What is affordable housing?

Affordable housing is defined as housing that does not cost more than 30% of a household's gross income. It assists low- to moderate-income people and families who cannot compete in open housing markets. Through funding sources, including subsidies, tax credits, and changes to zoning policy, governments, nonprofits, and private developers collaborate to fund and build affordable units.

Millions of Americans are paying too much every month to have a roof over their heads. Roughly 12 million households pay over half their income on rent or mortgage payments—what economists refer to as "severely cost-burdened," according to the U.S. Department of Housing and Urban Development (HUD). In those households, it only takes one unanticipated expense to spell the difference between keeping the lights on and falling behind on rent.

Many of the largest policy battles being waged in this country surround affordable housing. It intersects with income inequality, urban planning, racial equity, mental health, and economic mobility. The term itself, however, is poorly understood. Oftentimes when folks think of affordable housing, they think of government-run public housing projects, but the reality is much more complicated—and varied—than that.

This article is about what affordable housing really is, how it works, who it claims to help, and why its absence has become one of the key issues of our time. When it's over, you will have an attainable grasp of the problem and a generous thought of what solutions are in ascendancy.

So what does "affordable housing" in fact entail?

One of the most popular definitions is provided by HUD, which defines housing affordability as not paying more than 30% of gross monthly income to housing costs. Those costs usually cover rent or a mortgage, utilities, and all the basic fees.

A threshold of 30% has served as a widely used marker since the 1980s, although some housing economists argue that it's a simplistic overgeneralization. For example, a $ 15,000-income household using 30% of its income on housing and having almost nothing remaining for food, health, or transport. Forget about the household earning $200,000 a year and spending 30% of their income on housing. Nevertheless, the 30% rule is still the most prevalent yardstick employed in policymaking (by organizations like UN Women), research, and journalism.

AMI is a way of measuring the need for affordable housing.

Area Median Income (AMI) is used by most affordable housing programs to determine who qualifies. Every year, HUD publishes the Area Median Income (AMI) for every metropolitan area and county in the nation. Low-income housing developments usually serve low- to moderate-income households that earn between 30% and 80% of local AMI. Still, some programs build a small number of units available for incomes up to 120%.

The AMI is calculated by the Statewide Housing Project, which publishes its report each April that breaks down income for various counties in California, for example, the implementation of specific California project boundaries. AMI in 2023 was roughly 91,000 dollars for a four-person family residing within Los Angeles County. This would include families making approximately $54,600 or less, with a program serving at 60% of AMI.

Types of affordable housing

Affordable housing is not one program or building type. It includes different types of housing models, funding sources, and target groups.

Public housing

Local Public Housing Authorities (PHAs) own and manage public housing, with funding primarily coming from the federal government. Public housing served millions of American families at its height in the mid-20th century. Today, there are only about 960,000 public housing units in the country, according to HUD—a figure that has continued to dwindle year after year due to lackluster infrastructure, insufficient funding, and outright demolition.

Section 8 Housing Choice Vouchers

The largest nationwide program subsidizing private landlords is the federal Housing Choice Voucher Program (also known as Section 8). Vouchers do not tie assistance directly to a unit—eligible families can rent privately owned housing instead. The federal government pays the rent, with the household paying less than 30% of its income. HUD has reported that approximately 2.3 million households are using vouchers in 2023.

Low-Income Housing Tax Credits (LIHTC)

The main source for funding affordable rental housing in the U.S., created by the Tax Reform Act of 1986, is the Low-Income Housing Tax Credit program. Tax credits are funded by the federal government and given to states, which then award those credits to developers who promise not to raise rents but keep them affordable for a certain number of years (usually 30). LIHTC has been credited with financing over 3.6 million affordable units since it was introduced, according to the National Council of State Housing Agencies

Inclusionary zoning

Localities and states require developers to set aside a share of affordable units in new market-rate developments. The method, referred to as inclusionary zoning, has been used in cities like New York City, Chicago, and San Francisco. Opponents have also argued that it can lower overall housing supply by making development less financially appealing. Supporters say it combines affordable units within mixed-income neighborhoods rather than building pockets of poverty.

Community Land Trusts (CLTs)

Community Land Trusts (CLTs) are nonprofit organizations that permanently acquire land and sell or lease homes built on that land to homeowners at prices below the market. Since the trust retains ownership of the land, resale prices are limited, making the housing affordable to future purchasers. Community land trusts (CLTs) are well-established in cities such as Burlington, VT, and Atlanta, GA.

