutes, but it’s probably best to consult with an attorney or your local PHA. Just know that the ability to prove legal residence will be necessary.

Family Composition

In addition to where you live and your income, family size is taken into account when determining your eligibility for a Housing Choice Voucher under Section 8. The bigger your family, the higher the income limit because there are more people to support. In addition to family size, family composition also includes information on whether and how many children live in the household as well as their disability status.

Eviction History

You may be denied Section 8 assistance if you’ve been evicted from federally assisted housing in the past 5 years. It’s also important to note that if you receive an eviction notice, you’ll be able to continue living in the home until a court judgment is in place allowing the landlord to evict you. This protects your rights and continues your payments until a legal decision has been made.

Criminal Record

You can be denied assistance if you or a member of your family has a criminal record. There also must be a clause in leases stating that you will be evicted for criminal activity. Not all criminal activity is going to run afoul of the regulations, but, for example, you can’t be subject to lifetime listing on a sex offender registry. There are also restrictions for those who have drug-related offenses.

In addition, PHAs have discretion to prohibit people who have engaged in violent criminal activity or activity that’s deemed a threat to health and safety of those around them for some time. This can apply if it’s a member of your family as well. Like many things involved here, this gets complex, so refer to these guidelines and your local PHA.

Local Preferences

In addition to all the above, local PHAs may set some of their own standards based on their mission and areas of need. For example, priority may be given to those experiencing homelessness, those in substandard housing, families involuntarily displaced or spending more than 50% of their income on housing.

If you plan on buying a home after getting your Section 8 voucher, the next step is to get preapproved. A lender will look at your income, assets and credit as well as make sure the property meets minimum safety and health standards. They will then get a home appraisal to determine if the property is worth what you’re paying for it.

If your Section 8 voucher is a one-time grant, you’ll be able to use this toward your down payment or closing costs. If you’re getting monthly assistance, this is counted as part of your income for qualification.

There are some limits to the length of time you can receive assistance under a Housing Choice Voucher. If your home is being financed for a period of 20 years or more, you can receive assistance for 15 years. In all other cases, maximum assistance for homeownership is 10 years. These time limits may not apply if the family is disabled or elderly.

One of the most common reasons for not qualifying for a Housing Choice Voucher may be that you make too much income. If this is the case, there are a couple of things you can do before considering other measures.

The first is to consider whether your spending is all necessary. It’s never a bad idea to look at your budget periodically and determine if there is anything you can cut to save money and put yourself in a better position. Financial counseling never hurts. But if you have cut to the bone and are just putting groceries on the table, it’s time to look for other options.

Another avenue you can look at is downsizing your home with the goal of finding cheaper living space. This can have the effect of shoring up your budget.

If downsizing isn’t practical, you can talk to the PHA about what other options might be available to you. Just because you don’t qualify for Section 8 housing doesn’t mean you won’t be eligible for other programs. The VA also has some special housing assistance programs for veterans.

The Housing Choice Voucher Program, or Section 8, is intended to provide low-income or very low-income families with homeownership or rental assistance. Qualifications are based on family income relative to the area where you live in, whether you have lawful citizenship or residency status and your family composition among other factors.

You apply for Section 8 through your local PHA and housing assistance can be used for a down payment or a monthly subsidy toward a rent or mortgage payment. If you don’t qualify under Section 8, you may have other local housing options or qualify for a program through the VA.

If you’re interested in more information on the affordability of homeownership generally, check out this article on the costs of owning a home.