HOTMA Income Calculation Changes

The Housing Opportunity Through Modernization Act (HOTMA) made significant changes to how HUD programs calculate income and assets for rent determination. These changes, finalized in a 2023 rule and phased in since then, are now fully applicable at most PHAs for the 2025–2026 benefit year.

Key HOTMA income changes that affect Section 8 participants:

Asset income calculation: Previously, actual income from assets above a threshold was imputed at a set rate. Under HOTMA, the asset threshold increased from $5,000 to $50,000. Households with assets below $50,000 now have a simplified asset calculation — a flat imputed income amount based on a HUD-published rate, rather than a detailed inventory of all assets. Households with assets above $50,000 still have a full calculation, but this threshold change simplifies compliance for most Section 8 households.

Fixed income exclusion: Households where all income is from fixed sources (Social Security, SSI, pension, etc.) and where no income is self-employment or gig work may be eligible for a streamlined annual recertification rather than a full income review. This reduces administrative burden for the many elderly and disabled voucher households on entirely fixed income.

Self-employment income: The calculation method for self-employment income was clarified, providing more consistent treatment across PHAs. The method now more closely mirrors IRS tax calculation approaches, which helps self-employed participants understand how their income is calculated for rent purposes.

If your rent contribution changed significantly at your 2025 or 2026 recertification, ask your caseworker to explain how the HOTMA changes affected your calculation. Some households saw modest rent increases; others saw decreases depending on how their income structure interacts with the new rules.

Voucher Search Period — Extension Rules

When a PHA issues a voucher, it sets a search period — the window of time a household has to find eligible housing before the voucher expires. The standard period is 60 days, but PHAs have discretion to grant extensions. In high-cost markets where housing is difficult to find, extensions have become increasingly common.

Under updated HUD guidance reinforced in 2025, PHAs are explicitly encouraged to grant extensions when:

  • The household is searching in a tight rental market where vacancy rates are very low
  • The household includes a person with a disability who requires specific accessible features
  • The household is a victim of domestic violence with specific safety needs
  • The household is experiencing discrimination from landlords

If you are a voucher holder struggling to find housing within your search period, contact your PHA before the period expires and request an extension. Document the apartments you have applied to and been rejected from. PHAs are more likely to grant extensions when applicants demonstrate an active search effort. Extensions of 60–90 additional days are common; some PHAs grant up to 180 days total in difficult markets.

Landlord Incentive Programs

One of the most persistent challenges in the voucher program is recruitment of landlord participation. In high-cost markets where demand is strong, some landlords have no practical incentive to accept the additional requirements that come with vouchers — including inspections, HAP contracts, and rent restrictions. HUD has encouraged PHAs to develop landlord incentive programs to address this, and several innovative approaches have spread nationally.

Common incentive programs include:

  • Signing bonuses — One-time payments of $500–$2,500 to landlords accepting their first voucher tenant or listing a unit on housing portals for voucher holders
  • Security deposit assistance — Covering all or part of the security deposit, addressing a common financial barrier
  • Damage mitigation funds — A pool of money PHAs maintain to cover tenant-caused damages above the security deposit, addressing landlords' concerns about risk
  • Dedicated landlord liaisons — PHA staff members whose role is specifically to assist landlords with questions, resolve disputes, and process paperwork quickly
  • Rapid inspection scheduling — Priority scheduling for initial inspections at properties listed for voucher holders, reducing the time between lease signing and payment start

If you are a voucher holder struggling to find participating landlords, ask your PHA whether it has a landlord incentive program and request the list of currently participating landlords. Landlords who have accepted vouchers before are generally more willing to accept them again.

Over-Housed Participants — New Flexibility

Under previous rules, voucher holders who were "over-housed" — living in a unit larger than their household size normally justifies — could be required to move to a smaller unit at lease renewal. This rule, while logical in theory, was disruptive to families who had been in their homes for years and created instability particularly for elderly and disabled participants.

