Housing subsidies -- also known as vouchers -- work like prearranged discounts for rental expenses. These discounts are made possible through funding provided by the government as well as by banks and nonprofit organizations. Housing subsidies exist for people with low to moderate incomes, senior citizens, people affected by homelessness and people suffering from mental illness. Housing subsidies come in one of two forms: tenant-based subsidies and project-based subsidies. The difference between the two depends on how the discount is assigned. Tenant-based subsidies assign the discount to the tenant, which means tenants can take the discount from one residence to another. Project-based subsidies assign the discount to a residence or apartment, meaning that once a tenant leaves, he has to reapply through another program. The Section 8 program offers tenant and project-based subsidies.
Subsidy Housing Process
People looking for subsidized housing assistance can apply through State Public Housing Agencies, which act as local government housing offices. Housing agencies administer subsidy programs and maintain listings of available subsidized homes and apartments within a local region. A person's discount or subsidy amount is calculated by the agency based on her monthly income. According to the HUD reference site, subsidies cover up to 70 percent of rental costs depending on a person's or family's income level. Public housing agencies pay landlords directly on a monthly basis to cover assigned subsidy amounts on behalf of the tenant.
A tenant-based subsidy involves a contract agreement between the public housing agency and the tenant. Another contract arrangement also exists between the tenant's landlord and the public housing agency. Since the subsidy discount is attached to the tenant, whenever a tenant moves, the contract between the public housing agency and the landlord is terminated. Contract agreements are required under Section 8 housing as well as other types of subsidized housing. Any residence under contract with a housing agency must meet certain quality standards, and any tenant under contract must meet certain income requirements. To ensure that tenants and landlords meet their contract obligations, public housing agency representatives inspect residences and reevaluate a tenant's financial status on an annual basis.
Under the Section 8 program, project-based housing subsidies provide low-cost housing for individuals and families who fall within the low to very low income level category. Income level guidelines vary according to region, so Section 8 income requirements can vary from one locale to another. Project-based subsidies may cover apartment buildings and complexes or construction projects in which owners agree to rent out units under Section 8 guidelines. In addition to Section 8, other programs, such as Section 232 and Section 202 provide subsidized housing for the elderly and the disabled. Another program, known as Section 811, works specifically with nonprofits and community housing development organizations to reserve subsidy housing for people with physical disabilities and mental illnesses.