What Does Section 42 Mean?

Government programs like Section 42 housing can help renters find a nice place to live at a price that is doable.

This article will discuss what Section 42 housing is, who is eligible and how to apply for it.

What is Section 42 housing?

Section 42 is an affordable rental housing program in which developers and properties are required to house a percentage of residents earning less than a certain percentage (generally between 20 and 60 percent, but it can vary) of the area's median income, capping qualified participants' rent at a fixed amount.

Section 42 housing is also known as the “low-income housing tax credit program" or the “rental housing tax credit program." Section 42 is not a government-subsidized program. It benefits builders and real estate developers who agree to devote space in their communities to affordable housing. In exchange, they receive a federal tax credit.

Section 8 vs. Section 42

You may have heard of another program called Section 8 or the “Housing Choice Voucher Program." Section 8 is a government-subsidized program that helps the disabled, elderly and low-income families afford private housing. Both programs have eligibility requirements to qualify for them. Below, we'll discuss eligibility specifically for Section 42 apartments.

section 42 housing

Am I eligible for Section 42 housing?

Are you wondering if you're eligible for Section 42 apartments? Well, you'll have to apply to find out. Information required on the application will include data such as:

  • Income
  • Financial assets
  • Family size

Section 42 income limits

There are Section 42 housing income limits. To determine the maximum income you can earn and still qualify for Section 42 apartments, two things will be assessed:

  1. Number of people in your household
  2. Gross income

Gross income is what you make before taxes and deductions. The U.S. Department of Housing and Urban Development determines these formulas and qualifying income levels vary depending on where you live. Once it has been determined that you're eligible, the landlord or property management company will run your rental application to look at things like:

  • Credit history
  • References
  • Background check
  • Rental history

Note, as income and family-size can vary from year to year, Section 42 housing requires recipients to reapply before receiving a new apartment lease.

Communities that participate

Apartment owners are in control of their properties — they decide whether the complex will be a mixed-income community. Hence, some properties offer a portion of their units for Section 42 housing, while the rest rent at market rates. Rates for both (the latter is decided by HUD) are determined by the median income for the area.

In areas with notoriously high rents, the Section 42 affordable housing program can prove exceptionally beneficial, since each county and metropolitan area determines its own income and rental limits. This means in a high-income city like Los Angeles or New York, a developer can qualify for tax credits while building apartment communities that will command very high rents.

At the same time, tenants that would never be able to afford this community — but still make too much to qualify for Section 42 apartments in another city — could find themselves eligible for the rent cap Section 42 affords.

How can I apply?

Locate a community that offers Section 42 housing by visiting the HUD website. Select your state, then your city or ZIP Code to get a list of properties. This will include all the necessary information you'll need to get started. Each community's on-site management will be able to supply and initiate your application.

Section 42 and your next apartment

If you're eligible, Section 42 housing is a great option for your next apartment as you'll be able to rent a nice apartment at a better rate. Check the requirements and learn about housing developments that are available in your city.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.

Sage SingletonSage Singleton is a freelance writer with a passion for literature and words. She enjoys writing articles that will inspire, educate and influence readers. She loves that words have the power to create change and make a positive impact in the world. Some of her work has been featured on LendingTree, Venture Beat, Architectural Digest, Porch.com and Homes.com. In her free time, she loves traveling, reading and learning French.

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