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What Is Affordable Housing And How Can I Find An Affordable Home?

Ashley Kilroy6-minute read

June 02, 2022


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. No, 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. And there’s a reason it’s a pressing issue.

Late in March, the Biden administration extended the federal eviction moratorium. This measure helped millions of families stay in their homes during the pandemic despite financial struggles. But with the extension’s end this summer and the U.S.’s ongoing shortage of affordable housing comes the need to discuss solutions for over 11 million extremely low-income families.

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 government policies aim to help the lowest wage earners, though. That way, low-income earners 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 the HUD, affordable housing for an individual, including utilities, cannot exceed 30% of that gross income.

For A Community

The HUD sets 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. However, it is important to note that your age or possessing a physical disability may also qualify you for housing assistance. In addition, some affordable housing assistance is relegated to certain areas, like rural settings.

Let’s focus on what determines income limits. The HUD determines 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 median income found there, or the area median income (AMI). They do this by using data from the American Community Survey conducted through the U.S. Census. From this 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 are 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

What Type Of Rental Assistance Does HUD Offer For Low Income Housing?

Unfortunately, accessing rental housing as a low-income earner can be very difficult. Owners want to minimize their risks when renting out, but some rules make renting inaccessible to those financially struggling. 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. With Section 8 eligibility, renters receive housing vouchers that allow them to find an apartment or home of their own. In addition, the vouchers help pay the difference between what the individual or household can afford and the property’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 when receiving 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.

Find out what you can afford.

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Is It Hard To Qualify For Affordable Housing?

It's not hard to qualify, but 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 homes. So, even if you qualify for assistance, you may have to wait years before receiving a voucher.

What Type Of Home Buying Assistance Can Low Income Families Qualify For?

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

Government-Backed Mortgages

Government-backed mortgages through the Federal Housing Administration (FHA), Veterans Affairs (VA), and USDA help low-income home buyers with shaky credit. Each of these agencies insure loans through private lenders, protecting them in the case the borrower cannot repay. Because of this, lenders face less risk and thus may offer financially advantageous loans to low-income earners. For example, a lender may offer low interest rates.

All of these loans require a very low (3.5%) or no down payment.

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 while still owning a home.

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 with just that.

The program distributes vouchers through its Housing Choice Voucher program to responsible and stable Section 8 renters. In turn, renters can use vouchers to make their mortgage payments. It covers around 70% of the monthly expenses owed to your landlord. However, the program is currently very small.

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, the HUD claims it. After that, they 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.

However, it may 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. It offers a 50% discount on HUD homes to people in certain professions. Accepted job positions include teachers, police officers, firefighters, and EMTs, and the person must agree to live in the home for at least 3 years.

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

Closing Cost Help

Fannie Mae offers a credit through its HomePath Ready Buyer program for participants’ closing costs. The credit runs anywhere from 3% to 6% of the home’s purchase price. Buyers can only use the closing cost assistance if they buy a HomePath home, though. While that limits a buyer, it may ultimately benefit them. These are homes surrendered to Fannie Mae through a deed in lieu of foreclosure, which means they tend to be in better condition.

State And Local Resources

There are various state and local resources out there 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.

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: for safe and sanitary shelter, homeownership, and the chance to build wealth while owning. Government-backed programs help these groups find more than a place to live, though. It connects people with places they can call home.

If you need assistance, contact a HUD certified housing counselor that can help you access the resources you need. They can also guide you through creating a budget ready for future mortgage applications. If you want to read more about finding affordable housing, visit our Learning Center.

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.