• Incomes limits have fallen in my area but haven’t done so in the past, why did this happen?
  
• Given the recession that our area has experienced in recent years, why have income limits increased?
  
• Why does my very low income limit not equal 50% of my median family income (MFI) (or my low-income limit not equal 80% of my MFI)?
  
• How does HUD calculate median family incomes?
  
• Why do area definitions change for MFI and income limits?
  
• What is the relationship between Fair Market Rent areas and Income Limit areas?
  
• What does the term “HMFA” mean?
  
• How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
  
• What are Multifamily Tax Subsidy Projects?
  
• How can 60 percent income limits be calculated?
  
• How are maximum rents for Low Income Housing Tax Credit projects computed from the very low income limits?
  
• What is the national non-metro median to be used to calculate the floor on rural LIHTC rents?
  
• What is are the income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005 (also based on the non-metropolitan median income of $51,600)?
  
  
  

1. Incomes limits have fallen in my area but haven’t done so in the past, why did this happen?
A: Beginning with FY 2010 Income Limits, HUD eliminated its long standing “hold harmless” policy. HUD’s “hold harmless” policy maintained Section 8 income limits for certain areas at previously published levels when reductions would otherwise have resulted from changes in median family income (MFI) estimates, housing cost adjustment data, MFI update methodology, income limit methodology, or metropolitan area definitions. HUD eliminated the “hold harmless” policy to ensure better alignment between an area’s most recent income experience and the income thresholds for housing assistance.

Furthermore, in an effort to minimize disruptions in the operation of the section 8 Housing Choice Voucher program, HUD instituted maximum thresholds for the amount income limits can change from year to year. The new policy limits annual increases in income limits to 5 percent or twice the change in the national median family income, whichever is greater. For areas where income limits are decreasing, HUD limits the decrease to no more than 5 percent per year.

HOME Investment Partnerships program (HOME) rents, based in part on HUD Section 8 Income Limits, will continue to be held harmless and income limits for rural housing programs will continue their current hold-harmless policy at the request of the Rural Housing Service, because these limits are based on area definitions and program rules specified by the Rural Housing Service of the Department of Agriculture.
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2. Given the recession that our area has experienced in recent years, why have income limits increased?
A: Although HUD uses the most recent data available concerning local area incomes, there is still a lag between when the data are collected and when the data are available for use. For example, FY 2011 Income Limits are calculated using 2005-2009 5-year American Community Survey (ACS) data. The effects of the latest recession on local area incomes are most likely to be detected in 2009, but this represents only 20 percent of the survey sample. In areas where there is sufficient sample for a one-year update, the 2009 data does generally show a decline in incomes.
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3. Why does my very low income limit not equal 50% of my median family income (MFI) (or my low-income limit not equal 80% of my MFI)?
A: There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas. These exceptions are detailed in the FY 2011 Income Limits Briefing Material report, at this site.

Please review this report and pay special attention to Attachments 3 and 4 that list the exceptions for metropolitan areas. Please also note that Tables 1 and 2 (beginning on page 7) show that most nonmetropolitan area income limits are based on state nonmetropolitan area medians.

For further information on the exact adjustments made to any area of the country, please see our FY 2011 Income Limits Documentation System. The documentation system is available at: https://www.huduser.gov/portal/datasets/il/il11/index_il2011.html. Once the area in question is selected, a summary of the area’s MFI, Very Low-Income, Extremely Low-Income, and Low-Income Limits are displayed. Detailed calculations are obtained by selecting the relevant links.
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Median Family Incomes

4. How does HUD calculate median family incomes?
A: To calculate the FY 2011 MFI estimates, HUD incorporates 2005-2009 5-year ACS data. Specifically, for each metropolitan area, subarea of a metropolitan and non-metropolitan county, 5-year ACS data is used as the new basis for calculating MFI estimates. HUD is incorporating the 5-year data in this way to eliminate the reliance on the data collected during the 2000 Decennial Census as it is more than a decade old. In areas where there is a valid 1-year ACS survey MFI result, HUD endeavors to use this data as well to take advantage of more recent survey information. By using both the 5-year data and the 1-year data, where available, HUD is establishing a new basis for median family income estimates while also capturing the most recent information available.

