Do I qualify for income restricted housing? How can I apply?

As rent prices rise in the United States, particularly in metropolitan areas, there is a greater need for affordable rental homes. Unfortunately, finding a cheap apartment is tough for low-income earners. But there’s hope! Many apartment complexes offer affordable housing for low-income families, seniors, or people with disabilities. This is mostly possible because government agencies provide subsidies such as income restricted housing to help make the rent affordable. 

How did income restricted housing come about?

The first major housing crisis in the United States occurred after the Great Depression. In the 1960s, the federal government established the Department of Housing and Urban Development (HUD) to address housing issues, particularly by creating affordable rental housing for low-income individuals and families.

In the following decade, federal government agencies enforced laws to prevent housing discrimination and set rent and income limits for low-income apartments in government housing. However, during the 1970s, the responsibility for managing such housing shifted more to state and local authorities.

This marked the beginning of modern-day income-restricted housing. It consists of rented units limited to tenants with household incomes below certain thresholds. These housing options may be managed by government agencies, nonprofits, or housing associations, depending on the state.

What is income restricted housing?

Income-restricted apartments are privately owned housing developments. They specifically cater to low or middle-income renters. These properties commit to offering affordable housing for at least thirty years, with all units reserved for low-income tenants.

Keep in mind that this is different from income-based apartments. Those homes are owned by individual landlords who must meet certain standards, such as renovating to HUD requirements if not new construction. These rentals can be part of larger complexes where a portion of units are designated for low-income tenants. And, they may include duplexes, townhouses, or single-family homes.

What are the eligibility criteria for income restricted housing?

Knowing your eligibility can make it easier to find affordable housing. To be eligible for this housing, your household income must be 60% or less than the local area’s median income (AMI). 

This median income varies greatly from place to place. For instance, New York City’s median income is much higher than that of a rural community in the South or Midwest. So, someone from NYC might qualify for income-restricted housing with a higher income compared to a less expensive area. 

For income-based apartments, eligibility requirements are also based on the AMI, but the income threshold is lower. Your household income must be 50% or less than the AMI to qualify for income-based housing.

Read more: How to buy a house on disability?

How is AMI calculated?

AMI represents the household income of the average household in a region. It’s calculated by lining up all households from poorest to wealthiest, with the middle household being the median. 

Every year, organizations determine the average income in different areas of the country by comparing its income to a percentage of the AMI.

For example, if the AMI is $100,000 and a household earns $70,000, that’s 70% AMI. If the same household earns $130,000, that’s 130% AMI.

How is rent calculated for income restricted housing?

In this type of housing, the rent is calculated based on a portion of the area’s income and the individual’s gross income. Moreover, it considers the rental market rates and apartment size. Rents cannot go above market values but can change over time. Tenants pay the determined rent amount, while the government covers the gap between that and the market rate. Thus, compensating the landlord.

How can I apply for this rental assistance?

The initial application process is similar to any other rental. You’ll need a photo ID for adults and birth certificates for your children. All applicants must show proof of current income and undergo a background check.

However, not everyone who qualifies can get these apartments immediately. There’s often more demand than availability, especially for public housing. 

Most income-restricted homes are allocated through a housing lottery system. The process involves several steps.

Housing lottery application request

You have to fill out a short form to request the full housing lottery application. This form is available online in the building information for the property and area you’re applying for. It’s best to contact your local HUD field office for details.

Lottery application

Once you’ve requested a lottery application online, you’ll immediately receive access to the full lottery application. If the application period hasn’t opened yet, you’ll receive a link to the application via email once it’s available. It’s important not to submit more than one lottery application for the same building to avoid disqualification. The full application requires basic information along with detailed income specifics for your entire household.

Application approval

After submitting your lottery application, you’ll be notified of the lottery date and time via email or mail. If there are any issues with your application, the lottery agent will contact you to make corrections. If your application isn’t approved, you’ll receive notification.

Lottery draw

The lottery drawing takes place on the scheduled date and time. You’ll receive your lottery number either in person at the drawing or via email within ten days afterward if you’ve applied by mail.

Ranking and sorting process

Your final ranking on the waitlist is through a ranking and sorting process. This manual process accommodates applicant preferences for specific income-restricted homes.

Applicant selection

Applicants are selected from the list based on their ranking to view rental units in the building. If your rank isn’t high enough initially, you’ll be placed on the waitlist for future unit availability.

Final screening and certification

Once selected, you’ll need to submit complete information to finalize your eligibility. This includes proof of income and residency for your entire household, such as tax statements, bank statements, pay stubs, and proof of assets.

Key takeaway

Income-restricted housing is for households with lower incomes. Your eligibility depends on how many people are in your household and your total annual income. And, the rent is based on the median income in the local area. You can find income restricted apartments in any area through your local public housing agency.

Written by Ramona Sinha. March 11, 2025

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.