HUD Handbook 4350.3 § 4-6
Preferences (HUD Occupancy Handbook 4350.3 REV-1 CHG-4)
HUD guidance — not codified law
In Force
Verified 9/24/2026 · Next check 10/1/2026
effective 9/24/2026FederalAffordable Housing ProgramsOperative Text
HUD Handbook 4350.3 § 4-6
Assigning preferences to applicants who meet certain criteria is a method intended to
provide housing opportunities to applicants based upon household circumstances.
A. Key Requirements
1. Applicants with preferences are selected from the waiting list and receive
an opportunity for an available unit earlier than those who do not have a
preference. Preferences affect only the order of applicants on the waiting
list. They do not make anyone eligible who was not otherwise eligible,
and they do not change an owner’s right to adopt and enforce tenant
screening criteria.
2. Owners must inform all applicants about available preferences and give
all applicants an opportunity to show that they qualify for available
preferences.
3. If a property receives more than one type of subsidy, (e.g., insurance and
assistance payments), the preference requirements of each program, if
any, are applicable to the property.
Example – Properties That Receive More Than One
Type of Subsidy
The owner of a 221(d)(3) BMIR property with Property
Disposition Set-Aside must apply the statutory preference for
displacement and has the option to apply owner-adopted
preferences.
In a 236 property with a Loan Management Set-Aside contract,
the owner must apply the HUD regulatory preferences and has
the option to apply owner-adopted preferences.
4. Figure 4-3 below summarizes the preference requirements described in
subparagraphs B through D below.
B. Statutory, HUD, State, and Local Preferences
Congress and HUD have established various types of preferences in an effort to
provide housing to those most in need. HUD rules currently include four different
kinds of preferences that apply to various programs. Owners must apply
preferences to applicants based on the rules for the property subsidy type as well
as any owner-adopted preferences. The following are types of preferences:
1. Statutory preferences — displacement. Owners of Section 221(d)(4),
221(d)(3), and 221(d)(3) BMIR properties must give preference to
applicants who have been displaced by government action or a
presidentially declared disaster.
2. HUD regulatory preferences.
a. HUD regulations require that owners of Section 236 properties
give preference to applicants who have been displaced by
government action or a presidentially declared disaster.
b. In Section 236 properties that also offer rental assistance through
the RAP Program, owners must rank applicants according to the
following criteria [24 CFR 236.715].
NOTE: These ranking criteria are secondary to the preferences
required above.
Figure 4-3: Summary of Preference Requirements by Property Type
Statutory HUD Owner-
Preferences - Regulatory Adopted
Program Displacement Preferences Preferences
Section 221(d)(3)
Section 221(d)(3) BMIR
Section 221(d)(4)
Section 236
Section 8
New Construction
Substantial Rehabilitation
State Housing Agency
New Construction or Sub
Rehab
Rural Housing 515/8
Property Disposition
Set-Aside
Section 202/8
Loan Management
Set-Aside (LMSA)
(1) Applicants eligible for RAP assistance.
(2) Applicants eligible to pay less than market rent under
the Section 236 program.
(3) Applicants with income sufficient to pay the market rent
approved for the property. (See paragraph 3-8 for a
discussion of the limitations on renting to over-income
applicants. See Figure 4-4 for illustration.)
3. State and local preferences. Owners may apply preferences required by
state or local law only if they are consistent with HUD and applicable civil
rights requirements. For example, some states have laws that require
owners to provide a preference for housing to military veterans. Owners
must receive HUD approval in order to apply this locally legislated
requirement. Owners must submit a written request to the HUD Field
Office, describing the state or local laws requiring such preferences,
requesting HUD concurrence on the preferences.
Figure 4-4: Example of Section 236 Ranking Preferences Based on Income and Rent
Clear River Apartments is a Section 236 property with RAP assistance. The basic rent is $350, and
the market rent is $500.
Date of Application Applicant Name Estimated rent based Rank order for
upon income reported selection based on
on application form. estimated rent
(assuming no other
preference)
6/15/2001 Joseph Jones $372 3
8/1/2001 Marenka Salnikov $500 5
8/15/2001 Donny Yee $312 1
8/23/2001 Rebecca Green $225 2
9/12/2001 Sastri Sharma $360 4
C. Owner-Adopted Preferences
Owners are permitted to establish other preferences for assisted properties as
long as they are subordinate to any program-specific preferences discussed in
subparagraph B above, and comply with applicable fair housing and civil rights
statutes. Some of these owner-adopted preferences require prior HUD approval
(as noted below) and some do not. The types of preferences that may be
implemented by owners to serve unique groups of needy applicants include:
1. Residency preferences. A residency preference provides applicants who
live in a specific geographic area at the time of application a priority over
nonresidents.
a. Owners must never adopt a residency requirement (meaning the
owner will not lease to any applicant who does not live in the
defined jurisdiction or municipality).
b. A residency preference *must be developed, implemented, and
executed in accordance with the non-discrimination and equal
opportunity requirements listed at 24 CFR 5.105(a).*
c. HUD must approve residency preferences prior to use by the
owner. HUD will approve residency preferences only if the
preference does not result in discrimination or violate equal
opportunity requirements.
d. When an owner adopts residency preferences, HUD requires that
the owner consider the following as residents:
(1) Applicants who work in the jurisdiction;
(2) Applicants who have been hired to work in the
jurisdiction; or
(3) Applicants who are expected to live in the jurisdiction
as a result of planned employment.
NOTE: “Planned employment” means bona fide offer to work
in a municipality.
e. The owner may treat graduates of, or active participants in,
education and training programs located in a residency preference
area as residents of the area if the education or training program
is designed to prepare individuals for the job market.
f. For Section 8 properties, an owner’s residency preference must
be approved by HUD through a modification to the Affirmative Fair
Housing Marketing Plan, in accordance with 24 CFR 108.
g. Owners may not base a residency preference on the length of
time an applicant has lived or worked in the area.
h. If there are no eligible residents on the waiting list, owners cannot
hold units open because of a residency preference. In this
situation, owners must admit the next household on the waiting
list.
2. Working families. Owners may adopt a preference in selecting families
from the waiting list for those families in which the head of household or
spouse is employed. Even if the owner adopts such a preference,
however, discrimination against persons unable to work is prohibited.
Owners must not deny the preference to households in which the head or
spouse is 62 or older, or to a person with disabilities.
3. Disability. Owners may adopt a preference to select families that include
a person with a disability. Owners may not create preferences for persons
with a specific type of disability unless allowed in the controlling
documents for the property. (See Chapter 3, Section 2.) Owners may not
apply a preference for persons without disabilities.
4. Victims of Domestic Violence, *Dating Violence or Stalking*. Owners may
adopt a preference for admission of families that include victims of
domestic violence, *dating violence or stalking*.
5. Specific groups of single persons. Owners may adopt a preference for
single persons who are elderly, displaced, homeless or persons with
disabilities over other single persons.
D. Determining the Relative Weight of Owner-Adopted Preferences
Owners may decide to assign various importance to owner-adopted preferences.
If the owner chooses to do so, a ranking, rating, or combination of preference
circumstances must be identified in the Tenant Selection Plan and consistently
used. For example, an owner may choose to provide the highest ranking to
working families, though this ranking is subordinate to income targeting
requirements and to statutory and regulatory preferences described in
paragraphs 4-6 A and B above. Alternatively, an owner might choose to adopt a
policy that provides top priority to an applicant who qualifies for the most
preference categories (also known as combining preferences).Source: Legislative text reproduced verbatim
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Sep 24, 2026
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