For additional details concerning the use of the ACS in HUD’s calculations of MFI, please see our FY 2011 Income Limits Briefing Materials, Attachment 2 at the following web address: https://www.huduser.gov/portal/datasets/il/il11/IncomeLimitsBriefingMaterial_FY11_v2.pdf. Additionally, full documentation of all calculations for Median Family Income and Income Limits is available in our FY 2011 Income Limits Documentation System. This system is available at this web address: https://www.huduser.gov/portal/datasets/il/il11/index_il2011.html.
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Area Definitions

5. Why do area definitions change for MFI and income limits?
A: HUD follows Office of Management and Budget (OMB) definitions of metropolitan areas with some exceptions. In 2006, when HUD implemented the widespread area definition changes OMB made based on the 2000 Decennial Census, exceptions were made to the new OMB area definitions when Fair Market Rent (FMR) or MFI changes for new areas were greater than five percent. HUD created exception subareas, called HUD Metro FMR Areas, which continue to exist today.

Since 2006, OMB updated its metropolitan area definitions based on updated population counts and updated commuting data collected by the Bureau of the Census. For the FY 2011 Income Limits OMB made no changes and so there are no changes in area definitions, compared with the area definition used for FY 2010 Income Limits. For a complete description of the area definitions a used in the FY 2011Income Limits, please review the FY 2010 Income Limits Area Definitions report: https://www.huduser.gov/portal/datasets/il/il11/area_definitions.pdf.
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6. What is the relationship between Fair Market Rent areas and Income Limit areas?
A: With minor exceptions, Fair Market Rent areas and Income Limit areas are identical. HUD uses FMR areas in calculating income limits because FMRs are needed for the calculation of some income limits; specifically to determine high and low housing cost adjustments. Also, the two sets of area definitions are linked in statutory history. The two exceptions to the similarity between Fair Market Rent areas and Income Limit areas are Columbia, MD and Rockland County, NY. Due to historical precedent, independent FMRs are calculated for Columbia, MD, but income limits are not. By statute, income limits are calculated for Rockland County, NY while separate FMRs are not. Furthermore, depending on when OMB releases new area definitions, HUD may be able to incorporate these changes into income limits before they are implemented into FMRs.
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7. What does the term “HMFA” mean?
A: HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB.
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8. How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
A: The FY 2011 Income Limits Area Definitions report places a “CBSA” in front of those areas where all counties in the CBSA are used in the calculation; an “SA” is placed in front of those areas where only the counties or towns of the subarea are used. Note that HUD Metro FMR Areas (HMFAs) are not the same as CBSAs, but that an HMFA’s income limits may be based on CBSA data. To determine if income estimates are based on the subarea or CBSA income, please review the FY 2011 Income Limits Area Definitions report at: https://www.huduser.gov/portal/datasets/il/il11/area_definitions.pdf

Multifamily Tax Subsidy Projects (MTSPs) (otherwise known as Low-Income Tax Credit projects (LIHTC))

9. What are Multifamily Tax Subsidy Projects?
A: Multifamily Tax Subsidy Projects (MTSPs), a term coined by HUD, are all Low Income Housing Tax Subsidy projects under Section 42 of the I.R.S. Code and multifamily projects funded by tax-exempt bonds under Section 142. These projects may have special income limits so HUD has published them on a separate webpage. If you are a tax credit developer or resident in an MTSP, please go to the following site to determine what the appropriate income limits are: https://www.huduser.gov/portal/datasets/mtsp.html.
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10. How can 60 percent income limits be calculated?
A: For the Low Income Housing Tax Credit program, users should refer to the FY 2011 Multifamily Tax Subsidy Project income limits available at https://www.huduser.gov/portal/datasets/mtsp.html. The formula used to compute these income limits is as follows: take 120 percent of the Very Low-Income Limit. Do not calculate income limit percentages based on a direct arithmetic relationship with the MFI; there are too many exceptions made to the arithmetic rule in computing income limits.
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11. How are maximum rents for Low Income Housing Tax Credit projects computed from the very low income limits?
A: Please consult with the state housing financing agency that governs the tax credit project in question for a determination of official maximum rental rates. A list of state housing finance agencies can be found http://lihtc.huduser.gov/agency_list.htm. The Low Income Housing Tax Credit program is a U.S. Treasury Department program; therefore, HUD has no official authority over setting maximum rental rates. The following table is included for informational purposes only.