HOTMA provisions that took effect in 2024 give PHAs more flexibility to allow over-housed participants to remain in their units, particularly when requiring a move would create hardship. PHAs can now more readily approve continued occupancy in over-housed situations when a household member has a disability that makes the extra space medically necessary, when the tenant has been in the unit for 3+ years and forced relocation would be disruptive, or when comparable smaller units are not available in the market.

If you have been notified that you are over-housed and may need to move, ask your PHA whether any HOTMA-based hardship exceptions apply to your situation and request a review before agreeing to relocate.

Criminal History — PHAs' Updated Screening Authority

HUD issued updated guidance in 2024 on how PHAs should handle criminal history in Section 8 eligibility determinations. The guidance, following a series of fair housing court decisions, clarifies that blanket bans on applicants with any criminal record are generally not permitted. PHAs must conduct an individualized assessment of criminal history, considering factors including:

  • The nature and severity of the offense
  • The time elapsed since the offense
  • Evidence of rehabilitation
  • The applicant's overall record

Permanent ineligibility based on criminal history is now limited to narrowly defined cases — primarily sex offenders subject to lifetime registration requirements. For other criminal histories, PHAs must conduct an individualized review and provide the applicant with the opportunity to present mitigating evidence.

If you have been denied a Section 8 application or waitlist position based on criminal history, you have the right to request a hearing and present evidence of rehabilitation or extenuating circumstances. This is an area where legal aid assistance can be particularly valuable.

Utility Allowance Updates

Utility allowances are the amounts PHAs add to the payment standard to account for utilities not included in the rent. If your utilities (heat, electricity, water) are paid separately, the PHA's utility allowance for your unit type and utility configuration is subtracted from your rent contribution — effectively giving you credit toward utilities as part of the subsidy.

PHAs are required to update their utility allowances annually to reflect current energy costs. With utility costs having risen significantly since 2022, many PHAs updated their utility allowances upward in 2025–26. An increase in the utility allowance reduces your tenant contribution — check with your PHA whether its utility schedule was updated and what the current figures are for your unit type and utility configuration.

VAWA Protections — 2025 Reauthorization

The Violence Against Women Act (VAWA) provides specific protections for victims of domestic violence, dating violence, sexual assault, and stalking in HUD housing programs including Section 8. VAWA protections were reauthorized and strengthened in 2022 and are fully in effect through 2026.

Key VAWA protections for Section 8 participants:

  • You cannot be denied a voucher, terminated from the program, or evicted based solely on being a victim of domestic violence
  • You have the right to emergency transfer to a different unit if you certify that staying in your current unit poses an imminent safety threat
  • Confidentiality of your VAWA certification must be maintained by the PHA and landlord
  • Your lease cannot be terminated based on the acts of your abuser — you are protected even if the abuser is on the lease

If you are experiencing domestic violence and need to invoke VAWA protections, contact your PHA and ask to speak with a VAWA coordinator. Legal aid organizations specializing in domestic violence can also help you navigate the process.

Tenants' Rights Under the HAP Contract

The Housing Assistance Payments (HAP) contract between your PHA and landlord contains important tenant protections that many voucher holders don't know about. Key provisions:

  • The landlord cannot evict you without following the lease terms and applicable state law — the HAP contract does not give the landlord additional eviction authority
  • The landlord must maintain the unit in compliance with NSPIRE standards — if the unit fails inspection and the landlord doesn't repair, payments can be suspended, which creates leverage for tenant repair requests
  • Rent increases require PHA approval — the landlord cannot raise rent above the approved amount in the HAP contract without notifying the PHA and going through the rent reasonableness determination process
  • The HAP contract requires the landlord to provide the unit for the initial lease term — early termination by the landlord for reasons other than lease violation can be a HAP contract breach

Understanding these protections helps voucher holders advocate for themselves effectively. For a complete overview of Section 8 program rights and responsibilities, see How Section 8 Works.