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Low Income Housing Limits

The Department of Housing and Urban Development publishes income limits that most low-income housing programs use to evaluate applicant eligibility. HUD calculates the figures annually on the basis of an area's median income and household size, using data from the American Community Survey. HUD's major rental assistance programs, as well as local government initiatives outside of HUD purview, use these limits to distribute benefits.

  1. Purpose

    • HUD sets annual income limits to help ensure that the neediest households in a given area can apply to receive low-income housing benefits. Taking into account an area's median income, family size and a city or region's fair market rate rent data, HUD aims to keep housing expenditures in line with the nationally-accepted standard of housing affordability, which contends that if a family spends more than 30 percent of their income on housing -- rent and utilities -- they are stretching themselves into unaffordable territory, according to the U.S. Census Bureau.

    Categories

    • While local governments and HUD often use different percentage levels for different programs, the major low-income housing programs -- HUD's Section 8 and public housing initiatives -- adhere to three main categories. HUD classifies a family as "extremely low-income" if its household income falls at or below 30 percent of their area's median income, according to the agency's income limits website. HUD labels a household "very low-income" if its income is at or below 50 percent of their area's median. If a family comes in at or below 80 percent of its area's median, HUD categorizes it as "low-income."

    Practice

    • HUD's Section 8 program accepts renter households the agency considers "extremely low-income" or "very low-income." On the ground, most Section 8 tenants make drastically less than their area's median income. As HUD's Section 8 website points out, the agency directs local housing authorities to provide 75 percent of its Housing Choice Vouchers to families earning less than 30 percent of their area's median.

      HUD's public housing program, in theory, allows renters from all three above-mentioned income ranges to apply. On the ground, however, the reality is that the people in the program come, primarily, from the lowest end of the income spectrum. Nationally, according to HUD's Resident Characteristics Report, approximately 55 percent of public housing residents are "extremely low-income." In New York City, for example, 58 percent of public housing residents are "extremely low-income." As of 2010, the average annual income of a public housing resident in New York City is $21,385.

    Geography

    • Location not only plays a key role in dictating housing costs, it also is responsible for variations in HUD's income limits. HUD considers a three-person family in the Seattle-Bellevue, Washington metropolitan area "very low-income" at $38,500, which is half of the area's median income, based on 2010 numbers. In the relatively less affluent metro of Gulfport-Biloxi, Mississippi, that number drops to $23,650. In Eastern Worcester County, Massachusetts, meantime, that number increases to $46,350.

    Considerations

    • Some cities, particularly places in expensive rental markets, run their own low-income housing programs in addition to HUD-generated endeavors. San Francisco illustrates this point. According to the San Francisco Mayor's Office of Housing, the city requires some private developers to include below market rent rentals as part of market-rate developments. The San Francisco Redevelopment Agency and other city agencies attempt to provide additional affordable units, often in conjunction with non-profit organizations. As the Mayor's Office of Housing notes, it uses income as the main qualifier for its vacancies, which use different percentages of the city's median income to determine applicant eligibility.

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