What Are Income-Restricted Apartments? [Guide]


As the cost of living continues to rise in today’s economy, income-restricted apartments are becoming a more viable living option. But what are income-restricted apartments, and how can you qualify for one? Our guide addresses this growing trend in housing and provides details about the qualification and application process.

What Are Income-Restricted Apartments?

The idea of income-restricted apartments is not new. Around 25 years ago, the federal government began offering low-cost housing to those with low annual incomes. But what does an income-restricted apartment mean? Though it can vary from one city to the next, these apartments are generally meant for citizens who earn less than 80% of their region’s median income.

How Do Income-Restricted Apartments Work?

Income-restricted apartments are simply rent-controlled apartments capped at a certain percentage of the tenant’s income. This means that those who earn lower incomes can still afford to live in desirable areas without spending more than they can afford. Setting a maximum rent that tenants can pay each month is the whole idea behind this law.

What and how is rent controlled in such apartments? The amount of this max rent depends on the tenant’s annual income and the median income of the city or metro area wherein the apartment complex is located. So, for example, if you earn $30,000 per year and the median income in your city is $50,000, your rent would be capped at $500 per month—assuming there are no other restrictions in place.

What Are the Benefits of Income-Restricted Apartments?

The following benefits accompany living in an income-restricted apartment complex.

­Lower Cost of Living

Tenants who meet the income requirements for such apartments—i.e., capping rent at a percentage of their annual incomehelp keep costs down. As a result, even though the cost of living in such apartments depends on the city or neighborhood where the tenants reside, it tends to be cheaper than market-rate apartments.

For example, suppose the average rent for a one-bedroom apartment in your city is around $1,000. In that case, you’ll probably need to pay $500 to $600 per month to live in an income-restricted complex and simultaneously attain some savings as well.

Community Support

Income-restricted apartments have a way of making their tenants feel as if they’re partaking in something bigger than just living there. Frequently, such apartments come with additional perks, such as community gardens or on-site daycare. This helps residents feel more connected to their neighbors and fosters a sense of community.


Are income-restricted apartments bad? On the contrary, living in an income-restricted apartment can help tenants stabilize their lives and budgets—especially if they’re struggling financially. It’s often challenging to find affordable housing in a city. By having a stable home base, residents can focus on other essential matters, such as finding employment or continuing their education.


Income-restricted homes are a good option for those who want the comfort of living in an apartment with security features without sacrificing their affordability. Security measures include gated entrances and surveillance cameras, making these units safe places to live.

DID YOU KNOW? What does an income-restricted apartment mean? A misconception of such apartments is that they’re located in bad areas and are aesthetically unpleasant. The reality is that they’re charming and almost always located in or next to friendly neighborhoods.

Are Income-Restricted Apartments the Same as Income Based Housing?

The two housing programs offering affordable housing solutions to low-income families or individuals include income-restricted and income-based apartments. These two apartment types aim to fulfill the same goal, but several significant differences exist.

Property Eligibility Criteria

Many ask, what does subsidized housing mean? Income-restricted and income-based housing clarify this question. Income-restricted apartments are designed for low- or middle-income renters, typically owned by private owners. They’re funded by the government, as well as by nonprofit agencies.

On the other hand, income-based apartments are owned by individual landlords who rent to those who meet the specific criteria of HUD guidelines. These rental units can be part of apartment complexes and include duplexes, town-houses, or family-size apartments.

Tenant Eligibility Requirements

For income-based apartments, eligibility is based on the area’s median income, which means the household income level must be 50% or less than the median income for tenants to qualify. For income-restricted apartments, it should be 60% or less.

How Rent Is Determined

How do income-based apartments calculate rent? The rent is calculated based on the resident’s income rather than market value. It’s determined by the Department of Housing and Urban Development (HUD), which specifies that the monthly rent should be 30% of the resident’s adjusted gross income. The rest of the rent is subsidized by the government. (Read more about adjusted gross income here.)

How do income-restricted apartments calculate rent? For this housing type, the rent is based on a portion of the area’s income, market rent’s cost, and the apartment size. The difference between the determined rate and the market value is compensated to the landlord by the government.

