Affordable Housing
Housing a household can pay for while spending no more than about 30% of its income on rent or mortgage plus utilities. In policy, the term usually means homes whose rents or prices are restricted for lower-income households.
What Is Affordable Housing?
Affordable housing has two meanings, and it helps to know which one a speaker intends.
In the general sense, it is a standard. HUD’s glossary describes affordable housing as housing for which the occupants pay no more than 30% of their income for gross housing costs, including utilities, while noting that some jurisdictions set their own criteria and that the figure is a rule of thumb. Households paying more than 30% are considered cost-burdened; those paying more than 50% are severely cost-burdened.
In the policy sense, it is a category of homes. When planners, developers, and housing agencies say “affordable housing,” they usually mean income-restricted housing: homes whose rents or sale prices are capped and reserved for households earning below a set percentage of area median income.
How Affordable Housing Works
Restricted affordability almost always rests on a public subsidy, a legal requirement, or both:
| Approach | How it keeps costs down | Example |
|---|---|---|
| Rental assistance | The household pays about 30% of income; a subsidy covers the rest | Housing Choice Voucher Program |
| Publicly owned housing | A housing agency owns the homes and charges income-based rents | Public housing |
| Capital subsidies | Tax credits or grants reduce development costs in exchange for rent limits | Low-Income Housing Tax Credit |
| Zoning requirements | New developments must price a share of homes below market | Inclusionary zoning |
| Shared equity | Resale prices are limited so the home stays affordable to the next buyer | Community land trust |
Restrictions are typically recorded against the property and last for a set term. Tax credit properties, for example, generally commit to at least 30 years of affordability.
Affordable Housing vs. Workforce Housing
The two overlap but are not the same. Most federally subsidized housing serves households at or below 60% to 80% of area median income. Workforce housing usually aims at households from roughly 60% or 80% up to 120%. For a fuller comparison, see Affordable Housing vs. Workforce Housing.
Criticisms and Limitations
A 2024 National League of Cities explainer calls the definition nebulous, with programs and stakeholders adopting slightly different versions. The 30% standard is also blunt. Suppose one household earns $25,000 and another $150,000, and both spend 30% on housing. The first has $17,500 a year left for everything else; the second has $105,000. A 2014 article in HUD’s research journal, Cityscape, called cost burden a simple and intuitive measure but also presented an alternative that looks at homes rather than their current occupants: whether each unit would be affordable to a household at a given income level.
Sources
- HUD User — Glossary: Affordable Housing (archived HUD glossary) (opens in a new tab)
- Paul Joice, 'Measuring Housing Affordability,' Cityscape 16(1), HUD Office of Policy Development and Research (2014) (opens in a new tab)
- National League of Cities — What Is Affordable Housing? (2024) (opens in a new tab)
- 26 U.S. Code § 42 — Low-income housing credit (Cornell LII) (opens in a new tab)
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