The imputed income limitation (as defined in 26USC Sec. 42(g)(2)) is 60 percent of the MFI. A rent may not exceed 30 percent of this imputed income limitation under 26USC Sec. 42(g)(2). Unit rents by number of bedrooms are derived from Very Low Income Limits (VLILs) for the different household sizes according to the following table:

LIHTC Maximum Rent Derivation from HUD Very Low Income Limits (VLILs)

12. What is the national non-metro median to be used to calculate the floor on rural LIHTC rents?
A: Section 3004 of the Housing and Economic Recovery Act (HERA) specifies that any project for residential rental property located in a rural area (as defined in section 520 of the Housing Act of 1949) use the maximum of the area median gross income or the national non-metropolitan median income. The FY 2011 non-metropolitan median income is: $51,600.
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GO Zones:

13. 13. What is are the income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005 (also based on the non-metropolitan median income of $51,600)?
A: The 1-8 Person 50% Income Limits are as follows:

• Incomes limits have fallen in my area but haven’t done so in the past, why did this happen?
  
• Given the recession that our area has experienced in recent years, why have income limits increased?
  
• Why does my very low income limit not equal 50% of my median family income (MFI) (or my low-income limit not equal 80% of my MFI)?
  
• How does HUD update median family incomes?
  
• Why do area definitions change for the income limits and median family income estimates?
  
• What is the relationship between Fair Market Rent areas and Income Limit areas?
  
• What does the term "HMFA" mean?
  
• How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
  
• What are Multifamily Tax Subsidy Projects?
  
• How can 60 percent income limits be calculated?
  
• How are Low Income Housing Tax Credit maximum rents computed from the very low income limits?
  
• What is the national non-metro median to be used to calculate the floor on rural LIHTC rents?
  
• What is are the income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005 (also based on the non-metropolitan median income of $51,600)?
  
  
  

1. Incomes limits have fallen in my area but haven’t done so in the past, why did this happen?
A: Beginning with FY 2010 Income Limits, HUD has eliminated its long standing "hold harmless" policy. HUD’s "hold harmless" policy maintained Section 8 income limits for certain areas at previously published levels when reductions would otherwise have resulted from changes in median family income estimates, housing cost adjustment data, median family income update methodology, income limit methodology, or metropolitan area definitions. HUD eliminated the "hold harmless" policy to ensure better alignment between an area’s most recent income experience and the income thresholds for housing assistance.

Furthermore, in an effort to minimize disruptions in the operation of the section 8 Housing Choice Voucher program, HUD has instituted maximum thresholds for the amount income limits can change from year to year. The new policy limits annual increases in income limits to 5 percent or twice the change in the national median family income, whichever is greater. For areas where income limits are decreasing, HUD limits the decrease to no more than 5 percent per year.

Notice of this change can be found in the Federal Register notices of September 14, 2009, and October 7, 2009, that solicited public comments on HUD’s proposal to discontinue its "hold harmless" policy and the Federal Register notice of May 17, 2010 ¹ discussing the submitted comments. HOME Investment Partnerships program (HOME) rents, based in part on HUD Section 8 Income Limits, will continue to be held harmless and income limits for rural housing programs will continue their current hold-harmless policy at the request of the Rural Housing Service, because these limits are based on area definitions and program rules specified by the Rural Housing Service of the Department of Agriculture.


