Affordable Housing 101

What is “affordable housing”

The U.S. Department of Housing and Urban Development (HUD) considers an individual unit affordable if the occupant spends no more than 30 percent of the household’s gross income on housing, including utilities. People who spend more than 30% of their income on housing costs are considered to be cost-burdened. People who spend more than 50% of their income on housing costs are considered to be severely cost-burdened.

  • Housing costs: Rental costs are defined as rent plus utilities. Ownership cost is defined as monthly principal, interest, taxes and insurance.

Affordable housing is an umbrella term that generally refers to a continuum of housing options. In most cases, affordable housing refers to housing units that are subsidized and restricted to households earning less than 120 percent Area Median Income (AMI).

  • Area median income is the median income of all households in a given county or metropolitan region. If you lined up all the incomes of residents in a row, this number is the midpoint. Housing programs and the state’s workforce housing law use AMI.

What kinds of affordable housing are there?

A variety of housing types exist that work for people with different life situations and incomes:

  • Housing that is intended to move people experiencing homelessness or who are unsheltered (e.g., living in a car or an encampment) into a shelter. It is meant to be short term and to keep people safe while working toward more stable and longer term housing. Shelters are often run by non-profit organizations, government, or faith-based organizations.

  • Transitional Housing offers temporary housing and supportive services to help individuals and families achieve stability and move to permanent housing. It typically serves as a step between emergency shelter and permanent housing, providing assistance for up to 24 months. Programs may focus on specific populations, such as the chronically homeless, individuals in recovery, justice-involved individuals, and survivors of domestic or sexual or human trafficking. Eligibility and services vary by program and target population served.

  • Supportive housing combines safe, secure, permanent affordable housing with flexible, person-centered, voluntary services. It is designed to help individuals facing complex challenges—such as co-occurring medical, mental health, and substance use issues—achieve stability, autonomy, and dignity. With no time limit on residency, supportive housing aims to provide long-term stability for individuals with chronic needs that are difficult to address in other housing models. While some individuals may always require supportive housing, others may reach a point where they can transition to housing with less intensive support.

  • Public Housing: Public housing provides affordable rental homes to low-income individuals, seniors, and people with disabilities. It includes various housing types, from single-family homes to high-rise apartments. Residents must have incomes below 80% of the Area Median Income (AMI) and must live in a designated public housing project to receive assistance. Local public housing agencies (PHAs) own and manage these properties, using HUD funding to build, maintain, and improve them. Public housing is funded solely by Congressional appropriations, with no new units funded since the mid-1990s and a longstanding history of being underfunded.

    • In New Hampshire, about 3,700 households live in public housing.

    The Housing Choice Voucher Program (Section 8): is a federal program that helps very low-income families, the elderly, and the disabled afford safe, decent, and sanitary housing in the private market. Vouchers allow renters to pay only a portion of the rent based on their income, and can be used for any private rental that meets program guidelines. Eligibility is based on income and household size, with incomes not exceeding 80% of the Area Median Income (AMI). The program is administered by HUD and managed locally by public housing agencies (PHAs), with funding appropriated annually by Congress. 

    • In New Hampshire, approximately 9,900 households use Housing Choice Vouchers.

    Section 8 Project-Based Rental Assistance (PBRA): This program provides rental housing through private landlords who contract with HUD to receive subsidies. These subsidies cover the difference between what tenants pay—30% of their income (after deductions) or a minimum of $25—and the total rental cost. The assistance is "project-based," meaning it stays with the property, and tenants cannot take it with them if they move. To qualify, tenants must have incomes below 80% of the local median, and 40% of available units must go to those with "extremely low incomes" (up to 30% of the local median or the poverty line).

    • In New Hampshire, about 5,600 households live in Project-Based Housing.

  • Workforce housing includes a variety of housing types that is affordable (no more than 30% of gross income spent on housing cost) suitable for households of working people with different needs and income levels. Due to their income, this population is generally not eligible for any federal assistance programs. Workforce housing is not subsidized housing. Workforce housing can be naturally occurring, financed with low income housing tax credits (LIHTC), or the result of inclusionary zoning.

    • Per NH RSA 674:58-61, workforce housing is: Rental housing affordable to households earning up to 60 percent of the area median income and for-sale housing affordable to households earning up to 100 percent of the area median income.

  • Market rate housing refers to housing available on the private market without subsidies or income restrictions. In market rental housing, landlords set rental prices based on market demand, with no discounts or subsidies for lower-income renters. Similarly, market homeownership is unsubsidized, and owners are fully responsible for property costs and maintenance.