Could anyone move to less costly housing? How do individuals get passed to more affordable housing, or what characterizes affordable housing?

Because housing programs differ in age, location, and funding source, they have varying eligibility criteria. While an income threshold based on AMI is a requirement in most programs, non-work-related geographic criteria are added by some programs (programs also prioritizing populations including

• Seniors aged 62 or older

• Those at risk of (or experiencing) homelessness or housing instability

• Physically or Developmentally Disabled Individuals

• Veterans

• Households with young children

Affordable housing is seldom easy. Public housing and Section 8 voucher waiting lists are notoriously long. By 2023, HUD also said some local waiting lists had been closed for years because demand exceeded the supply of housing. In places such as Washington, D.C., and Miami, people routinely wait more than 10 years for a voucher.

So why is there a lack of low-cost housing in the US?

The United States knows it has a major affordable housing crisis, and there's no news there. In the 2023 "Gap" report, the National Low Income Housing Coalition (NLIHC) estimated that there are about 7.3 million affordable and available rental homes for extremely low-income renters with incomes at or below 30% of AMI nationally, leaving a deficit of more than 6.8 million units.

Several factors drive this gap:

Underinvestment in public housing. Financial assistance to public housing from the federal government has decreased substantially since the 1970s. Units that should have been fixed up and brought up to snuff but lack capital—even for maintenance—have been torn down.

Zoning restrictions. Many municipalities have zoning laws that restrict multifamily housing to specifically zoned areas and set limits on how dense these developments can be. This increases supply where demand is higher, which forces low-income renters into longer commutes or worse housing.

Rising construction costs. High costs of construction materials and labor shortages mean that housing of all types has become more costly to build, further tightening the margins on affordable developments.

Expiring affordability restrictions. LIHTC units have a minimum affordability requirement of just 30 years. When compliance periods on much older projects are complete, units can be converted to market-rate housing—decreasing the total stash.

What are the increasing solutions?

Whether it is a top-down expansion or a bottom-up tax incentive, no one policy alone will solve the affordable housing crisis. The best approaches often combine several strategies.

Across multiple states, zoning reform is drawing bipartisan support. Minnesota: With statewide legislation eliminating single-family-only zoning, the first in the U.S., duplexes and triplexes will be allowed in all residential zones starting in 2023. California passed several ADU laws and eased approval of multifamily projects.

Keeping down existing affordable stock is sometimes cheaper than new construction. These sorts of programs not only help nonprofits and CLTs acquire and rehabilitate aging affordable housing, but they also help prevent displacement, coaxing more out of every public dollar.

Social housing is a model that has enjoyed a renaissance in some U.S. policy circles. Social housing advocates have been inspired by examples in Vienna, Austria—where about 60 percent of residents live in publicly owned or subsidized housing—and are proposing government-owned mixed-income developments that cross-subsidize affordable units with revenue from market-rate ones.

For existing residents, tenant protections such as rent stabilization laws and just-cause eviction requirements play a critical role in keeping them housed while housing costs continue to rise.

Affordable Housing vs Low-Income Housing: What is the difference?

The terms are often confused but sit differently on the spectrum. The term "high-income housing" generally means property for rent that affordable families are financially unable to afford; "low-income housing" usually refers, conversely, to property subsidized for households with income strategically below the 60% of AMI generally regarded as at risk. In contrast, "affordable housing" is a far more inclusive designation—one that can even cover workforce housing for lower middle-income earners (60 percent to 120 percent AMI) who cannot afford market-rate rents either in hot markets.

That distinction is important from a policy perspective. Some affordable housing programs are geared toward the workforce, a range of professionals such as teachers, nurses, and first responders who earn above eligibility requirements for typical affordable housing but below what is necessary to afford high-cost rental markets.

The upshot on cheap housing

Public good: affordable housing. Stable and affordable housing influences health, educational achievement, economic productivity, and social mobility. It is not unavoidable—its scarcity is a consequence of decades of choices that policymakers can choose to undo and amend.

The first step to making any meaningful engagement with those choices is understanding what you mean by affordable housing and how it works. This discussion is taking place right now, in city councils, state legislatures, and federal agencies. To be informed puts you in a position to participate.

If you want to go deeper, the National Low Income Housing Coalition (nlihc. org) also publishes annual data on housing affordability by state and county. It hosts a searchable database of local affordable housing resources and waiting list information.

How to report Section 8 housing violations

To report a Section 8 Housing Choice Voucher violation, use the channel that matches the problem:

Unsafe or poorly maintained housing

Examples include mold, no heat or hot water, exposed wiring, sewage, pests, broken locks, structural damage, or lead hazards.