¹ Subsequent to the publication of the Federal Register Notice announcing the discontinuation of the "hold-harmless" policy, HUD received a request to hold rents harmless for the FDIC programs. HUD has complied with this request and has issued tables to FDIC with rents that do not decline.

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2. Given the recession that our area has experienced in recent years, why have income limits increased?
A: Although HUD uses the most recent data available concerning local area incomes, there is still a lag between when the data are collected and when the data are available for use. For example, FY2010 Income Limits are calculated using 2006-2008 3-year American Community Survey (ACS) data. These data were collected between 2005 and 2008. The effects of the latest recession on local area incomes are most likely to be detected in subsequent ACS years.

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3. Why does my very low income limit not equal 50% of my median family income (MFI) (or my low-income limit not equal 80% of my MFI)?
A: There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas. These exceptions are detailed in the FY 2010 Income Limits Briefing Material report, at the following site: https://www.huduser.gov/portal/datasets/il/il10/IncomeLimitsBriefingMaterial_FY10.pdf. Please review this report and pay special attention to Attachments 3 and 4 that list the exceptions for metropolitan areas. Please also note that Tables 1 and 2 (beginning on page 7) show that most nonmetropolitan area income limits are based on state nonmetropolitan area medians.

For further information on the exact adjustments made to any area of the country, please see our FY2010 Income Limits Documentation System. The documentation system is available at: https://www.huduser.gov/portal/datasets/il/index_il2010.html. Once the area in question is selected, a summary of the area’s median family income estimate, Very Low-Income, Extremely Low-Income, and Low-Income Limits are displayed. Detailed calculations are obtained by selecting the relevant links.

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Median Family Incomes

4. How does HUD update median family incomes?
A: The FY 2010 MFI estimation relies on three-year American Community Survey (ACS) data (collected for 2006, 2007 and 2008). The manner in which the ACS data are used depends on the type of data available, which differs by place size. Local ACS MFI estimates are available for areas with populations of 20,000 or more, but the statistical reliability of these estimates differs. When local MFI estimates are available, HUD MFI estimates are based partly on local ACS estimates and partly on state-level ACS estimates. The higher the statistical reliability of local estimates, the more heavily they are used. Local ACS MFI estimates are used in inverse proportion to the size of their margins of error ratios (the numbers computed by adding and subtracting the published margins of error ratios, or MoERs, from the median family income estimates form the "90 percent confidence intervals" for the estimates. There is a 90 percent probability that any random sample of the same size from the population will yield an estimate of the median family income in this range).

In practice, estimates for areas with small MoERs are almost entirely based on local ACS estimates but, where MoERs are large, state-level estimates more heavily influence results. For areas without local ACS estimates, update factors are generated using only state-level 2000 Census to 2008 ACS MFI change. All estimates are then updated from December 2008 to April 2010 using a trend factor of 3.0 percent, which reflects the average annual change in median income from 2000 to 2008.

For additional details concerning the use of the ACS in HUD’s calculations of Median Family Income, please see our FY2010 Income Limits Briefing Materials, Attachment 2 which can be found at the following web address: https://www.huduser.gov/datasets/il/il10. Additionally, full documentation of all calculations for Median Family Income and Income Limits is available in our FY2010 Income Limits Documentation System. This system is available at this web address: https://www.huduser.gov/portal/datasets/il/index_il2010.html

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Area Definitions:

5. Why do area definitions change for the income limits and median family income estimates?
A: HUD follows Office of Management and Budget (OMB) definitions of metropolitan areas with some exceptions. In 2006, when HUD implemented the widespread area definition changes OMB made based on the 2000 Decennial Census, exceptions were made to the new OMB area definitions when Fair Market Rent (FMR) or MFI changes for new areas were greater than five percent. HUD created exception subareas, called HUD Metro FMR Areas, which continue to exist today. The FMR and MFI relationships continue to be evaluated and these exception areas may go away.

