What Is Affordable Housing?

Affordable housing means that after paying your rent, you should still have enough money for necessities like food, health care, and transportation. The government sets an income affordability standard for housing at 30 percent, meaning no more than 30 percent of your income should be spent on rent.

However, according to the 2025 State of the Nation's Housing Report by Harvard, over 22 million renter households are cost burdened, with more than 12 million spending over half of their income on rent.

Cost-burdened renters may be eligible for a variety of affordable housing programs provided by the government. The terms surrounding affordable housing and how it is determined can be confusing, so let’s review the process.

AMI, Cost Burden, and Eligibility

“AMI” stands for Area Median Income. Basically, it’s a way to determine, based on where you live and your income, whether you can afford to rent an apartment. Every year, HUD (Housing and Urban Development) determines the AMI for every region in the country.

The AMI tends to be higher in large cities. For example, what is considered affordable in San Francisco is quite different from what is considered affordable in Wichita.

The general rule of thumb is to spend no more than 30 percent of your gross income on rent. So, for example, if you live in San Francisco, the average one-bedroom rents for $3,151/month. For context, California’s 2025 income-limit benchmarks put San Francisco County’s median income (AMI/MFI) at $186,600, and a one-person household earning $109,700 or less is considered low income for many housing programs.

Compare that to Wichita, where the average one-bedroom rents for about $828/month. Using the same 30 percent guideline, that works out to roughly $33,120 per year to afford the average one-bedroom.

Affordable housing programs often use AMI-based income limits to determine eligibility. For Wichita, the area median income is $93,800, with a 30% income limit of $19,750 for a one-person household.

Once the median income is established for an area, households earning less than 80 percent of that amount are considered low income. Those earning less than 50 percent are considered very low income, and anyone making less than 30 percent of the AMI is considered extremely low income.

How Affordable Housing Is Calculated

According to HUD, anyone paying more than 30 percent of their income on housing is cost burdened, and anyone paying more than 50 percent of their income on rent is severely cost burdened. This income threshold was established by Senator Edward Brooke, co-author of the Civil Rights Act of 1968, a landmark law that included fair housing regulations. Brooke wrote an amendment to the National Housing Act, a law originally passed in 1934, known as the Brooke Amendment. The Brooke Amendment set the threshold for what households could affordably pay for housing. At the time, the cap was 25 percent, but it was raised to 30 percent in 1981.

Households with incomes at or below 50 percent of AMI often qualify for the Housing Choice Voucher Program (also called Section 8). In most places, eligibility is focused on very low-income and extremely low-income households, and local housing agencies set preferences and manage waitlists.

How Housing Vouchers Work

HUD provides federal funds to local public housing authorities, or PHAs. Those who are accepted into the program are able to find their own housing. This can include apartments, townhouses, and single-family homes. As long as the housing meets the requirements of the program, the applicant is able to select it and they are not limited to traditional subsidized housing. The landlord is paid a subsidy by the PHA on behalf of the applicant, and the applicant pays the difference between the actual rent charged by the landlord and the amount the program subsidizes.  

30 Percent AMI

Those at the lowest income levels are often described as extremely low income. For Housing Choice Vouchers, HUD defines “extremely low income” using a specific formula: households must be very low income and earn no more than the higher of the federal poverty line or 30% of the area median income. Because PHAs must admit at least 75 percent extremely low-income households from their waiting lists each year (with limited exceptions), applicants in this range are often prioritized.

50 percent AMI

Households earning 50 percent of AMI or less are generally considered very low income and are typically eligible for Housing Choice Vouchers. That said, selection order and wait times depend on each PHA’s local waiting list rules and preferences.

80 percent AMI

Households earning 80% of AMI or less are generally considered low income, but voucher eligibility at this level is more limited. Under HUD rules, a low-income household (≤80 percent of AMI) generally must meet additional criteria, such as being continuously assisted or meeting eligibility criteria specified in the PHA’s administrative plan, to qualify. If eligible, these households are often admitted after extremely low-income households because of HUD’s income-targeting requirements.

