Buying Versus Renting on a Low Income

No matter your family’s needs, HUD housing assistance programs can help you find the right home.

The U.S. Department of Housing and Urban Development (HUD) partners with state and local agencies across the country to administer programs that serve both low-income renters and buyers.

To decide which option is best for you, you will need to consider your unique needs and preferences, as well as the eligibility and Section 8 housing application processes. You will also need to take into account the costs and availability of different types of housing in your area.

HUD Housing Basics

In most cases, HUD housing programs do not pay the full cost of a family’s monthly rent or mortgage payments. Enrollees can expect to pay up to 30 percent of their adjusted annual household incomes in housing costs.

Their local Public Housing Agencies (PHAs), which manage HUD programs at the regional level, will then pay the difference between the family’s contribution and the total fair-market cost of their rent or mortgage. The PHA will make these payments directly to the landlord or mortgage company.

Specific eligibility criteria for the Section 8 housing list can vary by program, state and region, due to differences in cost of living and other factors. Meeting program eligibility criteria is not a guarantee that a household will receive benefits. Unfortunately, demand for assistance often outstrips the amount of funding available to PHAs.

Applicants are placed on their PHA’s Section 8 housing list or other applicable program waitlists, when qualified for assistance, but no funds are available. Generally, PHAs provide services to each family on the waitlist, in the order funds become available. However, in some circumstances, the HUD allows PHAs to prioritize specific high-risk populations, such as:

  • The elderly.
  • Individuals with disabilities.

Due to the sometimes-complicated calculations involved in eligibility determinations and variations in cost of living, services availability and other factors, it can be difficult to accurately estimate whether or not you qualify for assistance under any given program, per HUD guidelines.

As a result, the HUD strongly advises everyone in need of housing assistance to submit a Section 8 housing application or apply for other appropriate housing assistance through their local PHAs, regardless of whether or not they believe they will be eligible.

In most cases, even Section 8 applicants who are determined to be ineligible for services benefit from working with their local PHAs, as the agencies can connect them to other support services and agencies for which they do qualify.

Choosing Between Renting and Buying

There are many factors to consider when you choose between HUD housing assistance rental programs and homeowner programs. Chief among these are:

  • Your family size and composition.
  • The availability of different kinds of housing in your region.
  • Your physical and financial abilities to maintain a house, and your interest in doing so.
  • The level of change you expect in your employment situation, family composition and physical and financial capacities.

Your local PHA can assist you in assessing your needs and expectations, and comparing them to regional housing stock and program criteria to determine whether Section 8 housing or a homeowners’ program is best for you.

Section 8 Rentals

The HUD’s Section 8 rentals program provides financial assistance to individuals and families seeking safe, sanitary and affordable rental housing. To qualify for Section 8 rental assistance, applicants be at least one of the following:

  • Very low-income
  • Elderly
  • Disabled

To apply for Section 8 housing assistance, individuals or families must contact their local Public Housing Agencies. Agency representatives will work with applicants to collect all of the information and documentation needed to determine eligibility. Applicants will need to provide information on their:

  • Household incomes.
  • Household compositions (who lives in a household, their ages and disability statuses, and how they are related to the head of household).
  • Backgrounds (criminal, medical, and otherwise, as applicable).
  • Housing histories.
  • Other related personal and financial factors that might affect housing stability and need.

If applicants are approved for assistance, and there is funding available to aid them, they become responsible for finding low income apartments for rent that meet their needs and program standards. PHA representatives can assist recipients in identifying Section 8 housing for rent, if needed.

Recipients can choose from any single-family homes, townhouses or apartments within their PHAs’ regions that meet basic HUD safety, sanitation and cost criteria. Once recipients have moved into HUD-approved and subsidized properties, they must follow HUD-dictated guidelines for good tenancy, in order to keep their financial support. This includes behaviors such as:

  • Paying rent on time.
  • Not damaging the property.
  • Abiding by rental agreement rules.

Failure to comply with these requirements may cause PHAs to revoke recipients’ awards and assistance.

HUD Housing Assistance for Homebuyers

Some low-income households choose to seek HUD housing assistance in buying a home, rather than in renting. General eligibility criteria for prospective homebuyers is the same as for rental program applicants. Applicants must be elderly, low- or very-low-income, or diagnosed with recognized disabilities to qualify for assistance.  Homebuying can be an excellent choice for qualifying households that:

  • Have a stable composition (e.g. family members are not generally expected to leave or join the household).
  • Expect to remain in the same area or region for an extended period of time.
  • Have a consistent income and strong financial habits.
  • Are physically capable of maintaining a home or property.

Like rental programs, HUD housing programs for homebuyers are handled through PHAs. The first step for all applicants is to contact their regional PHAs so that they can be assigned an agency representative who will work through the application process with them.

HUD maintains several different homebuying programs. These include:

  • VA homes for sale.
  • Good Neighbor Next Door.
  • Indian Home Loan Guarantee Program (Section 184).
  • Voucher Program.

Each HUD housing assistance program has slightly different eligibility criteria and provides different forms of support to recipients. For example, programs may subsidize or guarantee mortgage payments, help recipients buy qualifying homes at a steeply discounted price, or provide mortgage loans with special terms. PHA representatives will work with applicants to determine which programs they qualify for and which ones are most appropriate to their personal needs.