In addition, OMB makes annual area definitional changes that include name changes for primary cities in metropolitan areas, and new subareas of core-based statistical areas, as well as the creation of new nonmetropolitan counties, the splitting of some metropolitan areas and the inclusion of nonmetropolitan counties in metropolitan areas. OMB updates its metropolitan area definitions periodically based on updated population counts and updated commuting data collected by the Bureau of the Census. Changes to HUD geographic areas (Fair Market Rent areas and Section 8 Income Limit areas) are due to these changes published by OMB. (http://www.whitehouse.gov/omb/assets/bulletins/b10-02.pdf). For a complete description of the area definitions a used in the FY 2010 Income Limits, please review the FY 2010 Income Limits Area Definitions report: https://www.huduser.gov/portal/datasets/il/il10/index.html

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6. What is the relationship between Fair Market Rent areas and Income Limit areas?
A: With minor exceptions, Fair Market Rent areas and Income Limit areas are identical. HUD uses FMR areas in calculating income limits because FMRs are needed for the calculation of some income limits; specifically to determine high and low housing cost adjustments. Also, the two sets of area definitions are linked in statutory history. The two exceptions to the similarity between Fair Market Rent areas and Income Limit areas are Columbia, MD and Rockland NY. Due to a grandfather clause, independent FMRs are calculated for Columbia, MD, but income limits are not. By statute, income limits are calculated for Rockland County, NY while separate FMRs are not. Furthermore, depending on when OMB releases new area definitions, HUD may be able to incorporate these changes into income limits before they are implemented into FMRs.

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7. What does the term "HMFA" mean?
A: HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB. See OMB’s bulletin establishing CBSA definitions for FY 2010 at http://www.whitehouse.gov/omb/assets/bulletins/b10-02.pdf.

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8. How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
A: The FY 2010 Income Limits Area Definitions report places a "CBSA" in front of those areas where all counties in the CBSA are used in the calculation; an "SA" is placed in front of those areas where only the counties or towns of the subarea are used. Note that HUD Metro FMR Areas (HMFAs) are not the same as CBSAs, but that an HMFA’s income limits may be based on CBSA data. To determine if income estimates are based on the subarea or CBSA income, please review the FY 2010 Income Limits Area Definitions report at: https://www.huduser.gov/portal/datasets/il/il10/index.html

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Multifamily Tax Subsidy Projects (MTSPs) (otherwise known as Low-Income Tax Credit projects (LIHTC))

9. What are Multifamily Tax Subsidy Projects?
A: Multifamily Tax Subsidy Projects (MTSPs), a term coined by HUD, are all Low Income Housing Tax Subsidy projects under Section 42 of the I.R.S. Code and multifamily projects funded by tax-exempt bonds under Section 142. These projects may have special income limits so HUD has published them on a separate webpage. If you are a tax credit developer or resident in an MTSP, please go to the following site to determine what the appropriate income limits are: https://www.huduser.gov/portal/datasets/mtsp.html

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10. How can 60 percent income limits be calculated?
A: For the Low Income Housing Tax Credit program, users should refer to the FY2010 Multifamily Tax Subsidy Project income limits available at https://www.huduser.gov/portal/datasets/mtsp.html. The formula used to compute these income limits is as follows: take 120 percent of the Very Low-Income Limit. Do not calculate income limit percentages based on a direct arithmetic relationship with the MFI; there are too many exceptions made to the arithmetic rule in computing income limits.

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11. How are Low Income Housing Tax Credit maximum rents computed from the very low income limits?
A: Please consult with the state housing financing agency governing the tax credit project in question for official maximum rental rates. A list of state housing finance agencies can be found at http://lihtc.huduser.gov/agency_list.htm. The Low Income Housing Tax Credit program is a U.S. Treasury Department program; therefore, HUD has no official authority over setting maximum rental rates. The following table is included for informational purposes only.

