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What Is Affordable Housing? How To Find and Qualify For It

February 02, 2024 9-minute read

Author: Ashley Kilroy


Affordable housing is a hot topic as of late, though it’s not to be mistaken with housing affordability or housing that the bulk of an area’s residents can afford. Affordable housing, as defined by the U.S. Department of Housing and Urban Development (HUD), is housing that requires less than 30% of an occupant’s gross monthly income.

Let’s take a more in-depth look at how affordable housing works, the different forms it comes in and how someone can qualify for this type of assistance.

What Is Affordable Housing?

We have not always held the same standards for affordable housing. In the past, the topic of affordable housing referred to low-income, subsidized or public housing. That’s since changed.

Now, the dilemma of affordable housing affects every income level except the highest in the U.S. Essentially, this definition expanded to include any housing that allows homeowners to pay for their property on top of necessities, like health care or food.

Most HUD housing programs aim to help the lowest wage earners, though. That way, low-income individuals can achieve their dream of homeownership while giving them the chance to begin accumulating wealth.

For An Individual Or Family

The HUD defines housing affordability based on gross monthly income. This is the total amount the household brings in before deductions like taxes or expenses. So, according to HUD, affordable housing for an individual, including utilities, cannot exceed 30% of that gross income.

For A Community

The HUD uses income limits when determining eligibility for their programs. So, for the most part, you can only participate if your income sits at a certain level for your geographical area. However, it is important to note that your age or having a physical disability may also qualify you for housing assistance.

In addition, some affordable housing assistance is relegated to certain areas, like rural settings. You may even find entire neighborhoods and apartment buildings that are rent controlled or offer a mix of affordable and market-rate housing. Unfortunately, urban areas can suffer from a shortage of such communities and low-income individuals may be forced to relocate or find other assistance options.

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What Are Affordable Housing Income Limits Based On?

As mentioned previously, affordable housing uses an applicant's monthly earnings to decide if they qualify for assistance, but who determines the income limits?

The HUD sets and revises program income limits annually, ensuring that low-income families receive help. The Department establishes these limits for every county or Metropolitan Statistical Area (MSA) based on the area median income (AMI).

What Is Area Median Income (AMI)?

The HUD uses area median income – also called AMI or median family income (MFI) –  as a measurement to determine if individuals can afford to rent or buy a home. They use data from the American Community Survey, which is an analysis conducted by the U.S. Census Bureau. Each year, a new survey collects important information that helps the federal government determine how assistance funds are distributed.

From the collected survey information, the HUD locates the midpoint in a region’s income distribution. After that, the Department splits the AMI into different levels according to household size:

  • Extremely low income: Below 30% of AMI

  • Very low income: Below 50% of AMI

  • Low income: Below 80% of AMI

  • Moderate income: Between 80% and 120% of AMI

Since they’re regionally based, the limits vary between locations. If you want to find your area’s median income, you can use HUD’s income finder or this more user-friendly map.

Once you’ve determined if your income is within the limit range for your area, you can consider renting or buying affordable housing. To purchase a home, you’ll still need to follow the standard home buying process and submit an application to a lender. From there, you can choose the best type of mortgage and assistance program for your situation.

Get approved to see what you can afford.

Rocket Mortgage® lets you do it all online.

Affordable Rental Housing Opportunities

Unfortunately, accessing rental housing as a low-income earner can be very difficult. Owners want to minimize their risks when renting out their properties, but some rules make renting inaccessible to those struggling financially. The HUD offers help to these individuals and households through its rental assistance programs.


In general, if you meet, either as an individual or household, the HUD’s definition of low to extremely low income, you qualify for Section 8 or public housing. This means you have the option to find affordable rental housing or use assistance in the form of a voucher.

If you have Section 8 eligibility and choose to use a voucher, you can find an apartment or home yourself. The voucher then helps to pay the difference between what you or your household can afford and the rental unit’s fair market value.

But qualifying for Section 8 does not guarantee immediate accommodation. After the voucher’s approval, applicants have to wait for spots to open up. The system also often relies on a lottery system to distribute these vouchers. That leaves the time frame of when you could receive one up to some chance.

Please note that there are different names for vouchers that apply to other in-need groups. Section 22 refers to vouchers dedicated to seniors, and Section 811 vouchers go to those with disabilities.

Public Housing

Public housing is state-owned properties made affordable for low-income individuals and households. Those who meet income limits may apply to rent one of these houses or apartments from their local public housing authority. But while these properties come in all types and sizes, applicants face possible restrictions. Some rules may come with the rental, like limiting non-family home sharing.

How Do You Qualify For Affordable Housing?

