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A $25 billion federal rescue effort is underway to help the millions of Americans who are months behind on their rent and utility bills

Starting January 20, the billions will be split among all 50 states, Washington, D.C., U.S. territories and Native American tribes. Local officials will then funnel those dollars to cities and counties that have rental assistance programs. A renter or landlord can apply for the funds and, if approved, the money can pay up to 12 months of overdue rent, including late fees, or the next three months of pending payments. 

“You have money that’s specifically allocated for rent, and that’s the single most important bill they have,” said Greg Brown, senior vice president at the National Apartment Association, a Washington-based trade association. “This is a really solid down payment for helping people get out of that debt.”

The initiative, called the Emergency Rental Assistance Program, comes as President Joe Biden has extended the federal eviction moratorium and as millions of renters are buried in overdue payments. A Moody’s Analytics estimate found that more than 10 million Americans — that’s nearly a quarter of all renters — owe a combined $57 billion in rent, late fees and utilities as of January. That’s an average $5,600 per renter, according to the research firm.

The staggering sum also suggests Congress and the Biden administration will need to provide more than $25 billion in rental assistance. Experts expressed hope the aid will be the first of several rounds of federal funding geared toward helping Americans cover their housing costs, including mortgage holders who are behind on monthly payments to the banks that hold the deeds to their homes. 

Read on for details on who is eligible for the Emergency Rental Assistance Program and how to apply.

Who is eligible

You are eligible for federal rental assistance if at least one member of your household qualifies for unemployment, saw a reduction in take-home pay or experienced financial hardship due to the coronavirus pandemic, according to the Treasury Department. 

Applicants must submit documents that show they are at risk of homelessness  — such as an eviction notice — and that their income is at or below 80% of the median income for their city. For instance, residents in Reno, Nevada, where the median income is $58,790, may earn no more than $47,032 to qualify.

People who have been unemployed for 90 days and make 50% or less of local median income will get priority for the funding, according to the Treasury Department.

How to apply

To apply for assistance under the Emergency Rental Assistance Program, applicants must complete any required forms offered through their local rental assistance program — such as the King County program in Seattle or the Hillsborough County program in Tampa, Florida.

The agencies offering rental assistance will differ depending on where a renter lives, but most local programs have an online application portal where applicants can upload necessary documents. Notably, money does not go to the renter under the program. Rather, after an application is approved, the rental assistance program will contact the renter’s landlord and pay the renter’s past due balance directly. 

Either a renter or a landlord can apply for assistance. If a landlord applies on behalf of a tenant, the landlord must get written permission from the renter. 

Anyone needing assistance should apply as soon as possible, housing experts say. The $25 billion started flowing to states around January 20, said Kate Reynolds, who researches housing finance at the Urban Institute. 

How much the federal program ultimately ends up helping cash-strapped renters depends on how easy the application process is at the city level, NAA’s Brown said.

“Don’t ask people to provide a whole bunch of paperwork that they can’t provide or don’t want to provide for privacy purposes,” he said. 

The program’s effectiveness also hinges on whether there’s enough staff at the local rental assistance program to process those applications, Reynolds said.