The imputed income limitation (as defined in 26USC Sec. 42(g)(2)) is 60 percent of the MFI. A rent may not exceed 30 percent of this imputed income limitation under 26USC Sec. 42(g)(2). Unit rents by number of bedrooms are derived from Very Low Income Limits (VLILs) for the different household sizes according to the following table:

12. What is the national non-metro median to be used to calculate the floor on rural LIHTC rents?
A: Section 3004 of the Housing and Economic Recovery Act (HERA) specifies that any project for residential rental property located in a rural area (as defined in section 520 of the Housing Act of 1949) use the maximum of the area median gross income or the national non-metropolitan median income. The FY 2010 non-metropolitan median income is: $51,600.

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GO Zones:

13. What is are the income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005 (also based on the non-metropolitan median income of $51,600)?
A: The 1-8 Person 50% Income Limits are as follows:

Frequently Asked Questions

• Incomes have fallen in my area, why haven't income limits?
  
• Income Limits in my area have been the same for many years. Why is that?
  
• Incomes in my area have gone up in recent years, why hasn’t the income limit for our area gone up?
  
• Why does my very low income limit not equal 50% of my median family income (MFI) (or my low-income limit not equal 80% of my MFI)?
  
• How are median family incomes updated?
  
• Why do area definitions change for the income limits and median family income estimates?
  
• What is the relationship between Fair Market Rent areas and Income Limit areas?
  
• What does the term "HMFA" mean?
  
• How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
  
• What are Multifamily Tax Subsidy Projects?
  
• How can 60 percent income limits be calculated?
  
• How are Low Income Housing Tax Credit maximum rents computed from the very low income limits?
  
• What is the national non-metro median to be used to calculate the floor on rural LIHTC rents?
  
• What is are the income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005 (also based on the non-metropolitan median income of $51,300)?
  
  

1. Incomes have fallen in my area, why haven't income limits?
A: There are two reasons income limits may not reflect your experience with incomes in your area. First, income limits are not allowed to decline, so even if the underlying data shows a decrease (in the median family income) income limits would not go down; they would stay at the same level they were at the previous year. This policy, which HUD calls "hold harmless" is going to be eliminated next year, so income limits will show declines in the future.

Second, the lack of timely family income data prevents HUD from capturing recent declines in income. HUD uses the most current income data available to update its median family incomes, the basis for income limits. FY2009 Income Limits are based on American Community Survey data collected in 2007 when the economy was in much better shape and unemployment was much lower.

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2. Income Limits in my area have been the same for many years. Why is that?
A: Either your income limit has been "held harmless" sometime in the past or your incomes are currently falling. Incomes in your area may have been higher sometime in the past; your current income limit reflects those higher incomes. Under the "hold harmless" policy, your income limit will not increase until the incomes in your area exceed their historical high.

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3. Incomes in my area have gone up in recent years, why hasn’t the income limit for our area gone up?
A: Please see the answer to question 1.

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4. Why does my very low income limit not equal 50% of my median family income (MFI) (or my low-income limit not equal 80% of my MFI)?
A: There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas. These exceptions are detailed in the FY2009 Income Limits Briefing Material report, at the following site: https://www.huduser.gov/datasets/il/il09/IncomeLimitsBriefingMaterial_FY09.pdf. Please review this report and pay special attention to Attachments 3 and 4 that list the exceptions for metropolitan areas. Please also note that Tables 1 and 2 (beginning on page 8) show that most nonmetropolitan area income limits are based on state nonmetropolitan area medians.

For further information on the exact adjustments made to any area of the country, please see our FY2009 Income Limits Documentation System. The documentation system is available at: https://www.huduser.gov/datasets/il/index_il2009.html. Once the area in question is selected, a summary of the area’s median family income estimate, Very Low-Income, Extremely Low-Income, and Low-Income Limits are displayed. Detailed calculations are obtained by selecting the relevant links.

back to top

Median Family Incomes

5. How are median family incomes updated?
A: The FY 2009 MFI estimation relies on three-year American Community Survey (ACS) data (collected in 2005, 2006 and 2007). The manner in which the ACS data are used depends on the type of data available, which differs by place size. Local ACS MFI estimates are available for areas with populations of 20,000 or more, but the statistical reliability of these estimates differs. When local MFI estimates are available, HUD MFI estimates are based partly on local ACS estimates and partly on state-level ACS estimates. The higher the statistical reliability of local estimates, the more heavily they are used. Local ACS MFI estimates are used in inverse proportion to the size of their margins of error ratios (the numbers computed by adding and subtracting the published margins of error ratios, or MoERs, from the median family income estimates form the "90 percent confidence intervals" for the estimates. There is a 90 percent probability that any random sample of the same size from the population will yield an estimate of the median family income in this range).

