How to Calculate Section 8 Rent

The Department of Housing and Urban Development is the federal government agency that sets regulations and manages the national budget for the Section 8 housing program. HUD's new Section 8 Housing Choice Vouchers program, HCV, has the same purpose as the original program. It provides help for targeted populations who want to rent affordable housing. The vouchers allow eligible participants to reduce the amount of rent that they are responsible for paying for decent and safe, privately owned rental units. It also lets landlords improve their occupancy rates for rental properties.

The targeted population in the United States is mainly U.S. citizens. The program also has provisions for certain legal U.S. immigrants. HUD designed this program for low-income families and individuals, people with disabilities and senior citizens. The HCV program uses household income ranges to determine eligibility.

HUD provides federal money to local public housing agencies to manage the HCV applications, qualification process and participant payments. Every potential applicant needs to start an application for a Section 8 HCV at a local public housing agency. Depending on the size of your community, the city, county or state government might manage the applications for Section 8 HCVs.

The best way to find the PHA that serves your area is to use the Public Housing Contact Information link on the official HUD website. You can find the appropriate agency by selecting your state from a drop-down list or on a map. HUD then displays every agency in your state.

The median income for every city or county varies widely throughout the country. Therefore, HUD doesn't use a single maximum income for Section 8 eligibility.

In addition, HUD and your local PHA need to calculate the total income for all family members who will live in the rental property. Every year, HUD publishes information on its website about the median income and its income limits by family size for most cities and counties in every state. The published income limits range from amounts for a single person to families with up to eight household members. Within these categories, HUD also has income specifications for low, very-low and extra-low income tiers.

This information may be available online also, but you should contact the local housing agency to verify the current income eligibility limit. You'll need to contact them to apply for your HCV, so it makes sense to get both tasks completed at once. Your local PHA can give you correct information about the current median income for the area that you live in and the median for alternatives areas that you might want to consider.

Section 8 adjusted gross income limits vary due to the total number of family members, but HUD currently sets the maximum eligible household income at 50 percent of the median income in the local area or of the area where applicants intend to use the voucher. Since the median income will vary by location, there isn't a central Section 8 subsidy calculator.

In addition, every PHA must use 75 percent of its HCVs to help applicants whose income is 30 percent or less of the area's median income. This federal requirement reduces the total number of available HCVs.

Because the total amount of applications for HCVs usually is greater than the amount of funding available, it is normal to wind up on your local PHA's Section 8 HCV waiting list. The PHA won't accept or process your application until you reach the top of the waiting list.

Submitting your family's income and asset data to your PHA is the first step in the voucher application process. Generally, HUD counts wages, child support, Social Security, alimony, unemployment, public assistance to children and families, military pay and worker's compensation as household income. The primary assets that you need to declare on your application include tangible property that has a value of more than $5,000. If you also have liquid assets, such as savings accounts, you'll report income earned from that asset. If your household's total assets exceed $5,000, HUD applies a formula that calculates either actual income or actual value when determining income eligibility.

The PHA collects all of your documentation about the type and sources of income from you. It then verifies the information that you provide through your employer, your bank, the IRS and other available resources. Once this process is complete, the PHA determines whether your household qualifies to receive a voucher.

Calculating your potential Section 8 voucher amount is the final step of the HCV application process. All HCVs have a dollar limit and a fair market value restriction for any available rental property. In addition, the value of your HCV depends on the total number of eligible family members who will occupy the rental property.

The basic formula that your local PHA uses to determine your voucher amount is simple. Your voucher only covers the portion of rent and utilities that is equal to or less than 30 percent of your family's gross monthly income. If you choose a rental property with costs above this limit, HUD requires that you pay the difference to the landlord.

Every qualified Section 8 voucher recipient must locate a suitable rental unit themselves. HCVs have requirements for renters that specify the categories of housing that can be used for housing vouchers. The market value of housing must fall into a range that PHAs determine to be moderate housing costs in your area. Although you can pursue housing options outside of this range, if your rent exceeds the moderate range, your voucher won't cover the remaining 70 percent of the fair market rent for the unit you select.

Landlords who wish to participate in HUD's HCV program need to meet specific requirements. One important issue is an annual inspection to re-certify that the rental property meets HUD safety and other requirements. If a landlord's property doesn't pass inspection or the landlord doesn't agree to the annual re-certification, you will not be able to continue using an HCV for the unit that you are renting.