What Is a Housing Choice Voucher?
A housing choice voucher, commonly known as a Section 8 voucher, is a form of federal rental assistance designed to help very low-income families, the elderly, and individuals with disabilities afford decent, safe, and sanitary housing in the private market. This program falls under the broader category of social welfare programs within the financial landscape, aiming to address housing affordability and stability. The Housing Choice Voucher program is the largest federal low-income housing assistance program in the United States, assisting over 2.3 million American families.56 Participants are free to choose any eligible housing unit, including single-family homes, townhouses, and apartments, with the rent partially covered by a subsidy paid directly to the landlord by a local public housing agency (PHA).55
History and Origin
The Housing Choice Voucher program originated with the Federal Housing and Community Development Act of 1974, which established the Section 8 rental assistance program.54 It was created as an alternative to federally funded public housing projects, which were often owned and operated by state and city governments.53 The core idea behind Section 8 was to empower individuals with lower incomes to choose their housing in the private market using federal financial assistance.52 This concept of "choice" was central to the program's design from its inception.51 Over the years, significant legislative changes occurred, notably in 1983, 1987, and 1998, with the 1998 legislation merging previous tenant-based Section 8 components (certificates and vouchers) into the single Housing Choice Voucher program known today.50
Key Takeaways
- A Housing Choice Voucher (Section 8) is a federal subsidy helping low-income individuals afford private market housing.
- The program is administered locally by Public Housing Agencies (PHAs) with funding from the U.S. Department of Housing and Urban Development (HUD).49
- Recipients typically pay around 30% of their adjusted gross income towards rent, with the voucher covering the remainder up to a set limit.47, 48
- Eligibility is based on income, family size, and citizenship/eligible immigration status.46
- The program aims to provide housing stability and reduce hardships like homelessness and overcrowding.45
Formula and Calculation
The primary "calculation" in the Housing Choice Voucher program involves determining the portion of rent a tenant pays and the portion covered by the voucher. Tenants typically pay 30% of their monthly adjusted gross income for rent and utilities.43, 44 The public housing agency (PHA) then pays the remaining portion of the rent directly to the landlord.42 This subsidy amount is generally capped by a "payment standard" set by the PHA, which is based on the fair market rent (FMR) for the area and unit size, as determined by HUD.41
The tenant's portion of the rent can be expressed as:
The voucher subsidy is then:
Here, Gross Rent includes both the rent to the owner and any utilities not included in the rent. The Payment Standard is the maximum monthly subsidy the PHA will pay for a particular unit size in a specific market.
Interpreting the Housing Choice Voucher
Interpreting the Housing Choice Voucher involves understanding its value in providing housing affordability and its role in market dynamics. For eligible families, a housing choice voucher significantly reduces their housing cost burden, which is typically defined as paying more than 30% of income for housing.40 Research indicates that using a voucher can reduce housing cost burden by approximately 50%.39 This financial relief can free up household income for other essential needs, improving disposable income and overall financial well-being.
From a broader perspective, the program's impact is interpreted by its success in allowing families to access safer and less impoverished neighborhoods, though challenges exist in achieving this mobility for all recipients.37, 38 The effectiveness of the housing choice voucher is often measured by "success rates," which represent the proportion of new voucher recipients who successfully lease a home.36 These rates can vary depending on market conditions, PHA policies, and other factors affecting housing supply and demand.
Hypothetical Example
Consider the Garcia family, a low-income household consisting of two adults and two children. Their combined monthly adjusted gross income is $2,000. They are approved for a housing choice voucher. The PHA determines that the fair market rent for a suitable three-bedroom unit in their area is $1,500 per month, and the payment standard for a three-bedroom unit is also $1,500.
The Garcia family's portion of the rent is calculated as 30% of their adjusted gross income:
$2,000 (Adjusted Gross Income) * 0.30 = $600
They find a three-bedroom apartment for $1,400 per month, with utilities included in the rent. This rent is below the payment standard.
The voucher subsidy would then be:
$1,400 (Gross Rent) - $600 (Tenant's Portion) = $800
In this scenario, the Garcia family pays $600 directly to the landlord, and the PHA pays the remaining $800 directly to the landlord. This allows the family to secure housing that would otherwise be unaffordable based on their income, enhancing their cost of living affordability.
