This federal housing assistance program that eventually became Section 8 was established in the US Housing Act of 1937 during the Great Depression. Consequently, after the mass economic collapse, there became a housing crisis as well and the United States needed a financial assistance program to help the displaced people. The National Housing Act of 1934 made way for the US Housing Act of 1937, which then established the Federal Housing Administration. The current United States Housing Authority was created by the 1937 bill, with hopes to control and manage the government's payment and people's reception of subsidies.
In the 1970's, the government began to realize that the issue was no longer sub-standard housing, but that too many people were spending too much of their income on rent. The federal government further amended the US Housing Act of 1937 to create the Section 8 Program. This program allowed local housing authorities to take eligible familes from waiting lists, place them in housing, and determine their what the families were to pay. The program pays the difference between the families payment and the landlord's rent with federal money, as well as performig building maintenance for the tenants.
As a result, Section 8 tenants now pay about 30% of their income for rent, and the local housing authority pays the difference.
More recently, Section 8 was expanded in some areas to cover assistance for mortgage payments in addition to assistance with rent.