HUD HCV Guidebook § 2.4

When the PHA issues a housing choice voucher, it is important for the PHA to make sure the family
understands the maximum rent burden calculation, the maximum amount the family is expected to
contribute toward housing costs, and the maximum subsidy that the PHA may pay. This information
is essential for a family to search for and select an appropriately priced home.

While a family may select a unit with a gross rent exceeding the PHA payment standard, the family
should be aware that the PHA will not approve a unit for which the family share (the family rent to
owner plus the utility allowance) would exceed 40 percent of the monthly adjusted income.
Accordingly, the maximum rent burden at initial occupancy is also referred to as the maximum family
share or “the 40 percent rule.” The maximum initial rent burden applies only when the gross rent
for the unit selected exceeds the applicable payment standard. This maximum initial rent burden is
applied each time a family moves to a new unit (initial occupancy of a new unit) or signs the first
assisted lease for a unit if leasing in-place. The rule does not apply to changes in the family share
after move-in, for example when the owner requests a rent increase. Example 6 shows a sample
maximum initial rent burden calculation.

Example 6: Calculating Maximum Rent Burden at Initial Occupancy
         30% of monthly adjusted income           $700 x .30 = $210
         40% of monthly adjusted income           $740 x .40 = $280
         Maximum initial rent burden              $280

2.4       Maximum Subsidy
The maximum subsidy the PHA can pay in the Housing Choice Voucher (HCV) program is the payment
standard minus the TTP.21 The PHA performs the maximum subsidy calculation at the time the family
is issued a housing choice voucher. It is important for the family to know the maximum the PHA will
pay while searching for a unit. The actual PHA subsidy can be calculated only after the family has
selected a specific unit. Example 7 shows a sample calculation of maximum subsidy.

                            Example 7: Calculating Maximum Subsidy
                            Payment standard                        $450
                            Total tenant payment (TTP)    minus     $210
                            Maximum subsidy               equals    $240