It's not hard to qualify for affordable housing. You just need to be categorized as low income, meaning you or your family’s income is under 80% of your local AMI. For instance, let’s say you want to buy a home in San Francisco, which has a 2022 AMI of $97,000 for a single person house. So, to qualify for affordable housing you’d need an income of $77,600 or less.

Even though eligibility requirements are fairly straightforward, the country currently faces an affordable housing shortage. In fact, the National Low Income Housing Coalition (NLIHC) cites a shortage of almost seven million available rental properties for extremely low-income renters.

Presently, demand exceeds supply, and it’s difficult to change that. Local and zoning regulations make it hard to build low-income housing. Not only that, the lack of profit incentive discourages the private sector from building these types of single-family or multifamily housing units. So, even if you qualify for assistance, you may have to wait years before receiving a voucher.

Affordable Housing Programs

There are many affordable housing programs designed to help low-income families buy a home. Many are created with the idea of making the process more affordable from start to finish. So, there are opportunities out there to make home buying more affordable.

VA Loans

Active-duty service members, veterans and surviving spouses could qualify for a home loan backed by the U.S. Department of Veterans Affairs. This type of financing requires no down payment or mortgage insurance and offers low interest rates, all of which can make buying a home more feasible for low-income borrowers.

VA loans also don’t have a standard credit score requirement, though some private lenders may set their own. Rocket Mortgage® requires a minimum FICO® Score of 580.

Find out if a VA loan is right for you.

See rates, requirements and benefits.

FHA Loans

Similar to VA loans, the Federal Housing Administration insures home loans for first-time and repeat buyers. A borrower only needs a 3.5% down payment and a credit score of 580 or higher to qualify for an FHA loan. Some buyers may even qualify with a lower credit score if they can provide a 10% down payment, however Rocket Mortgage requires a minimum of 580.

Since FHA loans use more lenient requirements, they’re an excellent mortgage option for low-income individuals and families.

Find out if an FHA loan is right for you.

See rates, requirements and benefits.

USDA Loans

Besides using an FHA or VA loan, a low-income buyer can apply for a USDA-backed mortgage. This type of home loan is specifically designed for individuals who earn lower incomes than the local AMI and live in rural areas.

The U.S. Department of Agriculture backs mortgages and home improvement loans, both of which offer low interest rates.

HomeReady® Or Home Possible® Mortgages

Fannie Mae and Freddie Mac are government-sponsored home mortgage companies. The U.S. Congress created these institutions to inject liquidity into the country’s mortgage system by purchasing and guaranteeing mortgages.

Together, they work to help boost low-income citizens’ access to affordable housing. In particular, their HomeReady® and Home Possible® mortgage programs may benefit you if you are looking to build wealth by owning a home.  Some flexibility it permits is for borrowers to only need a 3% – 5% down payment or pay less on their closing costs as long as they meet the requirement of not making more than 80% of the area median income. These loans also come with a loan level price adjustment (LLPA) credit of 1% of the loan amount up to $3,500. If the loan is below $200,000, the credit will be $2,000 as opposed to 1%.

Freddie Mac BorrowSmart® AccessSM

Freddie Mac BorrowSmart Access is a special-purpose credit program (SPCP).1 SPCPs are intended to help people who have historically been underserved by existing lending and credit systems in the U.S. a chance to gain equal access to financial products and services. Owning a home gives the opportunity to pass on generational wealth because it's the most valuable asset most people own.

For a great many people, the biggest obstacle to homeownership is coming up with the money for a down payment. Freddie Mac BorrowSmart Access looks to provide down payment assistance to eligible clients who purchase their main home in a qualifying county in one of 10 eligible MSAs:

  • Atlanta-Sandy Springs-Alpharetta, Georgia

  • Chicago-Naperville-Elgin, Illinois, Indiana, Wisconsin

  • El Paso, Texas

  • Houston-The Woodlands-Sugar Land, Texas

  • McAllen-Edinburg-Mission, Texas

  • Memphis, Tennessee, Mississippi, Arkansas

  • Miami-Fort Lauderdale-Pompano Beach, Florida

  • Philadelphia-Camden-Wilmington, Pennsylvania, New Jersey, Delaware, Maryland

  • St. Louis, Missouri, Illinois

Beyond where you live, this program also has the following requirements:

  • Minimum 3% down payment

  • FICO® Score of 620 or higher

  • There’s an income limit of 140% of the area median where you’re looking to buy.

  • At least one client must be buying a home for the first time.

  • You must take free homeownership counseling.

