Section 8 is a widely known affordable housing program created to assist low-income earners. The primary eligibility requirement for this program is income.
We have researched and written this article to provide you with a detailed explanation of how to know your income eligibility for Section 8 Housing Choice Voucher Program.
Your individual or family’s income must fall within a certain percentage determined by the Area Median Income to be eligible for Section 8. Each year, HUD determines the income limits based on the percentage area’s median income level. This is divided into three groups or categories;
- Extremely Low Income – Incomes at or below 30% of the Area Median Income
- Very Low Income – Incomes at or below 50% of the Area Median Income
- Low Income – Incomes at or below 80% of the Area Median Income
Housing vouchers are generally available for households that earn 30% of the Area Median Income.
How to Find the Area Median Income
The Area Median Income is the average or median income of a household in a metropolitan region. A household’s income is calculated by adding up all revenue before taxes to arrive at a gross income. The HUD calculates household income limits yearly by utilizing data derived from the American Community Survey and then publishes a dataset afterward.
The household income is compared to the income limit set by HUD for the number of people in that household on the chart to find the Area Median Income. If the household’s income is 50% or below the median, they count as part of the 25% low-income set-aside.
How to Know What Percent Your Income is to the AMI
To know what percent your income is to the AMI, visit this HUD portal to access the annual income limit dataset. Select your state and then your county, or select the FY 2020 HUD Metropolitan Fair Market Rent/Income Limits Area. You will see a table showing income limits for different household sizes.
On the chart,
- Look at the top row to see the size of your household
- Then, check down the column of your household size to see the AMI level’s maximum household incomes.
- Find where your gross income falls and follow that row to the left to see your AMI level.
How to Calculate the Amount of Rent Section 8 Will Pay
Ideally, section 8 requires you to pay only 30% of your income as rent while covering the difference. To calculate the amount of rent that Section 8 will pay, you have to calculate your adjusted monthly income.
To derive the monthly income, you must first calculate the household’s annual income and subtract all allowable deductions by HUD. These include, but not limited to
- $400 per year for a family whose head of household or spouse is above 62 years or is a person with a disability
- $480 per year for each dependent. This includes anyone who is: Under 18 years, a full-time student, or a person with a disability
- Necessary medical expenses not covered by insurance.
Once all deduction has been made to your income, whatever is left should be divided by 12. After deriving the monthly income, calculate 30% of this figure. That would result in the amount to be paid as rent.
In cases where the household falls significantly under the Extremely Low Income of the AMI, the Public Housing Authority could employ a different formula that would make your public housing rent equal to either 10% of your monthly income or a minimum of between $25 and $50 dependant on the area housing authority.
The amount of money the housing authority pays as your rent subsidy depends on your adjusted income and the payment standards set for that area, which they derive from the fair market rent.
To calculate how much money section 8 will pay as rent, you can subtract your adjusted monthly income from your area’s fair market rent. Bear in mind that the housing authorities also consider utilities when included in the rent.
Your income eligibility for section 8 ideally depends on where your income falls on the AMI. You can easily find this by comparing your household’s income with HUD’s annual income limit dataset. The amount section 8 will pay as rent depends on your income and your area’s fair market rent.