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Establishing Rents when Tenants Receive Additional Subsidy

When tenants receive an additional subsidy through rental assistance programs such as the Housing Choice Voucher Program (or any other comparable rental assistance program), different requirements apply for each program.

  • Under LIHTC rules, if the rental assistance program rent limit exceeds the LIHTC rent, the unit rent may be raised to the higher limit.
  • Under the HOME program, the unit rent may not be raised to the higher limit under the rental assistance program unless all of the following are true (and units meeting these criteria are counted as Low HOME units):
    • The tenant's income is less than 50% of AMI;
    • The tenant pays no more than 30% of adjusted income toward rent and utilities; and
    • The unit receives Federal or State project-based rental subsidy

In summary, it is important to understand the rent requirements associated with both programs, as a single unit can meet both the HOME and LIHTC set-asides simultaneously IF the unit is rented according to the stricter standard. Given the complexity of the rules, however, developers and property managers should seek further guidance to ensure that their rate structures are in compliance with Federal requirements.