HUD Guideline for Determining Low-Income Status for Housing
HUD offers eligible low-income families several programs designed to provide them with affordable housing, particularly rental assistance. To qualify for public housing or a subsidy through the Housing Choice Voucher program (Section 8) or HUD's plans for seniors and disabled persons, a renter household must fit into one of HUD's low-income classifications. The agency crunches the numbers annually to come up with these figures.
Other People Are Reading
-
Function
-
The U.S. Census Bureau explains that most housing experts settle on 30-percent of household income as the amount most people should commit to housing costs--rent and utilities. When a household moves beyond that cap, the concern is that they will not have enough remaining cash to cover transportation, food and other expenses.
Methods
-
As HUD notes, they merge an area's median income and fair market rent data to set income guidelines for the agency's housing assistance programs. HUD collects data from the Census's annual American Community Survey to devise these figures. The American Community Survey differs from the Decennial Census in that it pulls a sample from the population to estimate median incomes and other characteristics of the population, while the Census aims to survey the entire population to generate the same and similar data.
-
Categories
-
After determining area-specific median incomes, HUD splits households into three main categories--low-income, very low-income and extremely low-income. These categories include families at or below 80 percent, 50 percent and 30 percent of their area's median income, respectively. Each HUD program uses different income thresholds to determine program eligibility. For the Section 8 rental assistance program, for example, a family cannot earn more than 50 percent of their area's median, according to HUD's Housing Choice Vouchers fact sheet. In most cases, local governments use HUD income guidelines for their own programs. Program limits vary, however, ranging from the 30 percent limit to 125 percent of median income, in most cases.
Considerations
-
HUD admits that its income calculations lag behind the economic realities of the day. For example, HUD uses American Community Survey data from 2006 to 2008 to set its 2010 fiscal year income limits. Due to the nature of data collection and analysis, this lag is unavoidable. To maintain program consistency, HUD generally limits increases and decreases in median income levels to five percent annually.
Geography
-
As median incomes vary by place, the cut-offs for HUD's income categories shift. In relatively affluent Nantucket County, Massachusetts and Orange County, California, a four-person family is at or below 80 percent of their area's median income if they make $78,500 and $74,300 a year, respectively. In less wealthy Brownsville, Texas, that figure decreases to $37,200.
-
References
- Photo Credit Photos.com/Photos.com/Getty Images
