Dealing with "Zero Income" Households

While "zero income" households are rare on Low-Income Housing Tax Credit properties (since there is no rental assistance, income is required in order to pay the rent), such households are not uncommon on Section 8 properties or developments with Rural Development rental assistance. There are a number of reasons why household members - or even entire households - may falsely claim zero income. Examples include  

• One member may claim no income in order to income qualify for the unit; or
• An entire Section 8 household may claim no income in order to pay no rent.

  While residents may sign zero income affidavits, owners may not rely on such statements if a reasonable person would conclude that the household’s income is higher that what is being represented.   When a statement of zero income is not credible, a detailed interview should be conducted. Elements of the interview should include:  

1. Work History: ask about any jobs held in the past. Check credit reports for prior employers. If there is a work history -
   1. Why are they not now working?
   2. Are they seeking employment?

If there is no work history, how have expenses been met in the past year?  

2. Sources of Income: Ask about income from all sources, including
   1. Workman’s Compensation;
   2. Unemployment;
   3. Inheritance; and
   4. Trust Funds
3. Method of Paying for Living Expenses: how does the household pay for
   1. Groceries
   2. Clothing
   3. Rent
   4. Toiletries
   5. Utilities
   6. Laundry
   7. Phone
   8. Transportation
   9. Cleaning Supplies
4. Money Accounts: Ask for documentation of bank accounts. If bank statements are obtained, look at deposits and withdrawals.
   1. Where did the money come from?
5. Loan Information: if an applicant states that deposits are a loan (or repayment of a loan), ask to see loan documents.
   1. Who is making (or repaying) the loan?
   2. If the applicant claims to be the recipient of a loan, how will they repay it?
6. Roommate History: ask about past roommates. If a roommate covered some of the expenses, will that roommate be moving in? If not, how will the expenses be paid?

  Truly zero income households are virtually non-existent. This is because a household with absolutely no income would not be able to survive. However, it is possible to have a zero-income certification on a rent-assisted property. In these cases, management must ensure that a "survival statement" is obtained on which the applicant/tenant demonstrates how the costs associated with daily living will be met. And, for Section 8 and Rural Development properties with zero income certifications, a re-interview of the household every 90-days in order to ascertain potential income is strongly recommended.