How to calculate 3X income rule for section 8 and Minimum credit score

Question

If you have a minumum multiplier to qualify people on income, e.g., income must be 3X rent, how do you make the calculation for a tenant using a section 8 voucher?

Also, if you are using one standard set of criteria to review all tenants, both section 8 and non-section 8, do you require a minimum credit score? If so what level do you use? (I am debating where and whether to reset a credit score miminum. I would rather focus on the details of the credit report (such as collections and delinquencies and nature of those issues).)

Nathan Gesner · Answer

You count the Section 8 voucher as part of their income. Let's say the rent is $1,000 and the tenant has a voucher for $500. The tenant is only responsible for $500 in rent, so you calculate 3 x $500 or $1,500 for income requirement. A tenant without a Section 8 voucher would have to show 3 x $1,000 or $3,000 for income.

I would not adjust my other screening requirements. All applicants are screened the same based on credit score, criminal history, landlord references, etc.

Kadia Lawrence · Answer

Ah okay, thank you. (Yes, the delay can be a bit frustrating.) Thanks Nathan.

Nathan Gesner · Answer

I won't accept new renters with section 8 because HUD delays are ridiculous and result in additional loss of income. I only accept section 8 if it is an existing renter that then qualifies to transition to section 8.

Kadia Lawrence · Answer

Thanks very much!! The issue I have is that the section 8 office takes a few weeks after leases are signed to issue the contract and declare the tenant's vs th PHA share. I guess the proxy might be what the person is paying now provided this isn't their first. Otherwise, there doesn't seem to be a basis. My other thought is to use the utility allowance we deduct from the fair market rent for the utilities they will pay for as a value they need to be able to pay. Then 3x that. However, technically it is not the rent. The other challenge is for those who pay nothing. Technically their 3X would be zero. However, I'd like to see some income showing that they can pay for utilities, and regular living expenses. (I think that's in line with the idea that rent should be no more than 1/3 of their gross income to afford other expenses.)

How to calculate 3X income rule for section 8 and Minimum credit score

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