How to Find Them, Qualify, Apply

It’s no surprise to anyone, whether you’re looking for a new apartment in NYC, a single-family home in Chicago, or a unit for rent in LA, monthly rent prices are skyrocketing nationwide. In 

In 2022, 22.4 million renter households in the U.S. were cost-burdened, spending more than 30% of their income on rent and utilities. This marked an all-time high and underscored the demand for affordable housing options like income-restricted apartments.

By definition, income-restricted apartments are housing units with rent limits designed to be affordable for those with low to moderate incomes, based on a percentage of the area’s median income (AMI). Tenants must meet specific income criteria to qualify, ensuring the rent remains within an affordable range.

The benefits of renting an income-restricted apartment include reduced rent costs and greater financial stability. In this Apartment Guide article, we’ll explore how to find and qualify for income-restricted apartments and more.

So what is an income-restricted apartment?

An income-restricted apartment is an affordable housing option tailored for people with low to moderate incomes. These apartments have rent caps tied to the area’s median income, and tenants must meet certain income-requirements to be eligible. 

Income-restricted apartments are often privately owned but may receive state, local, or federal subsidies. Typically, entire apartment communities are designated as income-restricted, providing affordable housing options. However, some communities feature a mix of both traditional and income-restricted apartments, offering diverse rental opportunities.

Here are some key characteristics of income-restricted apartments to look out for:

1. Income limits: These apartments have specific income limits set by government programs. Tenants must have an income below a certain threshold, typically based on a percentage of the area’s median income (AMI), to qualify for these apartments.
2. Rent control: The rent for income-restricted apartments is controlled and set at a rate that is considered affordable for those within the designated income brackets. This ensures that rent does not exceed a certain percentage of the tenant’s income, usually around 30%.
3. Government assistance: These apartments often receive funding or tax credits from government programs, such as the Low-Income Housing Tax Credit (LIHTC) program, to support the development and maintenance of affordable housing.
4. Eligibility verification: Potential tenants must undergo an application process where their income and financial status are verified to ensure they meet the eligibility criteria for the income-restricted housing.

History behind income-restricted rentals

The concept of income-restricted apartments in the United States emerged following the Great Depression, which marked the first significant housing crisis. In response, the federal government established the Department of Housing and Urban Development (HUD) in the 1960s to create affordable rental housing for low-income tenants and families.

The 1970s saw the introduction of legislation aimed at preventing housing discrimination and setting rent and income caps on low-income apartments in government housing. During this period, the federal government began delegating much of the responsibility for affordable housing to state and local authorities.

The Housing and Community Development Act of 1974 made several adjustments to existing housing programs and created the Section 8 rental assistance program. The Tax Reform Act of 1986 introduced the low-income housing credit, offering tax breaks to investors and developers engaged in creating affordable housing.

These developments laid the foundation for modern income-restricted housing.

Who is eligible for income-restricted housing?

Just as incomes vary across the country, so do tenant eligibility requirements for income-restricted housing. But regardless of location, eligibility for such apartments is based on certain income parameters. Most income-restricted housing is designated for those whose incomes are at least half of the median area income of the local community.

Basic eligibility checklist

• Age: Must be at least 18 years old.
• Income: Must fall below a specified percentage of the AMI for your household size.
• Residency: Must be a legal resident or citizen.
• Student status: Full-time students are generally ineligible; exceptions apply for specific circumstances.
• Background: Must pass a credit and background check (or pay 12 months of rent in advance to bypass the credit check).
• Other criteria: May include specific needs or priority status, such as for seniors, veterans, or individuals with disabilities.

How the government determines eligible income guidelines

Each year, HUD calculates an estimated median income for every large metropolitan area. Using these annual income figures, it then determines a maximum adjusted income allowed to qualify in each community based on the family size that is delineated into three categories.

1. “Low income-residents” are those making below 80%of the area median income
2.  “Very low income” families are tenants earning under 50% percent.
3. Individuals taking home just 30% percent of that are designated “extremely low income”

In most communities, housing with income requirements is earmarked for those on “very low income” or below 50 percent of the area’s median income. That’s up to local officials to determine.

To check your eligibility, visit the HDC website. For any questions, you can find contact information on the HUD website.

How to find income-restricted apartments

So, if you qualify for an income-restricted apartment, where can you start looking for one? Eligible apartments are hard to find on your own because they aren’t listed on general apartment finder websites like Redfin, Apartment Guide, or Rent. You have to turn to the government for guidance.

Finding your Public Housing Authority

To find income-restricted apartments, start by contacting your local Public Housing Authority (PHA), which is managed by the Department of Housing and Urban Development (HUD). These local offices are your primary resource for locating government-owned or privately managed income-restricted apartments. You can find contact information for your local PHA on the HUD’s public website. The PHA can assist in finding available apartments that meet your size and location preferences and provide details on exact rents. If you’re aiming for a government-owned apartment, you’ll need to fill out a PHA housing application. For apartments managed by private owners, your PHA can provide a list of contacts. If you encounter any issues, your local HUD Field Office is also available to help.

