According to Housing California, over 300,000 households participate in the housing choice voucher program (HCV), previously known as Section 8. The HCV program allows low-income families to finally escape homelessness.
By offering housing assistance programs, Merced, CA landlords can help end homelessness, a crisis affecting hundreds of thousands of Californians every day.
HCV program landlords also benefit from rental income security, with 70% of the voucher holder's rent coming from the US Department of Housing and Urban Development (HUD).
Sound good? If so, it's time to start doing the research on becoming a Section 8 landlord, beginning with this guide to setting reasonable rental rates for units reserved for HCV tenants.
How Is Section 8 Rent Calculated?
In Merced County, section 8 rent is calculated based on fair market rents (FMRs). Fair market rent is the average cost of renting a housing unit. It aims to promote affordable housing options for low-income tenants.
HUD will approve a unit for the HCV program so long as the cost to rent it is within 90% to 110% of the local FMR.
Merced County Fair Market Rents
FMRs vary depending on the county and the size of the unit. For example, the following were the fair market rental rates in Merced County in 2022:
- 1-bedroom: $914-$1,005
- 2-bedroom: $1,120-$1,232
- 3-bedroom: $1,591-$1,750
- 4-bedroom: $1,917-$2,109
You can view the full breakdown of 2022 FMRs by unit size on the County of Merced Housing Authority website.
Who Pays Rent for a Section 8 Unit?
HCV rent is paid by the voucher holder (the tenant) and HUD. HUD pays the majority of the rent, while the tenant is responsible for contributing 30% of their monthly adjusted gross income (AGI) for the unit.
Because Section 8 tenants are typically low or very low income, it benefits landlords to keep rental rates reasonable.
Increasing rent beyond the approved payment standard will put a larger financial burden on the tenant. That's because HUD will only pay up to the payment standard.
Merced County Payment Standards
The payment standard is the maximum amount HUD will pay a landlord for an HCV program unit. According to the County of Merced Housing Authority, these are the Section 8 payment standards in 2024:
- 1-bedroom: $1,252
- 2-bedroom: $1,539
- 3-bedroom: $2,123
- 4-bedroom: $2,585
You can view the full breakdown of 2024 payment standards in Merced County on the County of Merced Housing Authority website.
Modifying Rent as a Section 8 Landlord
Landlords must follow strict rules when implementing rent changes for Section 8 units.
In most counties, landlords must give at least a 60-day notice to HCV voucher holders before changing the rental fee. However, landlords may not give more than four months' notice.
Need Help Navigating Section 8 Regulations?
Section 8 rent reasonableness is based on Fair Market Rents and the local payment standard. If you still need help navigating Section 8 requirements, PMI Merced can help you understand how to price rental units, determine tenant eligibility criteria, and more.
PMI Merced is a locally owned and operated Merced, CA real estate asset management company. We are known across Merced County for our cutting-edge technology and high-touch client services.
Schedule a consult today to learn why partnering with us is a smart investment in your future profits.
