Source of Income
Source of Income: What You Need to Know
Frequently asked questions – and our answers – on this important fair housing topic
- What does “source of income” mean, and what are the different types?
“Source of income” refers to the type of financial resources a person uses to support themselves and pay for housing. The following sources of income are considered legal and must be accepted as payment for housing under the law:
- Any form of federal, state or local public assistance (such as cash assistance)
- Any form of federal, state or local housing assistance (such as Housing Choice/Section 8 vouchers, HUD VASH vouchers, ESG and SSVF grant money)
- Child support
- Unemployment insurance
- Disability payments
- Foster care subsidies
- Social Security or Supplemental Security Income (SSI)
- HIV/AIDS Services Administration (HASA)
- City FHEPS
- G.I. Bill housing allowances
- Advantage Program vouchers
- Living in Communities (LINC)
- Family Eviction Prevention Subsidy (FEPS)
- Pensions and other retirement distribtions
- Special Exit and Prevention Supplement (SEPS)
- Any other form of housing assistance payment or credit, whether or not such income or credit is paid or attributed directly to a landlord
- Other lawful sources of income
- Fair housing laws prohibit property owners, real estate licensees, co-op boards, condo associations and property managers from discriminating against people and making housing decisions based on certain characteristics that the law protects. New York State, New York City, Nassau County and Suffolk County all have laws classifying source of income as a protected characteristic and banning source-of-income discrimination in housing.
- Discrimination based on lawful source of income includes the illegal practice by property owners, real estate brokers and licensees, co-op boards, condo associations and property managers refusing to rent or sell to current or prospective tenants and buyers seeking to pay for housing with any form of public housing assistance, such as Housing Choice/Section 8 vouchers, Social Security Insurance (SSI) or cash assistance.
- Source-of-income discrimination is of particular concern in the rental market, especially when there are multiple applicants for individual units. There are too many documented instances of people who have been unfairly turned away from housing or steered to certain units because of the source of their income used for rent or security deposit. This practice is unfair and illegal.
- Property owners, real estate brokers and licensees, co-op boards, condo associations and property managers cannot treat current or prospective tenants differently based on their source of income. Examples of prohibited behavior include designating certain units for or refusing to rent to individuals or families because they receive public subsidies or vouchers. Source-of-income discrimination is treated just like any other kind of discrimination.
- Beyond the legal considerations, rejecting a tenant because of their source of income can lead to dire consequences for individuals and their family members. Everyone deserves a place to make their home, and tenants who receive government assistance just want a roof over their heads like every other renter. A rental applicant cannot be rejected or steered based on where their income comes from as long as it is a lawful source.
The major benefit of accepting housing vouchers and government subsidies is the fact that property owners can rely on timely rental payments each month. Other benefits include:
- Rent is often paid directly by government entities, which guarantees a steady and reliable stream of rental income;
- Programs have built-in advertising for property owners at no cost to showcase their rental properties, which increases the prospective pool of tenants and results in lower vacancy rates;
- Public housing agencies and local administrators screen and approve applicants before issuing vouchers;
- Tenants with vouchers stay in their units longer on average, resulting in lower turnover and vacancy rates for the property owner;
- Property owners who accepted tenants with vouchers have fared better financially than owners with non-subsidized tenants. During the pandemic, for example, government-subsidized rental payments continued despite the rental moratoriums affecting other tenants; and
- Property owners can also play a meaningful part in their community and make a difference by providing safe, stable housing for low-income individuals and families.
- While there are no federal requirements explicitly related to source of income, New York State, New York City, Nassau County and Suffolk County all have laws making it illegal to refuse to rent or sell property to someone based on their lawful source of income.
- All housing providers are subject to New York State human rights laws, including property owners, management companies, real estate brokers and licensees, co-op boards, condo associations, banks and lenders. Any housing provider who denies housing based on a person’s lawful source of income has potentially committed a fair housing violation and may be held legally responsible.
- Fair housing agencies are aggressively investigating and prosecuting property owners, real estate brokers and licensees, co-op boards, condo associations and property managers who fail to rent to tenants who pay rent with housing vouchers, government assistance or other forms of lawful source of income.
Any or all of the following are some potential consequences of violating
- Willful violations can carry a civil penalty of up to $250,000 per violation;
- Tenants can seek compensatory damages with no cap, including claims for emotional suffering associated with homelessness;
- A local fair housing agency could report a violation to the New York State Department of State (DOS), which could lead to revocation of a real estate professional’s license;
- Violators can be liable for the tenant’s attorney’s fees; and
- Charges could be initiated with the DOS and/or the appropriate REALTOR® association for violations of license law and the professional code of ethics, respectively.
- Local public housing agencies (PHAs) and local administrators (LAs) are in charge of administering vouchers to prospective tenants. Once a tenant is approved and finds a property to rent, the tenant presents the voucher to the property owner. The property owner must then complete a request for tenancy approval form and submit it to the local PHA/LA. The form details information about the unit, such as rent, address and utility costs.
- While the PHA/LA screens participants, the property owner can also go through with their regular screening process. The local PHA/LA must inspect the rental unit before the voucher holder can live there. Once the unit passes inspection, the property owner and tenant sign the lease, and the property owner and local PHA/LA sign a housing assistance payment document.
- The best and easiest way to approach this issue is for property owners and managers to treat persons with any lawful source of income the same as they would any other tenant. A property owner or manager would be discriminating if they treated a tenant differently because of the tenant’s lawful source of income, such as refusing to accept voucher funds toward rent payments or designating certain units for subsidized tenants.
To avoid source of income discrimination, property owners or managers
should not engage in any of the following:
- Setting artificially high-income requirements to exclude applicants who receive public benefits.
- Requiring copies of paychecks or other documents that may disadvantage any lawful source of income.
- Requiring a co-signer on the lease because of the applicant’s source of income.
- Posting advertising that states prospective tenants “must have a job.”
- Communicating publicly or internally that public assistance is not accepted, such as “No Section 8” or “No Programs.”
- Keeping a separate waitlist of apartments for those receiving subsidies.
- In general, property owners can require income and credit history qualifications. However, income and credit history reports may not be used in a way that frustrates the purpose of source-of-income laws. For example, where the vouchering agency pays 100% of the tenant’s rent, consideration of negative credit history or income would be unreasonable. Because of the guaranteed nature of voucher payments, credit checks are not necessary to assess an applicant’s ability to pay their rent.
- It is worth noting that the federal Department of Housing and Urban Development (HUD) does not include credit checks as one of the issues that property managers should screen for in its Housing Choice Voucher regulations. The regulations instead focus on rent and utility payment history, which are more relevant to tenant qualifications. Additionally, fair housing advocates report that credit checks can have a racially discriminatory impact and can be the basis for a fair housing violation.
- LIBOR and our REALTOR® members are committed to advancing fair housing for all who want to make a home in our communities, whether they are purchasing a home or signing a lease. Property owners and managers may be unaware of recent changes to the law when it comes to the treatment of various sources of income. We feel an obligation to share what we know and to help those who rent property understand the law and treat all people fairly.
- LIBOR stands ready to help people learn more about all issues related to fair housing. We will be using this site to provide regular updates on fair housing, including information resources and educational opportunities that relate to source of income issues and more. You can also sign up for our email updates or email us at info@HomeForAllofUs.org so that we can stay in touch with you.