What are “Income Restricted Apartments” ? – Guide and FAQs

In this article we will answer the most often-posed questions from people who believe they may qualify for income-restricted apartments and housing but aren’t exactly sure what it takes to be approved for one.

If that describes you, this guide should provide you with essentials that will save you time and money in your quest for a new home.

Let’s examine and answer some very popular questions that most people ask when trying to find information and guidance about Income Restricted Apartments and Housing:

Q: What does the term “income-restricted apartment” mean?

A: An income-restricted apartment is defined as an abode that is eligible for occupation by residents who meet specific income standards that allow them to qualify for reduced or subsidized housing.

Designed to help low-income families find adequate living spaces with rents at prices that are capped for affordability, some of these apartments may be owned by the city while others may be privately-owned properties that meet standards and requirements for income-restricted tenants.

How do property owners make up the difference between the amount they need to pay the mortgage and the reduced rent paid by the tenant? The unit owner receives a subsidy, usually from the state in which the property is located, a federal tax credit or in some circumstances, both.

There are two types of low-income housing that may be applicable when a family or individual searches for a subsidized apartment and both are aimed at giving housing opportunities to people incapable or unable to afford apartments within their unique market range, especially in major cities where rents are higher than average.

1. Public housing units are managed by a local housing authority offering domiciles to low-income qualifiers. Rent is based on a percentage of the family’s or individual’s income.
2. Section 8 assistance is a voucher-based program that provides renters with a subsidy that makes up for the difference in rent. These vouchers can be used only at apartment buildings accepting Section 8 subsidies.

Q: Who qualifies for income-restricted apartment units?

A: For those who are wondering about whether or not they meet low-income housing criteria, the journey begins with assessing the cost of living in that person’s home community since the nation’s cost of living standards vary so dramatically from city to city.

This difference can be best understood by considering a few examples of how the term low-income differs from place to place.

If you live in San Francisco, low-income may be defined as a family or individual earning less than $129K per annum.

Comparably, Chicago’s capped number is $71,300 while people in New York City must earn less than $85,350 to be eligible for assistance.

To figure out where you stand and whether or not you should pursue a search for an income-restricted apartment, use the U.S. Housing and Urban Development (HUD) calculator tools on the agency’s website or call your local HUD office.

Q: What will you need in order to apply for assistance?

A: Once you ascertain the limit your city or town has set as its benchmark for qualification, you will need to gather documentation that shows proof of your income.

Gather up the following documents, each of which can hasten the time it takes to file your application:

• -The last 4 consecutive pay stubs or notarized proof of income
• -Invoices that prove your outlay or receipt of income
• -Social security cards for all family members
• -IRS tax returns
• -Social Security/Medicare/Medicaid eligibility award letter
• -Most recent bank statements
• -Photo IDs for household members over the age of 18
• -Award letter that shows eligibility for food stamps
• -Legal documents verifying receipt of child support
• -Verification of disability status
• -Proof of additional types of income.

To complete the process, you may be asked to provide proof of U.S. citizenship or legal residency, provide a record of your most recent rental history and you could be asked to pass a criminal background check.

As a rule of thumb, your income may not exceed 50-percent of the median income for your county or your metropolitan area.

Q: How can you find income-restricted apartments?

A: One of the best ways to start your search is by contacting a HUD-approved housing counselor in your area in order to get personalized service. Use this link to get started.

Alternately, you can try calling this toll-free number: 1-800-569-4287. If you already know the type of assistance you need or desire–privately-owned, public or Section 8 dwellings-—you can ask about rental units or explore all three to find the arrangement best suited to your circumstances.

It’s incumbent upon you to mention unique circumstances that can impact your search. For example, if you’re a veteran, you could qualify for extra help via these two dedicated websites:

• https://www.va.gov/homeless/hud-vash_eligibility.asp
• https://www.blogs.va.gov/VAntage/71790/new-subsidy-helps-formerly-homeless-veterans-afford-housing-high-rent-areas/

Seniors may also receive additional help from the government’s Administration on Aging, and folks living in rural areas have not been forgotten.

If you live on property that is considered rural as defined by address or proximity, consult this website to find affordable, income-restricted homes in your area of the country.

Q: What types of income-restricted apartments and housing exist?

A: While the style of home isn’t restricted–you could run into income-restricted apartments, townhomes and single family dwellings, for example–technically, the two types of home categorized by the government are either subsidized and low-income.

At first blush, it can be hard to differentiate the two. Both are overseen by HUD and both are subject to HUD apartment rental guidelines. Both are income-based programs.

But here is where the two differ. Due to the backlog of public and Section 8 housing, these properties aren’t always advertised due to long waiting lists that perpetually exist. Not all properties classified as affordable housing may meet HUD criteria.

It gets more complicated. Apartment density can contribute to the mix of affordable units that may be further classified by HUD as low-, very-low and extremely-low income categories.

Maximum rents in each classification are typically 30- (low), 50- (very-low) or 80-percent (extremely-low) of the area’s apartment rental market.

Most low-income apartments are leased through public housing authorities, although there is the rare private property manager or building owner who has qualified for HUD eligibility and is therefore sanctioned to offer reduced rents.

