Many renters experience difficulty meeting their financial obligations -- and rental fees put a strain on low-income earners. The U.S. Department of Housing and Urban Development (HUD) administers programs -- such as the Housing Choice Voucher (HCV) program and subsidized rental projects -- that reduce the rental rate for low-income households. Income and credit scores play a significant role in qualifying for a lease and nonsubsidized units.
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The HCV program provides a monthly payment on behalf of the tenant. Applicants must meet strict guidelines -- regarding income, resources and assets, for example -- to qualify for the program. Approved units must meet guidelines regarding the physical condition and leasing agreement. Tenants may decide to move and use the voucher for a new leasing contract.
The HCV program also offers recipients the opportunity to purchase a home. The subsidy continues over a specific period -- 15 years, for example -- of an approved mortgage.
Subsidized rental projects are typically owned by the public housing authority, which rents units to applicants who meet the guidelines. Applicants must meet the income qualifications and possess steady income. Once the tenant decides to move, the subsidy remains with the property.
The Low Income Housing Tax Credit (LIHTC) program provides an indirect subsidy in the form of tax breaks. This program encourages developers in the private sector to offer a percentage of rentals to tenants who meet the guidelines.
The federal government awards tax credits to qualified developers who, in turn, sell the credits to investors to raise funds to finance the real estate, according to HUD. As a result, the developer can offer rentals at a rate below market due to savings.
Properties with unsubsidized market rent offer units at a rate comparable to the surrounding market. Market rentals do not offer direct or indirect subsidies. Tenants must qualify by meeting the minimum annual income and credit requirements.
Typically, renters with strong credit scores and reliable, equitable employment are qualified for the unsubsidized market. But, some unsubsidized properties offer a break in the form of a reduction.
Unsubsidized and reduced properties supply units at a rate slightly below market. These properties may have the same credit and income requirements as market units. Renters who cannot afford market rent but do not qualify for subsidies have an option for decent housing.