To be considered “affordable,” you should pay about 30 percent of your income on rent and utilities. For example, if you earn $1000 per month, you should plan to pay no more than $300 on housing.
Only two things can make housing more affordable: either people’s incomes go up (so they can pay more rent), their housing costs go down, or both.
Housing subsidies are additional funds that help to lower housing costs for low-income households. With housing subsidies, your rent is based on your household income. Applying for subsidized housing often means getting on a waiting list.
Examples of subsidized housing for low-income families include:
- Public Housing: You live in an apartment owned by a public agency (such as a local housing authority) that charges you an affordable rent based on your income. The public agency pays the additional housing costs.
- Section 8 Housing Choice Voucher: This program allows low-income families to rent quality housing in the community available through the private market. You pay the landlord what you can afford for rent and utilities (about 30% of your income) and a public agency pays directly to the landlord the difference between the rent you pay and a fair market rent. There is typically a waitlist to receive a voucher. When households are selected from the waiting list to receive a voucher, they are responsible for finding a rental unit where the landlord will accept the voucher as payment.
- Project-based Section 8: Similar to a tenant Section 8 Housing Choice Voucher, except the subsidy stays with the building; when you move out, you no longer have the rental assistance. Most units rental cost will be 30% of your household adjusted gross income. There may be a variety of housing types available through this program including single-family homes, townhomes, or apartments.
- Income-eligible housing: A developer builds or rehabilitates a property and receive subsidies in exchange for charging a rent that is affordable to low-income families. The subsidy is the form of funds received through a tax credit for investors in the federal Low Income Housing Tax Credit program, also known in Indiana as the Rental Housing Tax Credit/Section 42 (RHTC). The RHTC program allocates federal tax credits annually to for-profit and non-profit developers for the construction or rehabilitation of affordable rental housing. All units created through the RHTC program must be rented to households at or below 60% of area median income.
Workforce housing: Sometimes you work and earn too much to be eligible for housing subsidies, but the cost of housing in your area is still too high compared to what you can afford to pay. A local government may find other ways to help moderate-income households pay rents they can afford, such as allowing a developer to build additional units (called a density bonus) in exchange for reducing the rent for 10 – 15 percent of the units.
Supportive & Transitional Housing and Related Supports
Supportive housing is permanent affordable housing with on-site services that help formerly homeless, disabled tenants live in dignity in the community.
Transitional housing assists people in transitioning from homelessness, substance abuse addiction, domestic violence or other types of bad living environments.
Photo credit: Housing4Hoosiers
