Wondering whether a home you can afford is within reach? Affordable housing generally means paying no more than 30 percent of your income on housing costs, utilities included, and several programs exist to help.
| Item | Value |
|---|---|
| Common affordability benchmark | No more than 30 percent of gross income on housing costs, utilities included |
| Voucher eligibility for very low-income families | Income at or below 50 percent of area median income |
| Federal definition of low income | Less than 80 percent of area median income |
| Project-based voucher tenant share | 30 percent of income, or a minimum of $50 per month |
| Low-Income Housing Tax Credit (LIHTC) claim period | Every year for 10 years |
| Low-income households paying over 30 percent without a voucher or other federal aid (NLC, January 2024) | Seven out of 10 households |
These figures come from the National League of Cities explainer of January 2024 and Ballotpedia’s terminology page. Programs and thresholds can change, so check the source before you rely on them.
What does affordable housing actually mean?
The most common yardstick comes from the U.S. Department of Housing and Urban Development (HUD). As the National League of Cities (NLC) described in January 2024, HUD defines affordable housing as housing on which the occupant pays no more than 30 percent of gross income for housing costs, including utilities. Households that spend more than that are considered housing cost burdened.
In everyday use the phrase stretches further. Ballotpedia notes that it is used in at least three senses:
- A rule of thumb for cost, based on the share of income a household spends on housing.
- A price level that lets people with low incomes rent or buy a home.
- A shorthand for government programs that subsidize housing for households with lower incomes.
The definition is a guideline, not a hard rule. Ballotpedia quotes HUD as saying that some jurisdictions may define affordable housing on other, locally determined criteria, and that its own definition is intended solely as an approximate guideline or general rule of thumb. The NLC calls the definition nebulous, because programs and stakeholders often adopt slightly different versions.
Who does affordable housing serve?
Mostly households with low incomes, though “low income” depends on who is defining it. Ballotpedia reports that the federal government defines low income as a household income of less than 80 percent of the area’s median income. Some state or local laws instead tie the term to the federal poverty level.
Voucher eligibility works on a similar scale. Under the NLC’s January 2024 summary, very low-income families, at or below 50 percent of area median income, can apply for a Housing Choice Voucher. A few specific categories of families with incomes up to 80 percent of area median income can also apply.
Realtor.com, as quoted by Ballotpedia, describes the term as an umbrella covering government-subsidized programs for low-income families, seniors, and people with disabilities. Middle-income renters are a different story: the NLC says unsubsidized units, known as NOAH, mainly benefit that group, which assistance programs often overlook.
If you want to see how one of these programs starts, read about how to apply for public housing. Applications go through local housing agencies, since this site is independent and educational and does not run programs or take applications.
The main types of affordable housing programs
Affordable housing is an umbrella over many tools run from the federal level down to the local one. The NLC article groups them into four broad kinds, and the sections below follow that grouping.
Tenant-based vouchers
As of the NLC’s January 2024 article, the best-known federal tenant-based program is the Housing Choice Voucher program, also called the Section 8 Voucher Program. It is used by 2.2 million low-income households. Holders put the voucher toward rent in the private market, so they choose where to live, and public housing agencies administer the vouchers locally.
For the full mechanics, read how does a housing choice voucher work.
Project-based vouchers
Project-based vouchers are part of the same program, but the subsidy is attached to a unit instead of to the tenant. The landlord contracts with a public housing agency to rent to eligible low-income individuals and families.
According to the NLC, tenants in these units contribute 30 percent of their income toward rent and utilities, or a minimum of $50 per month. The voucher pays the difference between that share and the unit’s actual cost. Agencies can use up to 20 percent of their Housing Choice Vouchers this way.
Low-Income Housing Tax Credit
The Low-Income Housing Tax Credit (LIHTC) is, in the NLC’s January 2024 wording, the most important federal resource for creating new affordable housing supply. Developers receive nonrefundable, transferable tax credits to help pay for building or rehabilitating housing with strict income limits for tenants and strict limits on their housing costs. The IRS allocates the credits to state housing finance authorities, which write their own guidelines.
