HUD Handbook 4350.3 § 5-26
Procedures for Determining Tenant Contribution for Section 8, PAC, PRAC, (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 9/24/2026FederalSection 8 Project-BasedOperative Text
HUD Handbook 4350.3 § 5-26
RAP, and Rent Supplement Properties
A. Tenant Rent
Tenant rent is the portion of the TTP the tenant pays each month to the owner for
rent. Tenant rent is calculated by subtracting the utility allowance from the TTP.
It is possible for tenant rent to be $0 if the utility allowance is greater than the
TTP.
Example – Calculating Tenant Rent
TTP: $225
Utility allowance: -$ 75
Tenant rent: $150
B. Assistance Payments
The assistance payment is the amount the owner bills HUD every month on
behalf of the tenant. The assistance payment covers the difference between the
TTP and the gross rent. It is the subsidy that HUD pays to the owner.
1. Housing Assistance Payment (HAP) is the assistance payment made by
HUD to owners with units receiving assistance from the Section 8
program.
Example – Calculating HAP
Gross rent $564
TTP - $175
HAP $389
2. Rental Assistance Payment (RAP) is the assistance payment made by
HUD to owners for units receiving assistance through the RAP program.
3. Rent Supplement payment is the assistance payment made by HUD to
owners for units receiving assistance through the Rent Supplement
program.
4. Project Assistance Payment (PAC) is the assistance payment made by
HUD for assisted units in a Section 202 project for nonelderly disabled
families and individuals (also referred to as Project Assistance Contract
[PAC] projects).
5. Project Rental Assistance Payment (PRAC) is the assistance payment
made by HUD for assisted units in Section 202 or Section 811 properties
with a Project Rental Assistance Contract (PRAC).
C. Utility Reimbursement
When the TTP is less than the utility allowance, the tenant receives a utility
reimbursement to assist in meeting utility costs. The tenant will pay no tenant
rent. The utility reimbursement is calculated by subtracting the TTP from the
utility allowance.
D. Section 8 Minimum Rent
Tenants in properties subsidized through the Section 8 program must pay a
minimum TTP of $25.
NOTE: Minimum rent does not apply to Section 202 PAC, Section 202 PRAC,
Section 811 PRAC, RAP, Rent Supplement, Section 221(d)(3) BMIR or Section
236 programs.
1. The minimum rent is used when 30% of adjusted monthly income and
10% of gross monthly income, and the welfare rent where applicable, are
all below $25.
2. The minimum rent includes the tenant’s contribution for rent and utilities.
In any property in which the utility allowance is greater than $25, the full
TTP is applied toward the utility allowance. The tenant will receive a
utility reimbursement in the amount by which the utility allowance exceeds
$25.
Example – Utility Reimbursement for a
Tenant Paying Minimum Rent
The Nguyen family qualifies for the minimum total tenant
payment of $25. The family pays its own utility bills. The
utility allowance for the unit is $75 a month. The owner
sends the Nguyen family a check each month for $50
($75-$25) as a utility reimbursement. The Nguyen family
does not pay any tenant rent to the owner.
3. Financial hardship exemptions.
a. Owners must waive the minimum rent for any family unable to pay
due to a long-term financial hardship, including the following:
The family has lost federal, state, or local government
assistance or is waiting for an eligibility determination.
The family would be evicted if the minimum rent
requirement was imposed.
The family income has decreased due to a change in
circumstances, including but not limited to loss of
employment.
A death in the family has occurred.
Other applicable situations, as determined by HUD, have
occurred.
b. Implementing an exemption request. When a tenant requests a
financial hardship exemption, the owner must waive the minimum
$25 rent charge beginning the month immediately following the
tenant’s request and implement the TTP calculated at the higher
of 30% of adjusted monthly income or 10% of gross monthly
income (or the welfare rent). The TTP will not drop to zero unless
those calculations all result in zero.
(1) The owner may request reasonable documentation of the
hardship in order to determine whether there is a hardship
and whether it is temporary or long term in nature. The
owner should make a determination within one week of
receiving the documentation.
(2) If the owner determines there is no hardship as covered by
the statute, the owner must immediately reinstate the
minimum rent requirements. The tenant is responsible for
paying any minimum rent that was not paid from the date
rent was suspended. The owner may not evict the tenant
for nonpayment of rent during the time in which the owner
was making the determination. The owner and tenant
should reach a reasonable repayment agreement for any
back payment of rent.
(3) If the owner determines that the hardship is temporary, the
owner may not impose the minimum rent requirement until
90 days after the date of the suspension. At the end of the
90-day period, the tenant is responsible for paying the
minimum rent, retroactive to the initial date of the
suspension. The owner may not evict the tenant for
nonpayment of rent during the time in which the owner was
making the determination or during the 90-day suspension
period. The owner and tenant should reach a reasonable
repayment agreement for any back payment of rent.
Example – Temporary Hardship Schedule
Due to the death of his wife, Yung Kim took a six-week leave of absence from his
part-time job. He requests a financial hardship exception. The owner, Oak Knoll
Management, reviews his request and determines that the hardship is not long term.
Yung Kim and Oak Knoll Management implement the following schedule:
Current TTP $25
Hardship request received July 15
Owner grants temporary hardship July 20
August TTP $0
September TTP $0
October TTP $0
90-day period ends October 15
Total balance due 3 x $25 $75
Tenant agrees to pay $10 extra per month
for seven months and $5 extra on the eighth month.
Monthly payment for seven months
November – May TTP $25 + $10 $35
June TTP $25 + $5 $30
July TTP $25
(4) If the hardship is determined to be long term, the owner
must exempt the tenant from the minimum rent
requirement from the date the owner granted the
suspension. The suspension may be effective until such
time that the hardship no longer exists. However, the
owner must recertify the tenant every 90 days while the
suspension lasts to verify that circumstances have not
changed. The length of the hardship exemption may vary
from one family to another depending on the
circumstances of each family. The owner must process an
interim recertification to implement a long-term exemption.
Owners must maintain documentation on all requests and
determinations regarding hardship exemptions.
E. Welfare Rent
1. The term “welfare rent” applies only in states that have “as-paid” public
benefit programs. A welfare program is considered “as-paid” if the
welfare agency does the following:
a. Designates a specific amount for shelter and utilities; and
b. Adjusts that amount based upon the actual amount the family
pays for shelter and utilities.
2. The maximum amount that may be specifically designated for rent and
utilities is called the “welfare rent.” See below for an example.
Example – Calculating Welfare Rent
Published maximum for shelter and utilities: $200
Amount of welfare assistance for other needs: $220
Other income: $100
Monthly income = $520
“Welfare rent”= $200Source: Legislative text reproduced verbatim
Effective Timeline
Current
Sep 24, 2026
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Related Rules
§ 888.111
§ 888.111 Fair market rents for existing housing: Applicability.
§ 888.201
§ 888.201 Purpose.
§ 888.202
§ 888.202 Manner of publication.