Purchase Plus

Purchase Plus is another SPCP we offer for clients who qualify.2 This program requires that you live within an eligible census tract in one of 21 MSAs to apply:

  • Atlanta-Sandy Springs-Roswell, Georgia
  • Baltimore-Columbia-Towson, Maryland
  • Brownsville-Harlingen, Texas
  • Chicago-Naperville-Elgin, Illinois, Indiana and Wisconsin
  • Cleveland-Elyria, Ohio
  • Dallas-Fort Worth-Arlington, Texas
  • Detroit-Warren-Dearborn, Michigan
  • Houston-The Woodlands-Sugar Land, Texas
  • McAllen-Edinburg-Mission, Texas
  • Memphis, Tennessee, Missouri and Arkansas
  • Miami-Fort Lauderdale-Pompano Beach, Florida
  • New York-Newark-Jersey City, New York, New Jersey and Pennsylvania
  • Oklahoma City, Oklahoma
  • Orlando-Kissimmee-Sanford, Florida
  • Philadelphia-Camden-Wilmington, Pennsylvania, New Jersey, Delaware and Maryland
  • Phoenix-Mesa-Chandler, Arizona
  • Riverside-San Bernadino-Ontario, California
  • San Antonio-New Braunfels, Texas
  • St. Louis, Missouri and Illinois
  • Tampa-St. Petersburg-Clearwater, Florida
  • Washington-Arlington-Alexandria, Washington D.C., Virginia, Maryland and West Virginia

Eligible buyers in these areas can receive a base credit of $5,000. Rocket Mortgage is contributing an additional lender credit of 1% of your home's purchase price up to $2,500 for a total credit of up to $7,500. Although you have to be a resident of an eligible census tract when you apply, you can buy a home anywhere. Among others, here are a few of the additional eligibility requirements besides residency:

  • You need to be buying a primary residence.

  • At least one client has to be a first-time home buyer.

  • You need at least 3% down (can be covered completely or partially by the credit).

Section 8 Homeownership Voucher Program

Low-income households who need assistance can apply for the Section 8 homeownership program. It targets low-income, disabled and elderly individuals who need appropriate shelter.

Responsible Section 8 renters who have a history of on-time payments can receive a voucher through the Housing Choice Voucher program. Low-income borrowers – who previously rented – can use this discount to help reduce their monthly mortgage payments, making homeownership more affordable.

HUD Houses

A home can go into foreclosure for a couple of reasons. The foremost cause is when a borrower fails to make their mortgage payments. However, it’s also possible if property taxes or homeowners association (HOA) fees go unpaid.

When someone uses an FHA loan to purchase their home and fails to repay it, HUD claims it. They then put the HUD houses on the market for resale. These properties are more accessible to low-income households and may come with benefits like prepaid closing costs.

Unfortunately, it might be hard to find one following the pandemic. A foreclosure moratorium implemented during that time drastically reduced the supply of available HUD homes.

Special Discounts

It's possible to find unique deals or discounts to help lower purchasing costs. Consider, for example, the Good Neighbor Next Door program.

This option offers a 50% discount on HUD homes to people in certain professions. Accepted job positions include teachers, police officers, firefighters and EMTs. The main requirement is that the applicant must agree to live in the home for at least 3 years as a way to promote community development.

Sadly, this program also suffers from the lack of HUD inventory as of late.

State And Local Resources

There are various state and local governments that offer special programs for first-time and low-income home buyers, from education to energy efficiency programs. The HUD maintains a list of these, along with counseling services that can help you find the assistance you need for affordable and safe housing.

How To Find Affordable Housing To Buy

Finding an assistance program that’s right for you and your family can be difficult but finding an affordable property to purchase can be even more challenging. You can simplify your search with the following tips:

