The Tenant's Payment Floor: Understanding Minimum Rent and Hardship Exemptions

In the Housing Choice Voucher (HCV) program, every family is expected to contribute something towards their housing costs. To ensure this, the program allows each Public Housing Authority (PHA) to establish a Minimum Rent. This policy acts as a payment “floor,” setting the absolute lowest amount a tenant will be asked to pay, even if their income is extremely low or zero.

For you as an investor, this concept is straightforward, but understanding its interaction with “hardship exemptions” is key to knowing how your payment streams might shift.

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What is a PHA Minimum Rent?

The purpose is to establish a baseline contribution for all participating families. It becomes a factor in the Total Tenant Payment (TTP) calculation, which determines the tenant’s share of the rent.

How Minimum Rent Factors into the TTP

As a reminder, the TTP is the highest of several different calculations (such as 30% of adjusted income or 10% of gross income). The PHA’s Minimum Rent is simply one more item on that list.

This means if a family has very low or no income, their TTP will default to the PHA’s minimum rent.

The Safety Valve: Tenant Hardship Exemptions

What happens if a family cannot even afford the $50 minimum rent due to a crisis? To prevent homelessness, the program includes a critical safety valve: the financial hardship exemption.

A family can request to be exempted from paying the minimum rent if they are facing a qualifying financial hardship. According to the program handbooks, such circumstances include situations where the family:

• Would be at risk of eviction.
• Has experienced a loss of income or employment.
• Has had a death in the family.
• Has lost eligibility for a federal or state assistance program.

If a family requests this exemption, the PHA must suspend the minimum rent requirement while it investigates the claim to determine if the hardship is temporary or long-term.

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What a Hardship Exemption Means for YOU, the Investor

This is the most important part of the process for an owner. When a tenant is granted a hardship exemption, it does not reduce the total rent you receive. You are still made whole. The only thing that changes is who pays you.

Here’s the breakdown of what happens:

1. TTP is Recalculated: The PHA recalculates the family’s TTP without using the minimum rent as a floor. The TTP will now be based purely on their income (e.g., the $15 from our earlier example).
2. HAP is Adjusted: Because the tenant’s contribution (TTP) has gone down, the Housing Assistance Payment (HAP) from the PHA automatically goes up to cover the difference.

Payment Shift Example

Let’s see how the numbers change using our example. Assume the Gross Rent for your unit is $1,200 and the PHA Minimum Rent is $50.

Metric	Before Exemption	After Exemption is Approved
Tenant’s TTP	$50	$15
PHA HAP Payment	$1,150	$1,185
Your Total Income	$1,200	$1,200