Rental Assistance to Help Individuals and Families in Need
Of all recurring expenses, housing takes up the largest proportion of American household budgets. Even households that manage to keep their housing costs below the recommended 25 to 30 percent of gross monthly income have already spent half their earnings by the time they factor in house payments, utilities, and taxes (income-, property-, and sales tax), which leaves no leeway in the budget or opportunity to save.
With the majority of American households living paycheck to paycheck, many people are vulnerable to losing their homes if they are hit by a financial shock. A job loss, illness, or mounting debt often leave people unable to pay their rent or mortgages. They find themselves fearing eviction or foreclosure. They may be forced to consider moving in with relatives, filing bankruptcy, or moving to public housing or a homeless shelter. No person should have to endure these destabilizing events, which serve to distract from working and family life or recovering from an illness.
These situations are also terrible for the economy. As citizens abandon homes, prices devalue. Landlords lose money. Governments lose tax income. To prevent these downward spirals, the government administers rental assistance and apartment grant programs.
The Department of Housing and Urban Development provides many of these programs through grants it provides to the states. The states then use the federal funding to provide citizens with affordable housing. They also provide homeowners with grants to assist with avoiding foreclosure and with home repairs.
Most financial experts recommend rent payments not exceed 30 percent of gross income. When market rents are driven upwards, a segment of the population is often left with no viable rental options that keep their budgets within this ratio. They may only be able to find rental units that require 40-, 50-, or 60 percent or more of their income. They are priced out of housing. Many landlords will refuse to rent to them because their rent-to-income ratio is too high, making them a risk for eviction.
When rent claims such a large portion of a household's income, it has little left for clothing, food, and transportation. Many people need a vehicle to work and cannot afford to pay high rent and maintain an auto. Often, the jobs that the person qualifies for pay too little for him or her to afford market-rate rents.
This difficulty occurs in both urban and rural areas. Many large cities offer lots of employment opportunities. This attracts a large number of people to the area, which in turn drives up demand for apartments, making rents competitive and expensive. Massive rent increases in areas like San Francisco, Portland, and Denver demonstrate this effect. Those on the higher end of the income scale will find moving to that city worthwhile, while those with average and below incomes will get hurt and perhaps be forced out of the region, which leaves many lower paying jobs unfilled.
Rental assistance programs fix this unsustainable situation. Under these programs, the government provides developers with tax incentives in exchange for providing rental units that are designated for low-income tenants. Rather than paying the market rate, the tenants pay a portion equivalent to 30 percent of their modified adjusted gross income.
For example, Paul has an adjusted gross income that equates to $1,500 per month, but average rents in his city are $800, too high for his income. By applying for rental assistance at a designated property, he is able to obtain an apartment for below market rate at $500 per month, 30 percent of his adjusted gross income. Because of this, Paul is able to remain at his job in the city.
Rural areas often have lower rents but also more limited job opportunities and lower wages. Residents may also find they cannot get to work and go grocery shopping without a vehicle. To manage their expenses, they often need a rental-assistance program.
The disabled and elderly people benefit from rental properties that are designated for people over 55 and disabled. Many elderly and disabled people live on a fixed income that is too small to pay for a market-rate apartment. By renting at these designated properties, they can obtain housing based on 30 percent of their modified adjusted gross income.
Housing grants provide emergency relief
Homeowners and renters who are suffering temporary setbacks can save their homes through housing grants. Unlike rental assistance, these grants have no effect on housing payments. They provide a one-time grant to dig the renter or homeowner out of a difficult situation. These difficult situations often arise from medical problems, job losses, disability, and housing market shocks.
A newer type of grant assists homeowners with repairs. Often, homeowners are hit with devastating damages. Other times, they discover a dire problem with their house, such as a foundation or plumbing problem that they lack resources to fix. Major repairs may give a homeowner little choice except to abandon the home. A grant may be able to help with such emergencies.
Individuals in need of housing assistance can find help through local, state, and federal resources. The Department of Housing and Urban Development provides searchable databases of affordable apartments. Many properties that have designated low-income units advertise online. Individuals looking for grants can search www.governmentgrants.us. Local and state agencies also provide information on housing grants and rental assistance.