The Difference Between Low Income and Affordable Housing

People often use low income and affordable housing interchangeably, but they don’t mean the same thing. HUD generally defines housing as “affordable” when a household spends no more than 30 percent of its gross income on housing costs (including utilities).

Low income describes a household’s income level compared to the Area Median Income (AMI). Many programs use AMI to set who can qualify and, in some cases, how much rent can be charged. In practice, “low-income housing” usually refers to homes supported by specific programs designed for renters below certain income limits, such as Housing Choice Vouchers (Section 8), tax credit apartments (Section 42/LIHTC), and public housing.

The Low-Income Housing Tax Credit (LIHTC), often called “Section 42” because it’s in Section 42 of the federal tax code, was created as part of the Tax Reform Act of 1986 to encourage developers to build and rehabilitate rental housing that’s affordable for lower-income households.

Here’s how it works:

• State housing agencies award tax credits to developers (typically through a competitive process).
• Developers usually sell the tax credits to investors to raise equity for construction or renovation.
• In exchange, the property must reserve a portion of units for income-qualified renters and keep rents restricted for a required affordability period: generally, at least 30 years (15-year compliance period + 15-year extended-use period, with some exceptions and state variations).
• LIHTC communities can be new construction or renovated older buildings, and they’re often mixed-income (some rent-restricted units and some market-rate units).

Public housing

Public housing typically refers to rental homes that are owned and operated by local Public Housing Agencies (PHAs) under federal rules. HUD supports PHAs with funding to help operate and maintain these properties.

Public housing hasn’t disappeared, but many properties are aging, so housing authorities increasingly use tools that allow them to modernize and rebuild using a mix of public and private financing. For example:

• Mixed-finance public housing lets PHAs combine public, private, and nonprofit funds and can help unlock financing sources like LIHTC for redevelopment.
• The Rental Assistance Demonstration (RAD) allows PHAs to convert some traditional public housing assistance to long-term, project-based Section 8 assistance tied to the property, often to support major renovations and preservation.

Many public housing developments were built decades ago, and a significant share of that older stock is still managed locally by PHAs today while others are being repositioned through programs like mixed-finance and RAD to preserve affordability long-term.

How to Apply for Affordable Housing

To apply for the Housing Choice Voucher Program, find and contact your local PHA, like the NYCHA Housing Choice Voucher Program. Those who qualify are placed on a waiting list. Some of the waitlist times are quite long, so it’s a good idea to try and get on more than one.

Applicants for housing vouchers have to meet certain criteria. HUD only grants vouchers to US citizens and those with eligible immigrant status. HUD also restricts those with an eviction for drug-related criminal activity within three years of applying. The government doesn’t look at credit history, only at your income and assets.

An application must be written, and the housing authority will want information such as the names of everyone in the household, dates of birth, and relationships to the applicant. Include family characteristics and circumstances that might help you qualify (i.e., veteran, living in substandard housing). Provide the names and addresses of current and previous landlords and other references.

After an application is submitted, a representative from the housing authority may visit for an in-person interview. During this interview, applicants are encouraged to ask questions.

Once the voucher is issued, HUD encourages participants to consider several options before deciding on a rental. The voucher will cover whatever amount is left after the 30 percent of income is applied to the rent. So, for example, if the rent is $1,000 and 30 percent of your income would be $600, the voucher would cover the other $400.

When an agreement is reached between the renter and the landlord, the PHA will inspect the property in question to ensure it meets health and safety requirements and to make sure the rent requested is reasonable.

If you’re applying to a LIHTC (Low Income Housing Tax Credit) apartment, you only have to fall within the unit’s income limits (usually 50 or 60 percent of the AMI). Unlike HUD housing programs, there are no immigration restrictions unless the property receives funding from an outside source. Rent in an LIHTC apartment isn’t based on income. The rent is tied to the unit itself, so the rent won’t change if your income increases or decreases. To find a LIHTC community on Apartments.com, click on the “filter” option located to the right of the search bar on mobile or by choosing “More” on desktop. Scroll down to “Affordability” and click on “Low Income.” Read the property’s description to see what type of low-income options they provide or contact them directly to learn more.