Practical Applications
Housing choice vouchers are primarily applied in the realm of affordable housing and social assistance programs. They serve as a crucial tool for public housing agencies (PHAs) nationwide to provide housing opportunities to vulnerable populations, including low-income families, the elderly, and individuals with disabilities.34, 35
One practical application is enabling residential mobility, allowing voucher holders to move to different jurisdictions and retain their assistance, which can open up opportunities in areas with better schools or employment prospects.33 However, the actual success of this mobility can be hindered by factors like limited landlord participation in certain areas or source of income discrimination.31, 32
The program also directly impacts household budgets by reducing the financial strain of housing costs, which can then free up resources for other necessities like food, healthcare, and education.30 A 2015 analysis by the Center on Budget and Policy Priorities highlighted that housing vouchers sharply reduce homelessness and other hardships, lifting more than a million people out of poverty.29 The official website for the program is maintained by the U.S. Department of Housing and Urban Development (HUD).28
Limitations and Criticisms
Despite its successes, the Housing Choice Voucher program faces several limitations and criticisms. A significant challenge is that the demand for vouchers far exceeds their supply, leading to long waiting lists, with only about one in four eligible families receiving assistance due to funding limitations.25, 26, 27 This scarcity means millions of low-income renters continue to face severe housing hardship, paying over half their income for housing or living in substandard conditions.24
Another common criticism pertains to the difficulty voucher recipients often encounter in finding suitable housing, especially in higher-opportunity neighborhoods.23 While the program intends to promote residential choice, market barriers such as a lack of willing landlords, source of income discrimination, and tight rental markets can impede voucher holders' ability to lease a unit.20, 21, 22 Some landlords are reluctant to accept vouchers due to perceived administrative burdens or negative perceptions of the program or its participants.18, 19 As a result, studies show a decline in voucher success rates in recent years, with the national success rate falling to 57% in 2022 from 66% in 2018.17
Furthermore, the program's maximum rent limits are set at the metropolitan level, which critics argue can effectively bar households from more expensive, often higher-opportunity, neighborhoods.16 This can limit the program's effectiveness in helping families achieve upward socioeconomic mobility. There are also concerns regarding administrative inefficiencies at the local PHA level and the varying levels of support provided to voucher recipients during their housing search.14, 15 These issues highlight the ongoing need for policy reform and increased public funding to maximize the program's potential impact on housing equity.
Housing Choice Voucher vs. Public Housing
The Housing Choice Voucher program and traditional public housing both aim to provide affordable housing, but they differ significantly in their approach and implementation.
| Feature | Housing Choice Voucher (Section 8) | Public Housing |
|---|---|---|
| Housing Type | Tenants find housing in the private market (single-family homes, apartments, townhouses). | Tenants live in properties owned and managed by a public housing authority (PHA). |
| Subsidy Model | Tenant-based; the subsidy is tied to the family, allowing them to move and retain assistance. Some vouchers can be project-based.12, 13 | Project-based; the subsidy is tied to a specific housing unit or development. |
| Choice/Mobility | Offers greater choice in housing location and type, promoting mobility.10, 11 | Limited choice; tenants reside in designated public housing developments. |
| Management | Administered by local PHAs, with federal funding from HUD.9 | Owned and operated directly by local PHAs. |
| Landlord Role | Private landlords participate voluntarily and receive direct payments from PHAs.8 | The PHA acts as the landlord. |
The key distinction lies in the concept of tenant choice and mobility. A housing choice voucher empowers families to select housing in diverse neighborhoods, fostering economic integration. In contrast, public housing generally limits residents to specific developments, which can sometimes lead to concentrated poverty. While both programs are vital for addressing housing insecurity, the Housing Choice Voucher program is often favored for its flexibility and market-based approach, aligning with principles of free markets.
FAQs
Q: Who is eligible for a Housing Choice Voucher?
A: Eligibility is primarily based on total annual gross income, family size, and U.S. citizenship or eligible immigration status. Family income typically cannot exceed 50% of the median income for the county or metropolitan area where the family chooses to live, with at least 75% of new voucher holders having incomes below 30% of their area's median income.6, 7
Q: How do I apply for a Housing Choice Voucher?
A: To apply, you must contact your local public housing agency (PHA).5 Due to high demand and limited resources, waiting lists for housing choice vouchers are common and can be very long, often closing temporarily when too many applicants are on the list.4
Q: What is the difference between a Housing Choice Voucher and Section 8?
A: "Section 8" is the original legislative act that authorized the housing assistance program. The Housing Choice Voucher program is the current name for the primary tenant-based rental assistance program under Section 8. So, they refer to the same program.3
Q: Can a Housing Choice Voucher be used to buy a home?
A: While primarily for rental assistance, some Public Housing Agencies (PHAs) operate a homeownership program that allows eligible families to use their housing choice voucher assistance to buy a home. This is not universally available and depends on the specific PHA's programs.2
Q: What is Fair Market Rent (FMR)?
A: Fair Market Rent (FMR) is an amount determined by HUD for different metropolitan areas and non-metropolitan counties. It represents the rent (plus utilities) that would be needed to rent privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities. FMRs are used to determine payment standards for the Housing Choice Voucher program.1 These figures are central to calculating the rental income support provided.