The program has two major credit types, a 4 percent credit and a 9 percent credit, each redeemable every year for 10 years (NLC, January 2024):
- The lower credit fits projects that already get most of their funding from tax-exempt bonds or other government subsidies, plus the acquisition, rehabilitation, and conversion of existing structures.
- The higher credit is awarded through a competitive process run by state housing finance authorities.
Naturally occurring affordable housing
Naturally occurring affordable housing (NOAH) covers residential properties that no federal program subsidizes but whose rents are relatively low compared with the regional market, according to the NLC. The NLC says it is the most common form of affordable housing in the U.S., and also the form at the greatest risk of being lost to market speculation and demolition. Some units convert to higher rents or fall into disrepair under poor management.
How is affordability measured for renters and buyers?
HUD’s research office says in its HUD USER commentary that housing affordability generally means households can spend no more than 30 percent of monthly income on housing costs. For renters, those costs are generally just rent and utilities. For homeowners, they include principal and mortgage interest, property taxes, and homeowner’s insurance premiums.
To track the buyer side, HUD’s analysts use the HUD Homebuyer Affordability Index. It compares an area’s median income with the income needed to afford the median-priced home on no more than 30 percent of income. An index higher than 1 means higher affordability; below 1 means lower, per HUD USER.
The picture has tightened. HUD USER reports that, as of the first quarter of 2025, homeownership was unaffordable in 17 states, and it links the strain to mortgage interest rates that rose starting in 2022 and to pandemic-era shifts in migration patterns.
Why help still falls short, and what cities can do
Funding limits mean many eligible households get nothing. The NLC reports that, due to limited funding, seven out of 10 low-income households still pay more than 30 percent of their income for housing without receiving a voucher or other federal assistance.
The NLC points to local action as one response. Its examples of city-level tools include:
- Incentives for developers, such as payment-in-lieu-of-taxes (PILOT) programs, gap financing, and faster permitting.
- An impact fund to acquire and preserve naturally occurring affordable housing.
- Local housing trust funds that add public money for low-income housing, which can help when a state lacks funds.
HUD’s Increasing the Supply of New Affordable Housing Toolkit, mentioned by the NLC, goes deeper for local governments. Policy choices like these sit alongside wider debates covered in the hub on criminal justice reform.
Where reentry and housing meet
Finding a place to live after incarceration brings its own questions on top of cost. The guides below are a starting point, and each treats the topic as general education rather than legal advice.
- The overview of housing for felons maps the main routes to a place to live.
- A closer look at can felons get section 8 covers the voucher question directly.
- The page on apartments that accept felons looks at the private rental market.
- Landlord checks are explained in the guide to tenant screening criminal background check practices.
- Support models are compared in transitional housing vs permanent supportive housing.
- A different approach to homelessness is explained in what is housing first.
For the bigger picture of returning home, the hub on prison reentry ties housing to work, family, and services.
Frequently asked questions
What is the 30 percent rule?
Show answer
It is HUD’s rule of thumb that housing is affordable when the occupant pays no more than 30 percent of gross income on housing costs, including utilities, as the NLC described in January 2024. HUD itself calls it an approximate guideline.
Is Section 8 the same as the Housing Choice Voucher program?
Show answer
The NLC’s January 2024 article uses the names together: the Housing Choice Voucher, or Section 8 Voucher Program, is the most commonly known federal tenant-based voucher program. Local public housing agencies administer it. NLC is the source.
How do vouchers differ from LIHTC?
Show answer
Vouchers help households pay rent, while the Low-Income Housing Tax Credit gives developers credits to build or rehabilitate income-restricted housing. The split is described in the NLC explainer.
What is NOAH?
Show answer
It stands for naturally occurring affordable housing: properties with relatively low rents that no federal program subsidizes. The NLC says it is the most common form of affordable housing in the U.S. and is at the greatest risk of being lost.
Does “low income” mean the same thing everywhere?
Show answer
No. Ballotpedia says the federal government uses less than 80 percent of area median income, while some state or local laws use the federal poverty level instead.
