Tenant Based Rental Assistance (Deep Subsidies)

In tenant-based rental assistance programs, program participants receive a voucher or certificate that they can use to “shop” for a unit that meets their needs. The unit must meet the rent payment standard for the program, and often must pass a housing quality inspection. Properties with federal funding assistance cannot refuse to rent to people who have a rent subsidy. Other landlords must agree to accept rental assistance.

Tenant based rental assistance generally enables eligible households to pay a specific percentage of their household income toward rent and utilities. The subsidy pays the difference, up to an established payment limit. The U.S. Department of Housing & Urban Development typically considers housing “affordable” when it costs no more than thirty percent (30%) of a household’s monthly income. Certain types of income or expenses may be deducted or excluded from monthly income: these are adjustments to income. Therefore, subsidies are often set so that households pay no more than 30% of their monthly adjusted income or ten percent (10%) of their monthly gross income, whichever is higher. Though a household’s income may fluctuate, the percentage of income they pay toward housing remains the same. The subsidy may therefore also fluctuate, and if income decreases significantly, the subsidy may become very large. That is why rent structures where households pay a percentage of their household income toward rent and utilities are known as “deep subsidies.”