What Is the Housing Choice Voucher Program?
HUD's Section 8 program is the government's largest housing assistance program, helping low-income families find quality housing through a public housing authority backed by HUD.
The Housing Choice Voucher Program: What Multifamily Investors Should Know
The HUD Section 8 program is the U.S. government's largest housing assistance program. In order to help low-income families find quality housing, a local Public Housing Authority (PHA), funded by HUD, will pay a private landlord part or all of the unit’s rent. The largest program within Section 8 is called the Housing Choice Voucher Program, which allows a family to choose their own unit from within the pool of Section 8 properties in their area. Landlords generally apply for the Section 8 program due to the fact that they will receive steady monthly rent payments from HUD, and because they will, in essence, have a waiting list of tenants lining up to rent from them.
Requirements for Section 8 Landlords and Tenants
Before getting approved for the HUD Section 8 program, the local PHA needs to inspect the unit and the property to ensure that it’s safe and suitable for tenants. Plus, it’s important to realize that the unit rental amount needs to be less than or equal to the FMR (Fair Market Rent) for that individual area. Fair Market Rent is a statistic published by HUD used to determine rents for the Housing Choice Voucher Program and other HUD programs. HUD will often pay around 70% of a tenant’s rent, leaving them responsible for paying the rest directly to the landlord.
Under the Housing Choice Voucher Program, when a tenant chooses a unit at an eligible Section 8 property, and the lease is approved by the PHA, the tenant must sign on to a minimum 1-year lease. After that period of time, the tenant and landlord may enter into another long-term lease, or go month-to-month. Most landlords require security deposits, though these are not generally large, due to the fact that Section 8 eligible tenants have very limited income.
Housing Choice Vouchers vs. Project Based Vouchers
While tenants with Housing Choice Vouchers can choose between a variety of Section 8 units, the Project Based Voucher (PBV) program offers tenants affordable housing in a specific unit. Unlike Housing Choice Vouchers, which tenants may generally use at any local Section 8 property, tenants generally lose their housing benefits if they move elsewhere. Like Housing Choice Vouchers, Project Based Vouchers often pay 70% of a tenant’s rent, leaving them responsible for the remaining 30%.
Section 8 Leasing Considerations
For tenants, Section 8 programs, such as the Housing Choice Voucher Program, are highly competitive, with some families waiting years in order to get a unit. In many situations, tenants must simply wait to get on a waiting list. While this isn’t ideal from a housing policy standpoint, the high demand for these properties means that there will nearly always be tenants waiting to sign a lease-- nearly eliminating the marketing costs of leasing a multifamily property. All landlords need to do is post on one of the Section 8 listing sites, such as GoSection8.com. Despite ease of marketing, tenant quality can be an issue, with some Section 8 landlords accusing tenants of disrespecting and vandalizing property. For this reason, effectively pre-screening tenants is essential, with an emphasis placed on background checks, income/credit verification, and previous rental history.
Due to these factors, Section 8 involvement is not usually ideal for owners of brand new, high quality properties, as they can often command higher rents on the open market, while avoiding the potential tenant issues and bureaucratic red tape that Section 8 is often known for. In the end, while renting to Section 8 tenants can be an excellent business for some people, it isn’t right for everyone, so investors considering Section 8 participation should do as much research as possible before making a final decision.
To learn more about HUD multifamily loans, simply fill out the form below and a HUD lending expert will get in touch.
Related Questions
What is the Housing Choice Voucher Program?
The Housing Choice Voucher Program is a program funded by the U.S. Department of Housing and Urban Development (HUD) that helps low-income families find quality housing. A local Public Housing Authority (PHA) pays a private landlord part or all of the unit’s rent. The program allows a family to choose their own unit from within the pool of Section 8 properties in their area. Landlords generally apply for the Section 8 program due to the fact that they will receive steady monthly rent payments from HUD, and because they will, in essence, have a waiting list of tenants lining up to rent from them.
The program also offers tenants affordable housing in a specific unit through the Project Based Voucher (PBV) program. Unlike Housing Choice Vouchers, which tenants may generally use at any local Section 8 property, tenants generally lose their housing benefits if they move elsewhere. Like Housing Choice Vouchers, Project Based Vouchers often pay 70% of a tenant’s rent, leaving them responsible for the remaining 30%. For more information, please visit this link.
