July 29, 2020

How Does the Federal Government Support Housing for Low-Income Households?

The federal government spent $51 billion on housing assistance in 2019, and more than 80 percent of that spending was for three programs in the Department of Housing and Urban Development that provide rental assistance to low-income households. At a total cost of $41 billion, those three programs represent a relatively small portion of total federal spending — slightly less than 1 percent — but provide assistance to 4.4 million households. Here are some details on those three programs and the individuals that are served by them.

The three largest rental assistance programs operated by the federal government are:

  • Tenant-based rental assistance ($22 billion in 2019). Low-income households receive a voucher that allows them to choose housing in the private market while paying 30 percent of their income toward rent. The voucher, administered by local public housing authorities (PHAs), covers the remainder of the rent.
  • Project-based rental assistance ($12 billion). The Department of Housing and Urban Development (HUD) enters into contracts with property owners who have agreed to rent their units to low-income households. The households pay 30 percent of their income toward the rent and HUD makes up the difference. HUD has allowed such contracts to expire gradually over time and has been switching households to tenant-based assistance.
  • Public housing ($7 billion). In this arrangement, PHAs own and operate housing units and rent them directly to low-income households, who pay 30 percent of their income. HUD provides regulatory oversight and allocates funding to PHAs to support operating costs and capital improvements.

Aside from the three programs above, the federal government spent an additional $9 billion on smaller housing assistance programs in 2019. Those programs include Supportive Housing for the Elderly, Supportive Housing for Persons with Disabilities, and Rural Rental Assistance.

Most federal spending on housing assistance is for three low-income rental programs

Who Is Eligible For Rental Assistance?

Households must have incomes below certain levels — 50 percent of the local median income for tenant-based assistance and 80 percent of the local median income for project-based assistance and public housing. Under all three programs, a certain amount of support is reserved for extremely low-income households, which are defined as those earning less than 30 percent of the local median income. However, rental assistance is not an entitlement program, meaning that meeting the eligibility requirements does not guarantee that a household will receive benefits.

Who Receives Rental Assistance from the Federal Government?

A total of 4.4 million households were served by the three main rental assistance programs in 2019. Tenant-based assistance served 2.3 million households, project-based assistance served 1.2 million, and 930,000 households were in public housing.

The demographic profile of those households differs from that of the U.S. population as a whole. For example, while two-thirds of U.S. households are categorized as “White, not Hispanic”, only one-third of rental assistance households fall into that category. In addition, while only 10 percent of U.S. households are composed of a single father or mother, one-third of rental assistance households have only one adult living with children.

How Robust are Housing Benefits?

The rental assistance programs provide much-needed benefits to low-income families. For example, the average household that receives tenant-based assistance in New York City pays $500 per month toward a total rent of $1,600. However, that assistance does not necessarily solve housing-related difficulties. The total income for those families is $1,600 per month, on average, which means that they are paying 30 percent of their incomes toward rent. Moreover, those households spent an average of nearly four years on a waiting list before receiving any benefits and often live in a housing unit with no bedrooms or one bedroom.

Rental Assistance is a Key Part of the Safety Net

The three largest rental assistance programs help to ensure that 4.4 million households can afford adequate housing rather than face homelessness due to the prospect of paying rent that exceeds their income. Unlike other parts of the safety net, funding for those housing programs is not set in permanent law and is therefore subject to the annual appropriation process. That fact requires lawmakers to make a continual commitment in order to preserve benefits for the vulnerable population served — weighing the merits of the programs against other budgetary priorities, as well as our growing national debt.

Related: What is SNAP? An Overview of the Largest Federal Anti-Hunger Program

Image credit: Photo by Getty Images


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