The definition of low-income housing is any house that is either rented or owned by an individual or family that has a monthly household income that does not exceed a certain percentage of the median household income of a particular area (AMI). The percentage of the household’s income that is eligible to apply for low-income housing is regulated by the Department of Housing and Urban Development (HUD). Explaining low-income housing in an accurate way translates differently to every area where it is applied because it always takes into account the median household income.
Low-income housing is the situation in which a family is unable to afford housing because of the median house value of the area in which they live. This happens because their household income is less than what a household should spend for housing expenses. The generally accepted percentage of monthly income that should be spent on housing expenses is 30%. Any household that spends a higher percentage than that is considered burdened and can, therefore, apply for low-income housing.
There are three categories of low-income households that can apply for low-income housing:
As explained above, low-income housing is the house that low-income households can apply for in order to not struggle with their monthly expenses. Explaining low-income housing, however, needs to also be done from the developers perspective. For tax reduction incentives, private housing developers venture in creating low-income housing for those who need them. Like that, they reserve a certain amount of units from a new or rehabilitated housing development for low-income families. This gives them tax deductions for the upcoming years. Some of the most affordable places to live use this system to generate more low-income housing for those who need it.