How to qualify and apply for income-restricted apartments

Here is a step-be-step guide to help you navigate the process of applying for income-restricted housing. Keep in mind that specific requirements may differ by location.

1. Research available properties: Use resources like HUD’s website, local housing authorities, and community organizations to find income-restricted apartments in your area.
2. Verify your eligibility: Check the income limits and other criteria for each property to ensure you meet the requirements.
3. Gather required documents: Prepare documentation including proof of income (pay stubs, tax returns), identification (driver’s license, Social Security card), and any other required information.
4. Complete the application: Fill out the application form provided by the property manager or housing authority. Ensure all information is accurate and complete to avoid delays.
5. Submit your application: Turn in your application along with the required documents to the property management office or the designated submission point specified by the property. Be sure to follow any specific submission instructions provided by the property.
6. Prepare for credit and background checks: Be ready to undergo a credit and background check. If you prefer to avoid the credit check, inquire about paying 12 months of rent upfront.
7. Attend an interview: If required, attend an interview with the property manager or housing authority representative.
8. Wait for approval: If there’s a waiting list, be patient and check in periodically. Once a unit becomes available and you’re approved, you’ll be contacted.
9. Review and sign the lease: Carefully review the lease agreement, understand all terms and conditions, and sign the lease to secure your housing.

How rent is determined for income-restricted apartments

If you meet the qualifications for low-income housing, your rent will be determined almost exclusively based on the area’s median income rather than your individual income. Rent limits fluctuate depending on local median income and market value, with income-restricted rents set according to what is affordable in the area, typically reflecting current rental market trends and average incomes of the designated neighborhood, precinct, or ZIP code. While you and your neighbor might pay the same rent despite different incomes, rents cannot exceed the local market value, and most landlords charge the maximum allowed by the community.

Income-restricted apartments vs income-based apartments 

While often referred to together under general rental assistance, there are differences between income-restricted apartments and income-based apartments. One offers rents based more on the median income of the community and the other more on the individual tenant’s income.

Income-based apartments are explicitly held by individual property owners, who then must meet specific criteria for such housing programs. Among these are required renovations for income-based housing to meet certain HUD standards. The rent prices in an income-based apartment are calculated based on the individual tenant’s adjusted gross income. Then the rent is capped at 30 percent of that income, regardless of the area’s median income levels or tax credits.

Unlike income-restricted, income-based housing can be within an apartment complex or building where as low as only 20-40 percent of units are low-income apartments. Also, they aren’t constrained to traditional apartments. Income-based rentals can also include duplexes, townhouses and row houses — and even single-family homes.

Income-restricted apartments FAQs

How much does income-restricted housing cost?

The cost of income-restricted housing is typically based on a percentage of the area’s median income. Rent is usually capped at around 30% of the tenant’s income to ensure affordability. The exact cost varies depending on the location, size of the apartment, and specific housing program. It’s important to consider potential extra expenses such as utilities and fees, which may not be included in the rent.

How do income-restricted apartments calculate rent?

Income-restricted apartments calculate rent based on a percentage of the tenant’s income, typically tied to the area’s median income (AMI). The Department of Housing and Urban Development (HUD) establishes the AMI annually, varying by location and household size. Rent is usually capped at around 30% of the tenant’s gross monthly income, ensuring affordability. Programs like Section 8 may provide additional subsidies to further reduce tenant costs. The calculation may also consider household size, with higher income limits for larger households.

What are the tenant’s rights living in an income-restricted unit?

As a tenant in income-restricted housing, your rights are similar to those in other rentals and are largely determined by state and local laws. You have the right to a safe and habitable living environment, and landlords must make major repairs in a timely manner. Landlords cannot enter your home without notice and must provide proper notice before eviction as stipulated by local law. Additionally, you are entitled to a clear lease agreement and can report issues without fear of retaliation. Research your local laws to learn more about your landlord’s responsibilities.

What do you do if your income increases while living in an income-restricted apartment?

If your income exceeds the eligibility threshold while living in an income-restricted apartment, you will not be immediately evicted and can remain for an additional six months after reassessment. You will be given a hearing, and the Public Housing Authority (PHA) must provide 30 days’ notice to move out after contract termination. If your income decreases again during this period, you can request a new hearing and assessment from the PHA.

What makes you disqualified from an income-restricted housing unit?

Eligibility for income-restricted housing is generally based on local regulations, but common reasons for removal include failing to pay rent or utilities on time, missing recertification appointments or inspections, eviction, and providing false information to the Housing Authority.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.