How does the Housing Choice Voucher Program work?
The Housing Choice Voucher Program is the largest program within HUD's Section 8 program. It allows low-income families to choose their own unit from within the pool of Section 8 properties in their area. The local Public Housing Authority (PHA) will pay a private landlord part or all of the unit’s rent, and the tenant is responsible for paying the rest directly to the landlord. Before getting approved for the HUD Section 8 program, the local PHA needs to inspect the unit and the property to ensure that it’s safe and suitable for tenants. Plus, the unit rental amount needs to be less than or equal to the Fair Market Rent (FMR) for that individual area. When a tenant chooses a unit at an eligible Section 8 property, and the lease is approved by the PHA, the tenant must sign on to a minimum 1-year lease. After that period of time, the tenant and landlord may enter into another long-term lease, or go month-to-month. Most landlords require security deposits, though these are not generally large, due to the fact that Section 8 eligible tenants have very limited income.
What are the eligibility requirements for the Housing Choice Voucher Program?
In order to be eligible for the Housing Choice Voucher Program, tenants must meet certain criteria. The tenant must be a U.S. citizen or have eligible immigration status, and must have an income that is below the median income for the area. Additionally, the unit must pass inspection by the local PHA and the rent must be less than or equal to the Fair Market Rent (FMR) for that area. FMR is a statistic published by HUD used to determine rents for the Housing Choice Voucher Program and other HUD programs. HUD will often pay around 70% of a tenant’s rent, leaving them responsible for paying the rest directly to the landlord. Most landlords require security deposits, though these are not generally large, due to the fact that Section 8 eligible tenants have very limited income. Under the Housing Choice Voucher Program, when a tenant chooses a unit at an eligible Section 8 property, and the lease is approved by the PHA, the tenant must sign on to a minimum 1-year lease. After that period of time, the tenant and landlord may enter into another long-term lease, or go month-to-month.
For more information, please visit HUD's website.
What are the benefits of the Housing Choice Voucher Program?
The Housing Choice Voucher Program offers a variety of benefits to tenants and landlords. For tenants, the program allows them to choose their own unit from within the pool of Section 8 properties in their area. This gives them more flexibility in terms of location and amenities. Additionally, the program pays 70% of a tenant’s rent, leaving them responsible for the remaining 30%.
For landlords, the program offers steady monthly rent payments from HUD, and because they will, in essence, have a waiting list of tenants lining up to rent from them. Additionally, landlords may be eligible for tax credits and other incentives for participating in the program.
For more information, please visit Project Based Voucher.
How can I apply for the Housing Choice Voucher Program?
You can apply for the Housing Choice Voucher Program through your local Public Housing Authority (PHA). The PHA will inspect the unit and the property to ensure that it’s safe and suitable for tenants. The unit rental amount needs to be less than or equal to the Fair Market Rent (FMR) for that individual area. HUD will often pay around 70% of a tenant’s rent, leaving them responsible for paying the rest directly to the landlord. Most landlords require security deposits, though these are not generally large, due to the fact that Section 8 eligible tenants have very limited income. For more information, please visit HUD's website.
What are the restrictions of the Housing Choice Voucher Program?
The Housing Choice Voucher Program has several restrictions. Before getting approved for the HUD Section 8 program, the local PHA needs to inspect the unit and the property to ensure that it’s safe and suitable for tenants. Plus, it’s important to realize that the unit rental amount needs to be less than or equal to the FMR (Fair Market Rent) for that individual area. Fair Market Rent is a statistic published by HUD used to determine rents for the Housing Choice Voucher Program and other HUD programs. HUD will often pay around 70% of a tenant’s rent, leaving them responsible for paying the rest directly to the landlord.
Under the Housing Choice Voucher Program, when a tenant chooses a unit at an eligible Section 8 property, and the lease is approved by the PHA, the tenant must sign on to a minimum 1-year lease. After that period of time, the tenant and landlord may enter into another long-term lease, or go month-to-month. Most landlords require security deposits, though these are not generally large, due to the fact that Section 8 eligible tenants have very limited income.
For more information, please visit this page.