What Is Section 8 Housing?

A colorful affordable housing complex under a clear sky

If you've heard the term "Section 8 housing," you probably know it has something to do with tenancy for people in tight financial positions. But if your income is low and you are looking for a better place to rent, it's time you learned a lot more. This federal housing subsidy program could help you secure a safe, well-maintained home in a desirable community for less than you may think.

In short, Section 8 is a way to become a tenant in a qualifying home and pay a fraction of what the normal rent would be. According to the Center on Budget and Policy Priorities, more than 2 million people in the U.S. take advantage of this program. Is it right for you? Read on to find out.

How Section 8 Housing Works

Section 8 is administered and subsidized by your local Public Housing Authority (PHA). If you succeed in obtaining a Section 8 voucher and securing a home that accepts it, your portion of the rent would be 30% of your monthly income. The government would then pick up the tab for the rest.

The discount can be substantial. Imagine the rent for an apartment is $1,800 and your monthly income is $1,500. Multiply your income by 30%. In this example that would equal $450, which is what you would pay for the rent. That's $1,350 in savings. (Keep in mind that the income portion of the application is complicated because it involves certain additions and subtractions, so determining that figure is not as straightforward as it seems.)

You can see why Section 8 is an attractive program. Rather than live in designated subsidized housing projects (which may be located in less than desirable neighborhoods), it gives you some choice. But be forewarned: Section 8 can be a challenge to get. Not all property owners and landlords accept Section 8 tenants or set units aside for the program. Also, the amount the landlord charges can't be higher than the fair market rent for the area, and there are limitations for what the PHA will pay.

For you, the paperwork and application process is extensive. The demand for this program is so high that there is usually a waiting list, and some of those lists are so long that they're closed to new applicants. So if you're looking for instant approval, modify those expectations and be patient.

The Two Basic Types of Section 8 Housing

There are two main types of Section 8 housing:

  • Tenant-Based. This is the Housing Choice Voucher, and it's attached to you, the applicant. However long you are qualified for the subsidy, the Section 8 assistance remains yours. You are free to use the voucher at any property that meets the standards set forth by the PHA and accepts it. You can search for places as anyone else would (websites like Rent.com allow people to locate homes that are friendly to Section 8 applicants). Still, choices can range from limited to nonexistent, so you'll need to exercise patience and perseverance.
  • Project-Based. The other type of Section 8 is called the Project-Based Voucher, and it's connected to a specific property. The PHA gives private property owners a fixed number of vouchers per year to reserve units for Section 8 tenants. If you move in and then leave, the subsidy remains with the property—it doesn't follow you to your next home. These places can fill up fast, so if they're all occupied, you'll have to wait for the current tenant to leave and for your number to be called.

Requirements for Section 8 Housing

Your first step is to determine whether you meet the criteria for the program. The PHA will assess four fundamental aspects of your life:

  1. Income. In general, your income can't exceed 50% of the median income for the rental area you choose. Everything from earnings, child support and retirement funds to Social Security, welfare and disability benefits is included in the calculation.
  2. Family size and composition. Many factors are considered, including the number of people in your household and whether or not there are minor children, disabled people or individuals over the age of 62 living with you.
  3. Citizenship. As long as you're a U.S. citizen or have eligible immigrant status, you can qualify for Section 8. Documentation will be checked.
  4. Eviction history. You will be denied Section 8 if you've been evicted from a property for a serious lease violation, such as criminal activity related to drugs.

How Do I Apply?

To begin the process of applying for Section 8, visit your local PHA. You can fill out and submit your application there.

After the PHA reviews your paperwork, you'll either be accepted, rejected or placed on a waiting list. Unfortunately, it can take many months or even years to obtain a Section 8 voucher. In most cases you'll have to wait for your turn, though some PHAs use the lottery system. Ask what yours uses.

If You Qualify

If you do get the green light and receive Section 8, you're ready to locate qualified housing.

With a tenant-based voucher, you can look anywhere for a rental property, and as long as the landlord accepts it, you're in. Then the PHA will pay its percentage of the rent directly to the landlord—and you can celebrate!

As for project-based vouchers, after you're accepted, you'll have to wait for a Section 8 unit to be available. When your name is called, you're in. And again, you can toast to your new place.

If You Don't Qualify

If you don't qualify or you have to wait for what seems like an eternity, it can be frustrating. Where will you live when cash is tight and people are depending on you?

You may be able to rent an apartment without a credit check, but don't count on it. Instead, take action. Check your credit report to see where you stand. If there are any errors, correct them now. If there are dings, such as late payments, collection accounts or high debt as compared with your credit limits (known as your credit utilization ratio), rectify the damage if you can. You can't remove negative information before time is up—usually seven years—but lowering some balances or paying off collection debts will help your credit rating.

Other tips for influencing a landlord to take you on as a tenant include:

  • Finding a cosigner with good credit and a healthy income to guarantee the rent will be paid.
  • Asking the landlord if they'll accept a slightly higher rent or security deposit.
  • Paying a few months' rent with cash. Of course paying more may seem out of line when you're already struggling, but if you can cobble together the funds, it may be a possibility, especially if others are pitching in.

For many people, Section 8 housing is a great way to save money and live in a safe home in a decent neighborhood. If you do participate, take the opportunity to create a financially healthy place for you and your family. Build your credit scores by adding positive activity to your credit report. You can add your cell phone and utility payments with Experian Boost®ø, and those consistent payments may increase your credit scores. Then if you ever need or want to shift away from the housing subsidy, you'll be in a good place to rent—or even buy—on the open market.