What Are Below-Market-Rate Housing Units?
Quick answer: A BMR unit is affordable because its rent or purchase price is controlled by program rules rather than set entirely by the open market. Renters may face income certification and occupancy reviews. Buyers may face primary-residence, refinancing, and resale restrictions designed to keep the home affordable for future eligible households.
What are below-market-rate housing units?
“Below market rate” describes the price of the housing, not a single national program. The rent or sale price is lower than what a similar unrestricted home might command in the same area, but the discount exists because the unit is governed by an affordability agreement, deed restriction, covenant, zoning requirement, public funding condition, or another enforceable rule.
Local agencies may use different names for similar housing, including income-restricted housing, affordable dwelling units, inclusionary units, deed-restricted homes, or permanently affordable homes. The term BMR is especially common in some local systems, but it does not carry one universal set of rules across the United States.
For the broader policy that often creates these homes, see the guide to inclusionary housing in the United States . This page focuses only on what a BMR unit is and how its price and use may be restricted.
How is a BMR unit different from a market-rate unit?
A market-rate unit is generally rented or sold at a price set by current market conditions, subject to ordinary housing laws and any applicable rent regulation. A BMR unit has an additional affordability restriction that limits the price and usually limits who may occupy or buy it.
- Price: A market-rate home is priced through the open market. A BMR home uses a maximum rent, approved sale price, or resale formula.
- Eligibility: A market-rate applicant may still face credit, income, and screening standards, but a BMR applicant must also meet the affordable housing program’s income and household rules.
- Occupancy: BMR programs commonly require the approved household to use the unit as its primary residence.
- Future changes: A BMR rent, sale, refinance, or resale may require review by the administering agency or property manager.
- Length of restriction: A market-rate unit normally has no affordability period. A BMR restriction may last for a fixed term, renew upon resale, or remain in effect for the life of the project.
The key feature of below-market-rate housing units is that their affordability depends on enforceable rules, not a temporary discount.
The controlling documents matter more than the label. Two properties may both advertise BMR units but use different income levels, rent formulas, occupancy standards, or resale rules.
Rental BMR units
A rental BMR unit is an apartment with a restricted rent for an income-qualified household. The local agency or property agreement generally establishes a maximum rent based on factors such as the target income level, household-size assumptions, unit size, and applicable utility allowance.
How BMR rents are restricted
The property owner cannot simply charge whatever the unrestricted market would bear. The maximum rent is calculated under the local program and may be updated when the agency publishes new income and rent limits. The actual lease amount must follow the property’s governing documents and current approved schedule.
Before signing a lease, check whether utilities are included, whether there are separate charges for parking or other services, and how future rent increases are handled. A low advertised base rent can still produce a higher total monthly housing cost when required charges are added.
Income certification for renters
Applicants normally must provide evidence of household income, assets, and household composition before the lease is approved. The property may request pay stubs, tax records, bank statements, benefit letters, self-employment records, and documents for every adult household member.
Some BMR rental programs also require periodic recertification after move-in. For example, San Francisco requires annual collection and verification of current income, assets, household size, and occupancy information for inclusionary BMR renters. Other jurisdictions may use a different schedule, so do not assume the same recertification rule applies everywhere.
Occupancy rules for renters
The approved household is generally expected to live in the unit as its primary residence. Subleasing the entire apartment, using it as a short-term rental, or allowing an unapproved household to take over may violate the affordability agreement or lease.
If your household size, income, or occupancy changes, report the change through the route required by the property. Do not remove or add household members on your own assumption that the change will not affect eligibility.
Ownership BMR units
An ownership BMR unit is a home sold at a restricted purchase price to an eligible buyer. It may be a condominium, townhouse, cooperative share, or another owner-occupied property type.
The lower purchase price does not remove the ordinary costs of homeownership. A buyer may still be responsible for the mortgage, down payment, closing costs, property taxes, insurance, homeowners’ association fees, repairs, and maintenance.
How BMR sale prices are restricted
The initial sale price is usually calculated to be affordable to a household at a designated income level under local assumptions about mortgage costs and other housing expenses. The buyer may need income certification, financing approval, and proof that the property will be used as a primary residence.
The purchase contract and recorded documents may also limit refinancing, title transfers, renting out the property, or adding another owner. These rules are designed to prevent the affordable home from becoming an unrestricted investment property.
How resale controls work
When the owner wants to sell, the home usually cannot be listed at any price the open market might support. The administering agency may calculate a maximum resale price under the deed restriction or affordability covenant and may require the next buyer to complete income certification.
Boston, for example, requires owners of covered affordable homes to obtain a Certificate of Maximum Resale Price and sell to a qualified buyer certified by the Mayor’s Office of Housing. San Francisco states that its BMR ownership homes are resold at below-market prices to future eligible buyers. These examples show the common purpose of resale controls, but each property’s recorded documents determine the actual formula.
