According to the federal government, housing is considered affordable if it costs no more than 30 percent of the monthly household income for rent and utilities. It is built by private-sector developers and not-for-profit organizations, by cities and counties, and with assistance from the federal government. It can be ownership or rental, a single duplex or the size of many market-rate apartment complexes. Many properties have won design awards. You may live near an affordable housing development and
not know it!

Regulations for affordable housing come mainly from the United States Housing Act and the Housing and Community Development Act of 1974, which amended the original housing act. Affordable housing programs are referred to by the section of the Housing Act or other legislation under which it was originally developed. Examples of the different types currently in existence today are:

  • Section 8 - subsidized housing that proposes to bridge the gap between a low-income tenant's means and the cost of private housing. Congress designed the program to encourage new housing construction and substantial rehabilitation and to utilize existing housing.
  • Section 202 - provides direct federal loans to nonprofit sponsors to finance rental or cooperative housing for seniors and persons with disabilities.
  • Section 221(d)(3) and (d)(4) - provides a shallow interest rate subsidy to profit, nonprofit or limited-dividend developers of low and moderate income rental housing. Available to qualified low and moderate income families.
  • Section 236 - an interest-reduction subsidy provided to profit, nonprofit or limited-dividend developers of low and moderate income rental housing. The mortgage interest rate was subsidized down to 1% for loans made through private lenders and insured by the Federal Housing Administration (FHA). Tenants are required to pay at least 30% of their income in rent.
  • Section 515 - similar to the Section 236 program, but used for development in rural areas.
  • Low Income Housing Tax Credit - a program administered by the Internal Revenue Service (IRS), this program provides tax credits to private developers who provide housing to low and moderate income families, seniors or persons with disabilities. Rather than a deduction against their income, it provides a dollar-for-dollar reduction off the owner's tax liability.

There are many other forms of affordable housing developed under partnerships with private developers and city governments, community development block grants, etc. Much of the affordable housing today is also under some form of the Section 8 program, where the government pays the owner the difference between the tenant's contribution to the rent (equal to 30 percent of their income) and the Fair Market Rent based on capital and operating costs which is calculated by HUD.


Affordable housing serves families, seniors and persons with disabilities. It provides a stepping stone for young families, a stable place to get back on one's feet for vulnerable community members and a cost-effective living situation for persons with special needs. Members of AHMA and NAHMA manage over 50% of all privately owned, affordable housing and provide shelter to more than two million Americans nationwide. Eligibility for affordable housing is based on an individual's or family's household income. Under the federal government's definition, a family is considered "low income" if their income is below 80 percent of an area's median income. "Very low income" families are those whose income is below 50 percent of the area's median income.
There is a crisis in the availability of affordable housing today. To illustrate, the Housing Authority of the City of Los Angeles has an estimated 18-year waiting list for those who have applied and are eligible to receive public housing assistance. The increasingly high costs for housing continue to outpace the earning levels of families and the fixed income of seniors. Since 1997, for example, the median home price in the California Bay Area has increased about 200 percent, and the number of Californians paying more than 80 percent of their income towards rent has doubled in ten years.

To afford the typical two-bedroom apartment, a person earning minimum wage would have to work 112 working hours each week to pay the rent. There is an estimated shortage of 640,000 affordable housing units in California's seven major cities, and the number of homeless increases daily.

(Statistics provided by Nonprofit Housing Association of Northern California and California Housing Consortium.)