In practice, estimates for areas with small MoERs are almost entirely based on local ACS estimates but, where MoERs are large, state-level estimates more heavily influence results. For areas without local ACS estimates, update factors are generated using only state-level 2000 Census to 2007 ACS MFI change. All estimates are then updated from December 2007 to April 2009 using a trend factor of 3.0 percent, which reflects the average annual change in median income from 2000 to 2007.

For additional details concerning the use of the ACS in HUD’s calculations of Median Family Income, please see our FY2009 Income Limits Briefing Materials, Attachment 2 which can be found at the following web address: https://www.huduser.gov/datasets/il/il09. Additionally, full documentation of all calculations for Median Family Income and Income Limits is available in our FY2009 Income Limits Documentation System. This system is available at this web address: https://www.huduser.gov/datasets/il/index_il2009.html.

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Area Definitions:

6. Why do area definitions change for the income limits and median family income estimates?
A: HUD follows Office of Management and Budget (OMB) definitions of metropolitan areas with some exceptions. (a discussion of HUD exceptions to OMB metropolitan areas can be found at:) OMB updates its metropolitan area definitions periodically based on updated population counts and updated commuting data collected by the Bureau of the Census. Changes to HUD geographic areas (Fair Market Rent areas and Section 8 Income Limit areas) are due to these changes published by OMB. (http://www.whitehouse.gov/omb/bulletins/fy2008/b08-01.pdf). For a complete description of the area definitions a used in the FY 2009 Income Limits, please review the FY 2009 Income Limits Area Definitions report: https://www.huduser.gov/datasets/il/il09/index.html.

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7. What is the relationship between Fair Market Rent areas and Income Limit areas?
A: With two exceptions, Fair Market Rent areas and Income Limit areas are identical. HUD uses FMR areas in calculating income limits because FMRs are needed for the calculation of some income limits; specifically to determine high and low housing cost adjustments. Also, the two sets of area definitions are linked in statutory history. The two exceptions to the similarity between Fair Market Rent areas and Income Limit areas are Columbia, MD and Rockland NY. Due to a grandfather clause, independent rents are calculated for Columbia, MD while Income Limits area not and, by congressional direction, Income Limits are calculated for Rockland County, NY while separate rents are not.

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8. What does the term "HMFA" mean?
A: HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB. See OMB’s bulletin establishing CBSA definitions for FY2009 atHUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB. See OMB’s bulletin establishing CBSA definitions for FY2009 at http://www.whitehouse.gov/omb/bulletins/fy2008/b08-01.pdf.

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9. How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
A: The FY2009 Income Limits Area Definitions report places a "CBSA" in front of those areas where all counties in the CBSA are used in the calculation; an "SA" is placed in front of those areas where only the counties or towns of the subarea are used. Note that HUD Metro FMR Areas (HMFAs) are not the same as CBSAs, but that an HMFA's income limits may be based on CBSA data. To determine if income estimates are based on the subarea or CBSA income, please review the FY 2009 Income Limits Area Definitions report at: https://www.huduser.gov/datasets/il/il09/index.html.

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Multifamily Tax Subsidy Projects (MTSPs) (otherwise known as Low-Income Tax Credit projects (LIHTC))

10. What are Multifamily Tax Subsidy Projects?
A: Multifamily Tax Subsidy Projects (MTSPs), a term coined by HUD, are all Low Income Housing Tax Subsidy projects under Section 42 of the I.R.S. Code and multifamily projects funded by tax-exempt bonds under Section 142. These projects may have special income limits so HUD has published them on a separate webpage. If you are a tax credit developer or resident in an MTSP, please go to the following site to determine what the appropriate income limits are: https://www.huduser.gov/datasets/mtsp.html.

