It's not always easy to make ends meet, and if you're on a limited income, it can be even harder. If you’re like many Americans, one common struggle is to find affordable housing. The cost of rent is rising year after year. This is the reason why a lot of people are looking for ways to get financial relief from increasing housing costs.
The U.S. government recognizes this long-standing problem that’s why it started to offer housing programs for low-income families. One of these programs is providing income-restricted housing to low-income families.
But while living in income-restricted housing is definitely cheaper, many families are still hesitant about taking advantage of the benefits associated with this housing program. Often, many people don't know what income-restricted apartments are, or they have mistaken assumptions about how living in one might be.
This blog post will address 5 common misconceptions about income-restricted apartments. Hopefully, this will clarify your questions on how income-restricted apartments work.
What are Income Restricted Apartments?
First, it is important to understand what an income-restricted apartment is. An income-restricted apartment, also known as a rent-restricted apartment, is a housing unit that is a part of the U.S. Department of Housing and Urban Development’s (HUD) program to provide safe and affordable housing for low-income tenants. These buildings are often in privately-owned planned developments that are funded by the government or non-profit organizations.
Who qualifies for income-restricted apartments? Families, couples, and singles who have low income can apply for income-restricted apartments. The meaning of “low-income” is different depending on the state where you live. The HUD calculates the median income for each area or state in the country and to be considered low-income, your income must be 50% to 80% of the median income in the place you reside. A lot of times, preference is given to tenants that have extremely low income.
If you want to know more about income-restricted apartments, read the top five misconceptions that many people have about these types of housing.
1. Income Restricted Apartments are the same as Income-based Apartments.
There are many government programs that aim to provide affordable housing to the American public. Making income-restricted apartments is only one of these initiatives. Another well-known program is the availability of income-based housing. A lot of times, tenants often confuse the two housing programs. People often have the misconception that income-restricted apartments are the same as income-based apartments.
So, are income-based apartments different from income-restricted apartments? The answer is YES. Income-restricted apartments are not the same as income-based housing units. While eligibility requirements are somewhat similar requiring potential tenants to have an income lower than the state’s median income, the main difference is how rent is calculated.
The rent for an income-restricted apartment is determined and capped based on the area’s median income. The market rental rates are also considered as the monthly rent cannot exceed these rates. Another factor that determines the rental rate is the size of the apartment.
On the other hand, the rental rate of income-based apartments is determined based on the income of the tenant. Usually, the cost of the rent is 30% of the tenant’s adjusted gross income. The remainder is then subsidized by the government.
2. Income-restricted Apartments are All in Shady Neighborhoods.
When people think of an Income-restricted apartment, they usually think of shady neighborhoods and unlawful neighbors. The truth is, not all income-restricted housing are in undesirable communities. Depending on where you live, you might be surprised to find out that the income-restricted developments in your area are actually in great locations.
Before totally shutting out income-restricted housing, visit the neighborhood and the building first. Talk with residents and management staff that already live there. This will provide you first-hand information on what it's really like living at that particular building.
3. Income Restricted Apartments are not in Good Condition and Not Livable.
Another common misconception is that income-restricted housing units are not livable and are often in very bad condition. You’re probably worried about having to live in an apartment that’s not habitable. The reality, however, is that while some low-income apartments are not exactly brand new, they are in good, livable condition.
Just because the rent that you are paying is lower does not mean that you’ll live in low-quality housing. Keep in mind that when these apartment buildings were constructed, they follow the same construction standards as any other projects. Oftentimes, these low-income developments have to follow more stringent requirements as public funds are involved in their construction.
4. Nobody Wants to Live in income-restricted apartments.
Over the years, low-income housing projects developed a bad reputation. Because of this, it’s not uncommon to think that nobody really wants to live in an income-restricted housing unit. So, why would you want to live where nobody wants to be?
This, again, is another misconception. The truth is that waiting lists for income-restricted apartments are so long all across the country. The openings are very rare that’s why many people find it hard to get into the program even if they do qualify. Because of the affordability offered by income-restricted apartments, many families choose to live in these buildings to ensure that they have a safe roof over their heads.
5. You Have to Move Houses if Your Income Changes.
If you’re experiencing financial hardship and you cannot afford to pay market-rate rent, you might be considering applying for income-restricted housing. But one common question asked by potential tenants is what will happen if their income changes? Will you have to move and find another house to live in? Some people may find this prohibitive as they don’t want to incur moving costs and all the other expenses associated with moving to a new apartment.
Here’s the good news: if you currently live in an income-restricted apartment and your income increases, you will not have to move. It is important, however, that you disclose this information so you will not lose the benefit.
What will usually happen is that you might be asked to pay a higher rent but you will not be asked to move. Of course, this may not always be the case if the increase in your income is significantly higher like if you suddenly get a really high-paying job or if you won the lottery. You may lose your eligibility if your income meteorically rises.
How to Apply for Income Restricted Housing?
Are you interested in applying for an income-restricted apartment? If you don’t know where to start, below are some easy steps that you can follow to jumpstart the process. Some requirements and guidelines may vary depending on the state or area where you live so it is best to speak to official reps in your area to get the accurate information.
Step 1: Get in Touch with Your Local Public Housing Authority.
The first step in applying for an income-restricted apartment is to learn whether you are qualified. You can visit the HUD website to check the requirements in your area so you can get background information if you’re eligible to apply.
The best way to go about this process is to contact the local Public Housing Authority office in the state where you are looking to find an income-restricted apartment. Speak to a representative and inquire about the requirements and the steps that you need to follow in order to apply.
Step 2: Complete Your Application.
Once you speak to a PHA representative, you will get an idea of whether you meet the basic requirements in order to apply. The next step is to complete the application process. Get an application form from the PHA office and fill it out in detail.
You might be wondering: How do income restricted apartments verify income? You will be required to submit other documents to support your application.This will include proof of income. Examples of other documents include pay stubs, photo ID, birth certificates, and social security cards for all residents, etc. Check with your local PHA office for a complete set of documentary requirements.
Step 3: Wait for Approval and Advice Whether there is an Apartment Available for You to Move In.
If there are available units that suit your need, you will be advised whether you can move in. However, as mentioned earlier in the article, there are usually long waiting lists in many areas when it comes to income-restricted apartments. Getting into one is not instant so you may have to wait before there is an available unit in your area.
The earlier you apply, the better. Make sure that you accurately fill out your application and submit the required documents so you will not delay the process. If you are placed on the waiting list, keep your contact information updated so you will not miss the call in case an apartment opens up.
Is Income Restricted Housing for You?
Income-restricted apartments can be the solution to your housing problems when you are on a low income. If you believe that you need help in paying for your rent, consider income-restricted housing as an option. If the waiting list is long or there are no available income-restricted apartments in your area, inquire with your local PHA regarding other housing programs such as income-based housing or housing vouchers that can assist you to pay rent in privately-owned housing.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