DID YOU KNOW? What is another way to provide rent-controlled apartments? Some point to the federal government’s housing choice voucher program (Section 8) for such apartments. But Section 8 can only be used for non-subsidized rentals, making both income-based and income-restricted apartments ineligible.

Key Takeaways

Income-restricted apartments are housing with lower rent, meant for tenants with reduced income.
The amount of rent tenants pay depends on their annual income and the area’s median income, determined by the US Department of Housing and Urban Development.
Are income-restricted apartments bad? Such apartments are not bad but instead entail such benefits as lower cost of living, stability, and security.
To be eligible for an income-restricted apartment, you must have a gross annual income of 60% of your area’s median income.

How to Qualify for Income-Restricted Apartments

The qualification process for income-restricted apartments varies from city to city. Still, generally, you need to prove your total household income and provide documentation of your rent history and current housing situation. You may also be subject to credit checks and other screenings.

How do owners of income-restricted apartments verify income? First, the median income levels for each US Fair Market Rent area are calculated by HUD. Then, after the median income level is determined, HUD calculates the maximum incomes and establishes income categories, termed as “Low”, “Very Low”, or “Extremely Low.”

When you apply for an income-restricted apartment, a tenant background check will be conducted to verify your income and employment status to ensure you can pay the rent. Typically, your gross income should be less than 60% of the area’s median income for you to qualify.

How to Apply for Income-Restricted Apartments

Many wonder how to qualify for income-restricted apartments and about the rental application process. If you’re interested in applying for such, your best bet is to contact the complex directly. Each city has its own list of approved complexes. So be sure to do your research ahead of time.

Note the following five steps in applying for such apartments.

1. Research Income-Restricted Apartments in Your City

If you’re looking for affordable housing, be sure to research income-restricted apartments in your city first. In this way, you can still live in a familiar area, without having to change your job, school, or circle of friends.

2. Contact Your PHA

Once you’ve found an apartment and have confirmed that you meet the income requirements for low-income apartments, you can contact your local public housing agency (PHA). By speaking with a representative, you’ll be able to determine the approximate cost of rent, the apartment size, and available housing.

3. Fill Out Application

You can apply for a government-owned apartment directly through the PHA. But keep in mind that everyone living in the apartment with you must pass a criminal check. Some offenses may disqualify you from this type of subsidized housing or even ban you from living in certain areas.

4. Provide Documentation

What does subsidized housing mean with regards to documentation? First, preparing your documents ahead of time will mean verification should be much shorter, enabling you to move in sooner. Apart from the proof of citizenship, note the following list of documents you need to provide when applying.

  • The last four consecutive pay stubs or notarized proof of income
  • Invoices proving your outlay
  • Social security cards for all family members
  • IRS tax returns
  • Social Security/Medicare/Medicaid eligibility award letter
  • Most recent bank statements showing income
  • Photo IDs for household members over the age of 18
  • Legal documents verifying receipts of child support
  • Verification of disability status
  • Proof of additional types of income

So how else do income-based apartments calculate rent? Your documentation will help with this process and play a pivotal role in the government’s subsidy payment.

5. Join the Waiting List

Due to income-restricted apartments’ popularity, the market is quite competitive. So the odds are—after going through these steps—you’ll be put on a waiting list, which is why it’s better to submit your application ASAP.


If you’re looking for an affordable place to live, consider income-restricted apartments. These complexes offer a reduced rent price to low- and moderate-income earners, making it more feasible to live in than in an expensive area. Additionally, as many complexes have waiting lists, make sure you submit your application ASAP to enjoy living in your affordable home sooner.


What is the difference between income-based and income-restricted apartments?

What are income-restricted apartments vs income-based ones? The first is typically private establishments designed for low-income renters, while the latter is owned by individuals and rented out to those who meet specific criteria.

What qualifies as restricted income?

Typically, a restricted income means your annual household income is 50 to 60% of your area’s median income. If you meet this criterion, you’ll be qualified to apply for an income-restricted apartment and pay a lower rent.


Alex is an IT wizz gone SEO gone fire-juggler. We’re not even joking. When he isn’t researching why one personal loan is better than the other and which piece of hardware you should buy next, he’s rollerblading or selling homes (because he does that, too, the smarty-pants).

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