Tool 14: Rent Supplement Approach to Affordability

This tool allows you to calculate the impact of a rent supplement on a household’s shelter-to-income ratio. Rent supplements are monthly stipends given to low-income households to subsidize shelter costs. They provide a simple, flexible way for governments to assist low-income households in reducing their shelter-to-income-ratio to affordable levels.

Please note that the blue cells below are calculation cells and thus, do not require entered information.

Steps:

1. Establish whether the household is eligible for a rent supplement using applicable criteria (which may vary by community). Some examples of questions to be asked:
   • Is the household income within the maximum allowed?
   • Does the household include dependent children?
   • Does the household pass the asset test (have less than $_____ in total assets)?
   • Do all household members hold resident status?
2. In row A, enter a household’s monthly income. In many communities, only incomes below a certain amount are eligible for a rent supplement.
3. In row B, enter the household’s monthly rent.
4. In row C, enter the household’s eligible rent. In many communities, only rents above a community-set minimum threshold but below a community-set ceiling are eligible for a rent supplement. This defines the “supplement band.”
5. For row D, click the "calculate" button to determine the actual rent-to-income percentage before the supplement.
6. In row E, calculate the supplement for which the household is eligible using the formula set by your community. (A common formula is one dollar for every eligible rental dollar (C) over an established amount, reduced by a percentage of every dollar of household income (A) over another established amount.)
7. For row F, click the "calculate" button to determine the rent-to-income percentage after the supplement.

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