1. Notify the landlord or property manager in writing and keep a copy.

2. Contact the Public Housing Agency (PHA) that issued the voucher. Ask for a complaint number and a special or complaint inspection.

3. HUD’s Public and Indian Housing Information Resource Center can help locate or contact the PHA: 800-955-2232, Monday–Friday, 9:00 a.m.–5:00 p.m. Eastern. Section 8 properties must meet applicable health and safety standards.

4. Report serious building-code violations to the city or county housing/code-enforcement department. For an immediate danger, such as fire, gas leakage, exposed live wiring, or violence, call 911.

For a HUD-assisted apartment complex rather than a tenant-based voucher, call HUD’s Multifamily Housing Complaint Line at 800-685-8470. It accepts complaints involving poor maintenance, health and safety dangers, mismanagement, and fraud.

Section 8 fraud

Examples include unreported income, unauthorized household members, the landlord demanding extra rent “under the table,” false documents, or someone receiving assistance for a property where they do not live.

Report it to the HUD Office of Inspector General:

• HUD OIG Hotline: 800-347-3735

• An anonymous online complaint option is available.

• Include who was involved, what occurred, dates, location, housing authority, supporting evidence, and how the program was affected. Vague or unsupported reports may be closed without action.

You can also report suspected program violations directly to the local PHA.

Discrimination or retaliation

Report discrimination involving race, color, national origin, religion, sex, disability, familial status, or other federally protected housing rights to HUD’s Office of Fair Housing and Equal Opportunity:

• 800-669-9777

• HUD’s online housing-discrimination complaint form

• Submit the complaint promptly; Fair Housing Act allegations generally must be filed with HUD within one year of the last discriminatory act. Retaliation for reporting housing discrimination is also illegal.

Information to preserve

Keep photographs or videos, inspection reports, dates and times, repair requests, emails and texts, rent receipts, notices, names of witnesses, and copies of anything submitted. Avoid withholding rent or breaking the lease without advice from a local tenant lawyer or legal aid organization, as state procedures differ.

How to Buy Section 8 Housing?

Section 8 is not a special type of property deed. You purchase an ordinary house, condo, townhouse, or apartment building and operate it under the Housing Choice Voucher program.

Step 1: Choose the location and contact the housing authority

Identify the Public Housing Agency, or PHA, serving the property’s address. Ask for:

• Current voucher payment standards

• Utility allowances

• Inspection requirements

• Landlord registration forms

• Rent-increase procedures

• Change-of-ownership procedures

• Information about landlord incentives or damage funds

PHAs administer the voucher program locally, and their administrative procedures can differ. HUD maintains an official PHA directory.

Step 2: Find a suitable property

You can buy either:

• A vacant property and later rent it to a voucher holder

• A property with an existing Section 8 tenant

• A mixed building containing voucher and non-voucher tenants

Properties are generally found through regular MLS listings, real-estate agents, wholesalers, foreclosure sales, auctions, or direct owner outreach. Do not assume that a property advertised as “Section 8 approved” will automatically remain approved after a sale.

Step 3: Analyze the real rent—not just the payment standard

The PHA’s payment standard is not necessarily the rent you will receive. The PHA must determine that the proposed rent is reasonable compared with similar unassisted units, considering factors such as location, size, condition, amenities, and utilities.

Calculate:

PHA payment + tenant payment = total approved contract rent

Then subtract:

• Mortgage

• Property taxes

• Insurance

• Repairs and maintenance

• Property management

• Utilities paid by the owner

• Vacancy and payment-abatement reserves

• Licensing and inspection costs

• Capital expenditures

Do not base the purchase solely on the amount the current seller claims HUD pays.

Step 4: Perform Section 8-specific due diligence

When the property already has a voucher tenant, obtain and verify:

• Current lease and lease addendum

• Housing Assistance Payments, or HAP, contract

• Rent ledger showing PHA and tenant payments separately

• Current approved contract rent

• Tenant’s required portion

• Latest inspection report

• Outstanding repair deficiencies

• Any payment abatements or threatened termination

• Security-deposit records

• Notices sent to or received from the PHA

• Confirmation that the voucher is tenant-based or project-based

• Confirmation of the procedure for transferring payments to the new owner

The HAP contract governs the relationship between the PHA and landlord. The PHA normally requires new-owner documentation before redirecting subsidy payments.

Make the purchase contract contingent on satisfactory review of the Section 8 records and confirmation from the PHA.

