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How Annual Income is Determined

Information about How Your Income is Counted in the Section 8 Housing Choice Voucher and Low Income Public Housing Programs

Definition of Annual Income

HUD defines Annual Income as all amounts, monetary or not, which: go to, or on behalf of, the family head or spouse (even if temporarily absent) or to any other family member; or are anticipated to be received from a source outside the family during the 12-month period following admission or annual reexamination effective date; and which are not specifically excluded. Annual income also means amounts derived (during the 12- month period) from assets to which any member of the family has access. For HUD’s complete definition of Annual Income, including a listing of all income exclusions, see 24CFR5.609.

How the Housing Authority Verifies Income – Overview

As a condition of housing assistance under the program, the Housing Authority requires the family to complete a detailed Initial Application and an annual Personal and Financial Statement listing all sources of income, assets, and other information needed to determine the appropriate level of subsidy. Additionally, family members must sign a consent form, authorizing any financial institution, employer, Federal, State or local agency, etc. to release information to the Housing Authority.

HUD requires that all income, assets, and other family information must be verified according to the following levels of priority.

Upfront Income Verification: Upfront Income Verification is the verification of income, before or during a family re-examination, through an independent source that systemically and uniformly maintains income information in computerized form for a large number of individuals. In an effort to minimize HAP overpayments due to tenant misreporting and non-reporting of income, HUD has launched an upfront income verification tool called Enterprise Income Verification (EIV). EIV contains data regarding wages and benefits received by all program participants with valid Social Security Numbers.

Written Third Party Verification (Tenant Documents): Written third party verification (tenant documents) are current, original documents generated by a third party source.

Written Third Party Verification Form (HA Form): In cases where the tenant is unable to provide documentation, or where the tenant provided documentation is not sufficient, the Housing Authority will contact the income source directly, in writing, to obtain the verification information.

Verbal Third Party Verification: If the income source does not respond to a written request for information or provides incomplete or unclear information, the Housing Authority staff may contact the source by phone to request clarification on incomplete information.

Tenant Declaration (Self Certification): If no other verification is available, staff will note the reason in the file and require the tenant to sign an affidavit declaring their income.

Information Regarding Verification of Specific Income Types

The following is a list of the most common income types, as well as other items that the Housing Authority documents, including details associated with how these items are verified. This is not a comprehensive list, as new income sources and other related items are added frequently. Items presented below are listed in alphabetical order.

Annual contributions / gifts – HUD requires that regular and ongoing contributions and gifts should be counted towards annual income. However, gifts or contributions that occur annually (such as Christmas or birthday gifts) are not considered regular or ongoing because they occur only once during the re-examination reporting period of one year. Therefore, such contributions and gifts are to be excluded if they are less than $1,000 per household.

Assets: For current program participants at annual re-examination only, the Housing Authority will accept tenant self certification of assets on the Personal and Financial Statement if total household assets are reported to be less than $5,000. For applicants in the eligibility process, and for current program participants with $5,000 or more in total household assets, the Housing Authority will collect current tenant provided documents, such as bank statements.

Cash on hand – Occasionally Tenants report their cash on hand (as requested on the Personal and Financial Statement). Cash amounts less than $1,000 per household will not be counted as an asset. However, any amount of cash that is greater than or equal to $1,000 per household will be counted as an asset.

Child Care Expense Deductions: The Housing Authority must first verify that child care expenses are used to enable a family member to work, actively seek employment, or further his/her education. For instance, the childcare must be provided during the hours of work, education, etc. when there is no other activity (such as school) for the child.

Community Service Requirement: For verification of participation in required community service for public housing tenants, a timesheet signed by the agency but provided by the family is acceptable. For verification that a family member is exempt from performing community service, staff must obtain the highest level of thirdparty verification possible in accordance with this procedure, except for those exemptions that are due to permanent reasons such as age or permanent disability which have already been verified and documented.

Disability: If a tenant receives SSI, the verification of the SSI payment is acceptable verification of the disability. If the tenant does not receive SSI, verification of disability, depending on the individual’s circumstances, will be requested from a doctor, other health care professional or a social worker, with medical or professional knowledge of the person’s disability. If such verification is not available, the Authority may consider other forms of verification on a case-by-case basis.

Full Time Student Status: Full time student status must be verified using current tenant documents provided either by the household or by the school. Full time student status will be annually.

