Section 8 vs. Section 42: What Is the Difference?

Updated on March 11, 2017
Rebekah Steenbock profile image

Former property manager turned real estate and marketing B2B freelance writer.

Don't let apartment hunting make your head spin!
Don't let apartment hunting make your head spin! | Source

Section 42 Versus Section 8

Is this place subsidized? Does that mean only 30% of my income goes toward rent? What is Section 42? What is Section 8? What do you mean by market rate? If I had a nickel for every time I was asked one of those questions, I would be retired on a beach somewhere in Tahiti. But it is an understandably confusing process (especially if you are apartment hunting), so I will break it down for you.

Section 42 housing: If you are submitting an application with a Section 42 apartment complex, it means that income limits apply simply to live in the building. Your income does not change the amount of rent you will be paying. Section 42 was created as an incentive for developers to build apartment homes for those who fall in the medium to lower income bracket. The government matches the contributions of the developer for the building. In return, the developer does not charge over a certain maximum per month in rent. This maximum is determined by the county that the apartments are located in. When applying, you must fill out a lengthy application which details all of your assets and income. From there, a compliance team will verify the validity of said assets and income. If you are not over the maximum income, and you can pay rent you're in.

Section 8 housing: Section 8 apartments are apartment homes managed by HUD. There is a voucher tied to each unit which states that the resident in that unit only pays 30% of their income toward their rent. The remainder of the rent is subsidized by tax dollars. There is a lengthy process to apply for Section 8 as well. You must do this through HUD. Typically there is a waiting list depending on your county. Like Section 42, applicants must submit all assets and income in order to apply.

Traveling voucher: This is rent subsidy voucher which is tied to the person renting the home, not to the unit like Section 8. Basically what this means is that the person with a traveling voucher can live anywhere they would like, as long as HUD approves the rent price. Traveling vouchers open up the door for anyone would does not wish to be tied to a particular apartment complex. If they move, the voucher moves with them. This is not the case with Section 8; If you move from a Section 8 home, you lose the subsidy.

Market rate: This is the most common way to rent an apartment. The rent is determined by market forces. Sometimes it is more, sometimes less. Market rate is how I have always rented, and I wouldn't do it any other way. You have to prove that you are capable of paying the rent via pay stubs or a letter from your employer. They run the background check, and you are good to go from there. It is quick and painless.

Trying to deal with government housing is understandably confusing. Hopefully, this helps alleviate some of the confusion and stress of apartment hunting. There is more that could be said but I don't want to make your head spin, so this is pretty much what you need to know. Happy hunting!

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