Unfortunately, one of the only ways to find privately-owned or managed apartments is to go through HUD authorities. Classified ads aren’t always good indicators that a property has been approved by HUD, even if the unit is listed as “affordable housing.”

Q: What are the differences between “income-restricted” and “income-based” apartment categories?

A: There’s a maximum upper limit to income-restricted abodes that can’t be exceeded under any circumstances.

In fact, income must be proven to be within a narrow range for qualification. These units are typically planned developments designed for low- or middle-income families that are underwritten by local government, the U.S. government or, on rare occasions, nonprofit organizations.

Additional criteria may also be taken into consideration that has nothing to do with income. These criteria could include family size or the “special needs” of one or more family members.

A second difference has to do with tenant eligibility. To qualify for an income-restricted apartment, a maximum income amount established at the time a property is designated as income-restricted must fit within a stringent guideline that may be as low as 60-percent of an area’s median income.

This contrasts with criteria that must be met for income-based qualification in that it takes into consideration the entire household’s size, expenses and circumstances that aren’t required to be met to lease an income-restricted apartment.

Finally, there are specific differences in the amount of rent that can be charged in both models. Rents can’t exceed market values when renting an income-restricted unit that also meets apartment size limitations associated with the rent structure.

But when an income-based apartment is leased, government subsidization plays a major role in that the remaining obligation can’t exceed 30-percent of a tenant’s adjusted gross income.

Q: Do income-restricted apartments run credit checks on folks applying for housing?

According to OlympiaManagement, this question is a classic “good news/bad news” tale. One’s eligibility to receive government subsidies for housing won’t be based on your credit score, so bad credit score numbers shouldn’t impede your ability to rent an income-restricted apartment. Accordingly, the amount of income you receive is the major determinant of qualification.

But on the other side of the coin, “while the government won’t evaluate your credit to qualify you for housing benefits, property owners might pull your credit report to qualify you to rent from them,” say authorities on the subject.

Before you panic, you should know that excellent credit isn’t usually required for qualification, especially since apartment owners and building managers set their own credit number guidelines.

Good news is that folks in the business of renting to people who live on limited incomes tend to relax credit requirements because they understand that low-income families need shelter and may not have the most stellar credit reports as a result of incurring bills (e.g., medical) that far exceed their resources.

Just in case you’re interested in boosting your eligibility, you should know that in this market, “no credit is better than bad credit.”

This statement is verified by the HUD guideline that states, “owners may reject an applicant for a poor credit history, but a lack of credit history is not sufficient grounds to reject an applicant.” Remember that next time you go shopping for an income-restricted apartment.

Q: Are Income Restricted Apartments Bad?

Income restricted apartments are not bad and they are not necessarily in bad areas; they are designed to be affordable options.

They take into consideration a renter’s income when they determine the monthly rent for an apartment.

People who qualify for these apartments can save a lot of money renting apartments that often look the same as more expensive apartments.

People who qualify rent these apartments so that they can have a decent quality of life.

Income restricted apartments are often in the same areas as standard apartments. They are not public housing or the projects; people can qualify based on their income.

With rent prices increasing year after year, these apartments provide an affordable alternative for anyone who qualifies.

Q: How Do Income Restricted Apartments Verify Income?

Income requirements for income restricted apartments are different in different states and local areas because they are based on the median income.

HUD calculates the median income for each metro area throughout the entire country, and then it determines how much the maximum income is based on family size for that metro area. There are three categories that qualify, which are Low, Very Low, or Extremely Low.

When you apply for an income restricted apartment, they will first run a background check and they do verify your income. The Landlord also will verify your employment status and income level to make sure you can afford to pay the rent.

Generally, your total household gross annual income should be 50 to 60 % lower than the median income of the area.

The household income includes the income of all adults over 18 who are living in the apartment.

People apply through their local Public Housing Authority, and they use your tax returns or W2s to verify your income.

Q: Can Students Live in Income Restricted Housing?

Students are allowed to live in income restricted housing. Anyone who qualifies is able to rent these apartments, including students, families, and seniors.

However, the student cannot be a dependent on a parent’s tax returns if that parent earns more than the qualifying income for restricted income apartments.

The student must be an individual who is independent and meets the low income requirements.

Income restricted housing is designed to make living affordable, and colleges often have programs and dorms for students. There are other government subsidies available for low income students.

It is important to look up the restrictions and qualification criteria. Students often need to be 24 or older to qualify for one on their own.

However, they can live with their families in income restricted housing as long as the family qualifies.

Q: Is Income Restricted the Same as Section 8?

Income restricted housing is not the same as Section 8 housing. They are two different programs. One is income restricted, and the other is income based. They have the same goal, but there are some important differences to note.

Both types of housing are based on income, but the threshold is usually lower for Section 8. The rent is determined differently as well.

For income restricted housing, the rent is based on a percentage of the area’s income, and the difference between the market value and this amount is usually subsidized by the government, so the landlord is compensated.

However, with Section 8, the rent is based on 30% of the tenant’s income. An individual or family can make use of vouchers to find and rent a housing unit if they qualify for the Section 8 program.