Citizenship and Immigration Status: All program participants admitted to the program must sign a statement indicating whether they are a US citizen, a legal resident, or whether they do not contend to have eligible citizenship status (and will therefore receive prorated assistance). US citizens will be asked to provide proof of citizenship, which may include either a birth certificate, passport, or naturalization certificate. Non-citizens who are under the age of 62 years old must provide documentation of eligible immigration status (which is then verified in the E-verify SAVE system).

Medical Expense and Disability Assistance Expense Deduction: The Department of Health and Human Services has developed Federal privacy standards to protect patients’ medical records and other health information provided to health plans, doctors, hospitals, and other health care providers as of April 14, 2003. These standards are part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The privacy requirements under HIPAA have a significant impact on how PHAs verify disability status, medical expenses, and disability assistance expenses. HIPAA requires that patients sign a specific authorization before a covered entity can release their medical information to a third party for purposes not related to the patient’s health care.

The Housing Authority appreciates the statement in the Verification Guidance acknowledging that “with increasing privacy law requirements, PHAs may have difficulty in verifying” medical and disability assistance expenses. In light of these considerable difficulties, the Housing Authority has determined that the best way to ensure the validity of medical and disability assistance expense information, while simultaneously protecting the confidentiality of our applicants and participants and complying with HIPAA, is a reliance on applicant / participant self-certification. To receive the medical expense deduction, tenants must complete the medical expense verification forms provided in the medical expense packet. However, if a program participant reports medical expenses in excess of $3,000, Housing Authority staff will attempt to further validate the expenses in a manner that does not violate the confidentiality of the program participant.

Photo Identification: All adult household members will be asked to provide a government issued photo identification at the initial interview, before being added to the household, or at the annual re-examination following an existing household member’s eighteenth birthday. Photo identification may consist of a passport, drivers license, state issued identification card, military identification card or a student identification card. Photo identification must always be presented in person, rather than by mail.

Seasonal Income: If a participant is employed in an occupation that is cyclical (that increases or decreases at the same time each year such as farm workers, teachers and construction workers) all income expected to be received during the year must be annualized. If the Housing Authority determines that past income is the best predictor of future income, historical data may be used to project annual income.

Self Employment: All self employed tenants and applicants will be asked to provide a complete copy of their most recent tax return (including Schedule C and Schedule SE if applicable). Additionally, all self employed tenants and applicants will be asked to complete the self employment certification form, and to sign form IRS 4506-T.

Social Security (SS) / Supplemental Security Income (SSI): The Housing Authority is required to use the HUD EIV system to obtain up-front verification of Social Security and SSI benefits for current program participants. If the amount shown on EIV does not match the amount provided on a current original benefits letter, the amount in the benefits letter will be used. If no current original benefits letter has been provided, but EIV matches the amount the tenant has reported through the Personal and Financial Statement, EIV may be used without collecting tenant documents. However, if the amount reflected on the PFS does not match EIV and the tenant has not supplied an original benefits letter, staff will either obtain an original benefits letter or will contact the tenant by phone to provide the tenant an opportunity to dispute the information in EIV. If the tenant does not dispute the information in EIV, staff will document the phone call and may use the data in EIV. If the tenant does dispute EIV, an original benefits letter must be obtained. Additionally, original benefits letters will be used to verify the Social Security and SSI benefits of applicants and other individuals who are not in the EIV system.

Social Security Numbers: All applicants, regardless of age, must disclose a valid Social Security Number and provide the required documentation at the time of their initial eligibility determination.

Wages: The Housing Authority is required to use the HUD EIV system, along with tenant provided documentation (such as current consecutive paystubs), to obtain verification of wages.

HCV Homeownership Q&A

Tips for preparing for homeownership:

  • Attend a Homeownership seminar offered by a HUD approved Housing Counseling Agency.
  • Start a savings account. Even saving a small amount will show a lender that you have been working toward your goal.
  • Develop a budget for the whole family.
  • Work to improve your credit score and pay off debts.
  • Be realistic about the size and type of home that you may be able to afford.

How does the HCV Homeownership Program work?

The Housing Choice Voucher Program (HCV) includes a homeownership program. Under the program, participants who qualify may have their monthly housing assistance payment applied to a mortgage payment rather than rent.

You may be eligible to participate if:

    • You have participated in the HCV program for at least one year
    • At least one member of your family works 30 hours per week or more, and your family earns more than the minimum allowable earned income. (This amount changes annually. There are some exceptions for elderly or disabled persons. Participants must have enough income to qualify for a mortgage loan)
    • You are in good standing with the HCV program (no program violations or outstanding debts)
    • No one in your household has owned a home for the last 3 years.