What is shared equity?
Shared equity is a homeownership structure that balances two goals: allowing the owner to build some equity while preserving affordability for the next buyer. The owner may keep the amount allowed by the resale formula, while part of the market appreciation remains with the home or is shared with the program.
Not every BMR home uses the same shared-equity model. Some use a maximum resale price tied to income changes. Others use a fixed appreciation formula, a shared-appreciation provision, a community land trust ground lease, or another recorded restriction.
Before buying, ask for a written example showing how the resale price would be calculated. A buyer should understand what happens to appreciation, approved capital improvements, selling costs, and any city or program lien.
How long do BMR restrictions last?
There is no universal affordability period. The restriction may last for a stated number of years, restart when the home is resold, remain for the life of the project, or continue permanently.
The answer should appear in the property’s regulatory agreement, deed rider, affordability covenant, ground lease, or other controlling document. Do not rely on a real estate advertisement or verbal statement when deciding how long the restrictions apply.
For ownership housing, the length of the restriction affects future resale and refinancing. For rental housing, it affects how long the property must maintain restricted units and follow the program’s rent and tenant-eligibility rules.
Income and household eligibility
BMR programs generally reserve units for households within a specified income range. Eligibility often depends on total household income, the number of people who will live in the unit, and the target income level assigned to that unit.
- Maximum income: The household cannot earn more than the limit assigned to the opportunity.
- Minimum income: Some rentals or ownership opportunities require enough income or approved assistance to support the housing cost.
- Household size: The number of household members may determine both the income limit and the unit sizes available to you.
- Assets: A program may review bank accounts, investments, real estate interests, or income generated by assets.
- Primary residence: Rental and ownership programs commonly require the BMR unit to be the household’s main home.
Area Median Income, or AMI, is often used to express the income category, but the dollar limit changes by location, household size, and year. Always use the table attached to the specific property or current local program notice.
Why BMR does not mean free housing
A BMR restriction lowers or controls the housing price; it does not eliminate the household’s financial responsibility.
For renters
- Monthly rent: You must pay the approved lease rent.
- Utilities: Some or all utility costs may be separate.
- Deposits and fees: Lawful deposits or approved charges may still apply.
- Lease compliance: You must follow the lease and occupancy rules.
For buyers
- Purchase costs: You may need a down payment and closing funds.
- Monthly ownership costs: Mortgage payments, taxes, insurance, and association fees may apply.
- Maintenance: You are generally responsible for repairs and upkeep.
- Resale limits: You may not receive the same appreciation as an unrestricted market-rate owner.
BMR also does not always mean housing for the lowest-income households. Local programs may offer units at several income levels, including moderate-income tiers.
What should you check before applying or buying?
- Confirm the unit type. Determine whether it is a restricted rental or ownership opportunity.
- Read the current income limits. Use the correct household size, location, and program year.
- Check the full housing cost. Include utilities, fees, association dues, taxes, insurance, and financing costs where applicable.
- Review the occupancy rule. Confirm who must live in the unit and whether subleasing is prohibited.
- Ask about recertification. Rental programs may require periodic income and household reviews.
- Read the resale documents. Buyers should understand the maximum resale price, eligible future buyer rules, and approval process.
- Confirm the affordability period. Find out whether the restriction expires, restarts, or remains permanently.
- Keep every governing document. Save the lease, covenant, deed rider, regulatory agreement, and agency approvals.
Frequently asked questions
Can a BMR unit become market rate later?
Possibly, but only if the controlling restriction allows it to expire. Many programs use long-term or permanent affordability restrictions. Check the recorded documents for the exact unit.
Can a BMR homeowner rent out the property?
Often not. Many ownership programs require the home to remain the owner’s primary residence and prohibit renting without written approval. The deed restriction or covenant controls.
Can a renter stay if household income rises?
The answer varies. Some programs allow an existing tenant’s income to rise above the original admission limit, while others apply a different rule. Review the lease, recertification policy, and local program requirements.
Does every BMR buyer receive the same resale profit?
No. The resale formula may depend on the recorded restriction, changes in income limits, approved appreciation, capital improvements, or another local method.
Is a BMR unit the same as a housing voucher?
No. A BMR restriction is attached to the unit or property. A voucher is a separate form of rental assistance. This article does not cover the full comparison.
What is the safest next step?
Below-market-rate housing units are restricted homes, not ordinary market-rate properties with a temporary discount. Before you apply, rent, or buy, identify the administering city or housing agency and read the current property documents that control income eligibility, occupancy, rent or sale price, and future resale.
The most common mistake is assuming that all BMR units follow the same rules. The label describes the pricing concept, but the local program and recorded agreement determine what you can pay, who may live there, and what happens later.