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The Basics of Section 8 Housing

The purpose of this article is not to spark a political or moral debate. I’m not arguing for or against the program. Nor am I advocating either way for it’s existence or continuance. My hope is to shed some light on how the program works, who uses it, and some limitations to the program. This article is a precursor for a later article about how Section 8 affects property values. But it’s important to know some of the basics of Section 8 before reading that article.

The Basics of Section 8

Section 8 Vouchers allow a renter to rent a home, and the government will pay the balance of the rent that exceeds 30% of the renter’s monthly income. In order for the unit to qualify, it must be inspected and approved by the local housing authority. The rent must be at or below the Fair Market Rent (FMR) set by HUD. There are two types of of Section 8:

  • Tenant-Based: Known as the Housing Choice Voucher program, which is attached to the person. The person can choose any home that accepts the vouchers. When they move out they can take the assistance with them, the next tenant of that property may or may not be a Section 8 tenant.
  • Project-Based: Works just like the Vouchers, but it’s attached to the property. With a Project-Based Certificate, if the tenant moves out of the property, they don’t take the assistance with them. It stays with the property and the next tenant uses the benefit. With Project-Based Vouchers, if the tenant lives in a project-based unit for one year, they may receive a Tenant-Based Voucher or comparable rental assistance to use at another qualified property.

Who Qualifies for Section 8

As for qualifying, it can change a bit from authority to authority. But generally, the rules are as follows: You earn less than 50% of the Area Median Income (AMI) in which you live. The requires that the program targets 75% of the assistance funds to families who earn 30% or less of the AMI. There are a few other basic requirements such as citizenship (including certain categories of non-citizen but legal residents) along with limits on how many assets you own.

Quick Math: You make $20,780/yr and rent an apartment for $1,327/mo.
You pay $519.50/mo (30% of your income) in rent, the Fed pays the other $807.50

As an example, in Nashville (Davidson County, 2018) the AMI is $74,900, The FMR for a 3 bedroom unit is $1,327. There’s a lot of other stipulations, but we will use the most basic. Your family is less than 30% of the AMI, and you only need to pay 30% of your income to rent. This means you may be a family of 3 (single mother and two kids) making $20,780/yr. You get an apartment with 3 bedrooms for yourself and each child that’s $1,327 per month. You will pay the landlord $519.50 in rent, and the government will pay the landlord $807.50. Obviously it’s a bit more complicated than that, but you get the picture.

Limitations of Section 8

Something to keep in mind that your housing options are limited by the Section 8 Program. You can’t just pick any place you like. There are restrictions on the cost of rent, condition of the property, quality standards for living, among other things. Outside that, there are no other limits and really, any landlord can participate so long as they meet the standards. You may even have Section 8 homes in your neighborhood that you don’t know about. This is because the landlord can require good credit, a good proven rental history, clean criminal record, etc.

It’s also important to note that getting approved for Section 8 takes a long time. Most housing authorities have a long waiting list that can take up to a year to get approved. Some may have priority lists for the homeless, victims of domestic violence, etc), but for the most part the wait is long. There are a limited number of people who can participate. For Davidson County, the waiting list is closed (as far as I know). It was last open for one week in September of 2017. Before that it was open for one week in August of 2015, one week in 2013, and one week in 2008. I think you get the picture.

Section 8 Tenant Composition

People think of Section 8 as places where degenerates and crime ridden communities are. But it could also be the single mother of 2 kids who’s father died in a fire without insurance (side note, get life insurance!). According to HUD Statistics for March 2017 thru June 2018, 19% of Project-Based Vouchers went to female headed households with children in Tennessee. That number goes up to 52% for Tenant-Based Vouchers in Tennessee.

Take a look at the charts below and you can see who actually uses Section 8 Vouchers. All these numbers are pulled from HUD and are based on Tennessee. To the left you see the percentage of Elderly, Disabled, and family’s with children who use the program. On the right you’ll notice the percentage of people who stay in Section 8 homes over a period of time.

Tenant-Based Voucher Chart

Final Thoughts

Like I said before, I’m not advocating any which way on the existence of Section 8. As a tax-payer myself, I have a few views on it.  But I hope any biases I have don’t interfere with delivering the information. My next article is going to go over how Section 8 affects property values. Hopefully, understanding the basics of Section 8 will help when you read that article. I’ve included some references below if you want to read up more on the Section 8 programs from the Government, Tenant, and Investor’s side.

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