Section 42 housing is subsidized housing and a part of a federal tax program that allows builders and developers to provide affordable housing.
Developers then receive a federal tax credit from the government. In order to receive the credit, the developers agree to maintain properties in a safe and decent condition, plus maintain income and rent restrictions while they are receiving the credit.
While having low rent is beneficial for those who can't afford to pay high rent, there are other perks that come with this type of housing. In order for developers to receive a tax credit from the government, there are certain rules they need to meet. These rules benefit the tenants.
Like many housing programs, luck and good timing may play a big part in nabbing one.
In order to find Section 42 housing, visit the HUD website. Select your state, then your city or zip code to get a list of properties that offer Section 42 housing. You'll see what kind of requirements are needed in order to get going with your application.
In order to determine your eligibility, you'll need to send over financial and household information.
Section 42 eligibility is determined by factors such as the number of people in your household and your gross income — which is how much you earn before taxes.
They want to know about every asset you may possibly have access to. Expect to answer questions and provide documents about any of the following:
Be prepared to fill out a lot of paperwork upfront and every year after that you wish to renew your lease.
Keep in mind that different properties under the program may have different expectations depending on specific terms and agreements between the landlord and the U.S. Department of Housing and Urban Development (HUD).
While there are certain eligibility requirements that must be met for both programs, the programs are definitely different. Section 42 properties have rents that are capped at a fixed amount and include utilities that are the resident's responsibility.
Whereas in Section 8 properties the rent is based on 30 percent of the tenant's income and whatever is left is funded by the federal government.
There may be confusion between what subsidized means and Section 42 apartments.
If you live in a subsidized apartment, a portion of your rent is paid for by the government or housing program. Subsidized housing, also known as affordable housing, is assistance from the government to help people with low to moderate incomes pay for their rent and expenses related to housing.
Subsidized apartment programs were created to help those with low incomes to live in adequate housing. These programs are usually run by federal agencies and private foundations.
In order to qualify, residents of subsidized apartments need to meet certain requirements, including income restrictions.
Section 42 isn't subsidized by the government.
Reduced or subsidized low-income apartments are also known as income-restricted and have income caps. This means in order to qualify, potential residents that may qualify for Section 42 can't have an income level higher than a certain amount.
Income-restricted apartments are good options for those who are looking for affordable units and meet the income and household criteria.
Qualifications depend on where you live, as the income restrictions vary by each city. The Department of Housing and Urban Development in each state determines the maximum income allowed for each county, city and major metropolitan area.
For example, in San Francisco, Section 42 requires a 60 percent cap on a potential renter's income limit. The income limit is based on the average mean income (AMI) in their county. Basically, Section 42 means developers can't charge rent that's higher than 30 percent of a tenant's income.
Visit HUDUser.gov to see the latest income limits in your area.
Looking for an affordable apartment can sometimes be stressful, but don't hesitate to dig into tax credit options to find what you're looking for.
Go on HUD.gov to find out more about requirements specific to your situation and household. There are also online calculators that may give you a better sense of whether you qualify for Section 42 or other low-income programs.
If you think you'll qualify, consider looking around your community for a Section 42 property that might fit your needs.