Will the Housing Authority help me find a house and get a loan?

It is your responsibility to obtain an attend approved homeownership counseling, work with a lender to qualify for a mortgage, find a real estate agent to work with, and find a home to buy.

Here’s how it works:

        • You attend HUD approved Housing Counseling as needed to learn about the homebuying process.
        • If you meet the minimum requirements, we will provide a list of lenders that are familiar with the HCV program. It is your responsibility to choose a lender and apply for a mortgage. You do not have to choose a lender from the list.
        • You and your lender can use the Eligibility Worksheet on our website to review the basic requirements.
        • You select a real estate agent and begin searching for a home you can afford.
        • We determine your final eligibility after you find a home to purchase.

How much assistance will I qualify for?

The amount of assistance you would get from the HCV Homeownership Program depends on your income and your total monthly homeownership costs. In general, the amount of assistance may be similar to what the Housing Authority pays your landlord now as rental assistance.

The Housing Authority can help you estimate the amount of assistance you may receive.

This assistance may be sent directly to you every month, or to your lender, depending on what you, your lender and Housing Authority staff decide.

Your assistance payments would be continually adjusted as your income and housing costs change.

In most cases, your homeownership assistance payments would end after 15 years, or sooner if your income increases so that you are able to afford your entire monthly payment.

How much will I need for a downpayment?

The amount of the downpayment depends on the price of the home you buy and your lender’s requirements.

You are required to make a downpayment of at least 3% of the purchase price. 1% must come from your own savings, and the rest may be a gift from a friend or relative.

You will also be responsible for paying closing costs, which may cost several thousand dollars.

If you participate in the Housing Plus program, you may use the funds in your escrow account for your down payment if you complete your Housing Plus contract.

There may be other programs available to provide a homebuyer with additional assistance. Some that the Housing Authority is aware of can be found on the Housing Programs Q&A. Your lender may have additional information.

What kind of mortgage can I apply for?

If you participate in the HCV Homeownership program, you must receive a conventional, fixed-rate mortgage from a lender we approve of. Adjustable rate mortgages, balloon payments, and seller financing are not permitted with the HCV Homeownership program.

Si desea una traducción en español, por favor llame al (831) 454-9455.

Housing Programs Q&A

Quick Facts about the Housing Authority:

  • We are an independent local public agency.
  • We serve over 4,000 families per year through rental and homeowner-ship programs.
  • We are not part of HUD (Department of Housing and Urban Development). However, many of our programs are funded through HUD.

What Kind of Assistance Does the Housing Authority Offer?

The Housing Authority assists thousands of families through the Housing Choice Voucher (Section 8) rental assistance program. We also own apartment complexes for low-income families. In addition, we administer a number of special programs for renters and homeowners.

I’m a landlord. How do I get involved in Housing Authority programs?

The Housing Authority has specially-trained staff who can assist landlords who wish to participate in our rental programs. We offer direct deposit and a number of other landlord-friendly services. To get acquainted visit our landlord section.

What if I need help now?

The Housing Authority does not have any programs that can help people with emergency housing needs. All of our programs require some kind of application process, and many have long waiting lists. If you have immediate housing needs, please visit our Links page for more housing resources.

I am not a Housing Authority client, but I am a renter or a homeowner having a problem related to housing. Can you help me?

We are unable to help with most tenant-landlord disputes.

How do you help renters?

The Housing Authority has a number of programs for low-income renters, including:

  • The Housing Choice Voucher (Section 8) program allows you to select a unit to rent. With this program, renters pay about 30% of their income in rent and the Housing Authority pays the rest, within certain limits.
  • The Housing Authority owns several apartment complexes, including public housing and farmworker housing that we rent to low-income families at affordable rent levels.

The Security Deposit program makes a limited amount of assistance available in certain locations to qualified renters who just need help with move-in costs.

Our rental programs do have waiting lists. To find out more, go here.

I’d like to buy a home. What special programs do you have?

The Housing Authority’s first time homebuyer programs include:

First time homebuyer downpayment loans for low to moderate income families. The amount and type of assistance varies by city.

Mortgage Credit Certification (MCC) program, which offers a tax credit to first time homebuyers to help make the costs of homeownership more affordable.

The Housing Choice Voucher program has a homeownership option that allows participants to use their voucher to purchase a home.

What programs are available to higher income families?

If you are not low-income, you may still be eligible for assistance through our Security Deposit program as well as some of our homeownership programs. See our income limits here.

Si desea una traducción en español, por favor llame al (831) 454-9455.