  1. Consider less favorable neighborhoods. Buying a home in an up-and-coming, trendy neighborhood can be very expensive. Instead, try house-hunting in a neighborhood that hasn’t gone through the gentrification process.
  2. Define your house budget ahead of time. Don’t start touring properties until you firmly know how much home you can afford. This precaution can prevent you from setting your sights on a property that’s too expensive.
  3. Rely on word-of-mouth. Many buyers use a multiple listing service (MLS) to find a potential house, but not all homes for sale will be in this database. Ask your friends and family members to keep an eye out for any properties that are for sale by owner (FSBO).
  4. Apply for a Section 8 voucher as soon as possible. Since you’ll most likely be placed on a waiting list, you should submit your application early in the home buying process. That way you can use the waiting period to find a home.
  5. Find a co-borrower or roommate. You can use a spouse, friend or family member to help you make the monthly mortgage payments. If your co-borrower is also low-income, they may be able to qualify for additional assistance programs as well.
  6. Check for local home buyer programs. Local nonprofits and government agencies will also aid home buyers. Some of these programs can include grants, home improvement loans or down payment assistance.
  7. Use a real estate agent. While forgoing a real estate agent might seem like a great way to reduce your costs, you could actually pay more for a home without a professional to guide you. Plus, most buyers don’t have to pay REALTOR® fees as the seller typically covers this cost.
  8. Negotiate with the seller. Some buyers may feel pressured to immediately accept a seller’s counter offer, especially in a competitive real estate market. But don’t be afraid to negotiate the purchase price while finding ways to satisfy the seller.
  9. Be flexible with your “needs” list. It’s easy to get stuck on your ideal vision of your dream home, but this approach can make it difficult to find an affordable house. Be prepared to make compromises when looking at properties. Remember, you can always renovate or remodel down the road.
  10. Become a landlord. Many government-back mortgages allow borrowers to purchase a multiunit property. For example, you could buy a property with four apartments with a VA loan. Then you can live in one unit and rent the rest to earn a rental income. Investing in affordable housing like this is a way to earn a living while providing housing opportunities for others.

The Bottom Line: Affordable Housing Helps Those In Need Find A Place To Call Their Own

Low-income individuals and households need the same opportunities as anyone else: safe and sanitary shelter, homeownership and the chance to build wealth while owning. Government-backed programs help these groups find more than somewhere to live, though. It connects people with places they can call home.

If you’re ready to find a house of your own, learn more by reading about how to buy a home with low income to help you prepare for the purchasing process.

Client will receive a $3,000 credit toward down payment. Offer valid only for first-time home buyers when qualifying income is less than or equal to 140% AMI and when the property is located in an eligible county within the following metropolitan statistical areas: Atlanta-Sandy Springs-Alpharetta, GA, Chicago-Naperville-Elgin, IL-IN-WI, Detroit-Warren-Dearborn, MI, El Paso, TX, Houston-The Woodlands-Sugar Land, TX, McAllen-Edinburg-Mission, TX, Memphis, TN-MS-AR, Miami-Fort Lauderdale-Pompano Beach, FL, Philadelphia-Camden-Wilmington, PA-NJ-DE-MD, St. Louis, MO-IL. Client is required to complete one-on-one Homebuyer Education Course with GreenPath facilitated by Homeownership Preservation Foundation (HPF). Offer valid on new loans locked on or after 2/28/2023. Offer valid on primary residence retail purchase loans only. Offer is not valid for team member or Schwab channel products. Offer is nontransferable and cannot be combined with any other discounts. Offer cannot be applied retroactively. Offer may not be redeemed for cash. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional restrictions/conditions may apply. This is not a commitment to lend. 

2 Client will receive a closing cost grant up to the amount of $7,500 on their Closing Disclosure. Offer is valid for only for first-time home purchasers with primary residence properties in specific census tracks located in Atlanta-Sandy Springs-Roswell, Georgia; Baltimore-Columbia-Towson, Maryland; Brownsville-Harlingen, Texas; Chicago-Naperville-Elgin, Illinois, Indiana and Wisconsin; Cleveland-Elyria, Ohio; Dallas-Fort Worth-Arlington, Texas; Detroit-Warren-Dearborn, Michigan; Houston-The Woodlands-Sugar Land, Texas; McAllen-Edinburg-Mission, Texas, Memphis, Tennessee, Missouri and Arkansas; Miami-Fort Lauderdale-Pompano Beach, Florida; New York-New York-Jersey City, New York, New Jersey and Pennsylvania; Oklahoma City, Oklahoma; Orlando-Kissimmee-Sanford, Florida; Philadelphia-Camden-Wilmington, Pennsylvania, New Jersey, Delaware and Maryland; Phoenix-Mesa-Chandler, Arizona; Riverside-San Bernardino-Ontario, California; San Antonio-New Braunfels, Texas; St. Louis, Missouri and Illinois; Tampa-St. Petersburg-Clearwater, Florida; and Washington-Arlington-Alexandria, Washington D.C., Virginia, Maryland and West Virginia. Offer valid from November 17, 2023. Offer is nontransferable. Offer cannot be applied retroactively to closed loans. Offer may not be redeemed for cash, and no change will be given if the discount amount exceeds costs otherwise due. Rocket Mortgage reserves the right to cancel this offer at any time. Other discounts may be ineligible with this offer.

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Headshot Ashley Kilroy

Ashley Kilroy

Ashley Kilroy is an experienced financial writer. In addition to being a contributing writer at Rocket Homes, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.