Step 5: Inspect the property independently

Do not rely only on the PHA inspection. Hire a professional home inspector and evaluate the roof, foundation, plumbing, electrical system, HVAC, pests, lead-based paint risks, permits, and code violations.

Voucher units must pass the applicable program inspection standards before assistance can begin or continue. The PHA also reviews rent reasonableness before executing the HAP contract.

Step 6: Arrange financing and close

A Section 8 rental property can generally be purchased using ordinary real-estate financing, such as an investment-property mortgage, commercial loan, portfolio loan or cash. Owner-occupants purchasing qualifying small multifamily properties may have additional financing choices.

Tell the lender that the property contains voucher-assisted tenants and provide the leases, HAP records and rent history requested during underwriting.

Step 7: Complete the change of ownership

Immediately before or after closing—as instructed by the local PHA—submit the new-owner package. It commonly includes:

• Recorded deed or closing documents

• Tax identification information

• Direct-deposit authorization

• Proof of ownership

• Management-agent information

• Assignment or replacement documentation

• Updated landlord contact information

• Banking details

• Certifications required by the PHA

Do not assume payments will automatically transfer from the seller to you.

Step 8: Continue program compliance

As the owner, you must:

• Maintain the property in compliant condition

• Complete required repairs

• Allow scheduled inspections

• Collect only authorized rent and charges

• Follow the lease and HAP contract

• Request rent increases through the PHA

• Follow federal, state, and local fair-housing laws

The normal lease-up sequence includes the tenancy-approval request, inspection, rent-reasonableness determination, lease execution, and HAP contract.

Buying a large project-based Section 8 property

Buying an apartment complex with a project-based Section 8 contract is much more complicated than purchasing a single-family voucher rental. It may involve HUD approval, affordability restrictions, regulatory agreements, contract assignment, financial review, and a formal Transfer of Physical Assets process. HUD identifies project-based Section 8 properties through its multifamily-assisted property system and maintains forms related to ownership transfers.

Use an affordable-housing attorney, HUD-experienced lender, and accountant for this type of acquisition.

2. Using a Section 8 voucher to buy your own home

Some PHAs offer an HCV Homeownership Program that allows eligible voucher participants to apply their monthly assistance toward qualifying homeownership expenses instead of rent.

Generally, the participant must:

• Already be admitted to the voucher program

• Work with a PHA that offers homeownership assistance

• Meet first-time-homebuyer rules

• Meet applicable income and employment requirements

• Complete approved homeownership counseling

• Qualify for financing

• Obtain an independent home inspection

• Receive PHA approval before purchasing

Not every PHA offers the homeownership option.

Send the city and state, and indicate whether you are buying as an investor or using a voucher to buy your own residence; the relevant housing authority and exact process can then be identified.

Frequently asked questions about affordable housing

What is the 30% rule in affordable housing?

The 30% rule states that a household should spend no more than 30% of its gross monthly income on housing costs. Any household spending more than this threshold is considered "cost-burdened" according to HUD. Households spending more than 50% are classified as "severely cost-burdened."

Who is eligible for affordable housing programs in the U.S.?

Eligibility varies by program. Most require households to earn below a percentage of the Area Median Income (AMI)—commonly 50% to 80% of AMI for rental assistance. Some programs prioritize specific groups, including seniors, veterans, people with disabilities, and households experiencing homelessness.

How long are the waiting lists for affordable housing?

Waiting times vary significantly by location and program. In high-demand cities, waiting lists for Housing Choice Vouchers (Section 8) can exceed five to ten years. Many local waiting lists are closed entirely due to overwhelming demand.

What is the difference between public housing and Section 8?

Public housing refers to government-owned rental units managed by local Public Housing Authorities. Section 8, or the Housing Choice Voucher Program, provides subsidies that eligible households can use to rent privately owned apartments. Vouchers offer more flexibility in where a household can live, while public housing ties assistance to a specific unit.

Is affordable housing the same as subsidized housing?

Not necessarily. Subsidized housing receives direct government funding to lower costs for residents. Affordable housing is a broader category that includes subsidized housing but also encompasses workforce housing, community land trust homes, and inclusionary zoning units that are priced below market rate without direct subsidies.

What is a Community Land Trust, and how does it keep housing affordable permanently?

A Community Land Trust (CLT) is a nonprofit that owns land and leases it to homeowners or renters at below-market prices. Because the CLT retains ownership of the land and caps resale prices, homes remain affordable for future occupants—not just the first buyer. This model prevents speculative price increases from eroding affordability over time.

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