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11. How can 60 percent income limits be calculated?
A: For the Low Income Housing Tax Credit program, users should refer to the FY2009 Multifamily Tax Subsidy Project income limits available at https://www.huduser.gov/datasets/mtsp.html. The formula used to compute these income limits is as follows: take 120 percent of the Very Low-Income Limit. Do not calculate income limit percentages based on a direct arithmetic relationship with the MFI; there are too many exceptions made to the arithmetic rule in computing income limits.

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12. How are Low Income Housing Tax Credit maximum rents computed from the very low income limits?
A: Please consult with the state housing financing agency governing the tax credit project in question for official maximum rental rates. A list of state housing finance agencies can be found at http://lihtc.huduser.gov/agency_list.htm. The Low Income Housing Tax Credit program is a U.S. Treasury Department program; therefore, HUD has no official authority over setting maximum rental rates. The following table is included for informational purposes only.

The imputed income limitation (as defined in 26USC Sec. 42(g)(2)) is 60 percent of the MFI. A rent may not exceed 30 percent of this imputed income limitation under 26USC Sec. 42(g)(2). Unit rents by number of bedrooms are derived from Very Low Income Limits (VLILs) for the different household sizes according to the following table:

13. What is the national non-metro median to be used to calculate the floor on rural LIHTC rents?
A: Section 3004 of the Housing and Economic Recovery Act (HERA) specifies that any project for residential rental property located in a rural area (as defined in section 520 of the Housing Act of 1949) use the maximum of the area median gross income or the national non-metropolitan median income. The FY2009 non-metropolitan median income is: $51,300.

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GO Zones:

13. What is are the income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005 (also based on the non-metropolitan median income of $51,300)?
A: The 1-8 Person 50% Income Limits are as follows:

Frequently Asked Questions

• Why is my income limit unchanged from last year?
  
• Why did some area median family income (MFI) estimates decrease in FY2008 even though the OMB definition of the area did not change?
  
• Why did the area definitions change for the income limits and median family income estimates?
  
• Why does my very low-income limit not equal 50% of my median family income (MFI) (or my low income limit not equal 80% of my MFI)?
  
• What does the term “HMFA” mean?
  
• How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
  
• How can 60 percent income limits be calculated?
  
• How are Low Income Housing Tax Credit maximum rents computed from the very low-income limits?
  
• What is the FY2008 State Non-Metro Median Family Income and what are the associated income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005?
  
  

1. Why is my income limit unchanged from last year?
A: Income limits may be unchanged from last year either because area incomes or other factors governing local income limits did not increase or because income limits would otherwise be lower but have been administratively frozen rather than allowed to decrease. HUD has in the past selectively frozen income limits in instances where a reduction resulted from changes in income estimates, income estimation methodology, or income limit methodology.

2. Why did some area median family income (MFI) estimates decrease in FY2008 even though the OMB definition of the area did not change?
A: Some area median family incomes changed because incomes are falling in the area. The FY 2008 MFI estimation relies on 2006 American Community Survey (ACS) data as well as 2006 Bureau of Labor Statistics (BLS) wage data. The manner in which the ACS data are used depends on the type of data available, which differs by place size. Local ACS MFI estimates are available for areas with populations of 65,000 or more, but the statistical reliability of these estimates differs. When local MFI estimates are available, HUD MFI estimates are based partly on local ACS estimates and partly on state-level ACS estimates. The higher the statistical reliability of local estimates, the more heavily they are used. Local ACS MFI estimates are used in inverse proportion to the size of their margins of error (the numbers computed by adding and subtracting the published margins of error, or MoEs, from the median family income estimates form the "90 percent confidence intervals" for the estimates. There is a 90 percent probability that any random sample of the same size from the population will yield an estimate of the median family income in this range).

In practice, estimates for areas with small MoEs are almost entirely based on local ACS estimates but, where MoEs are large, state-level estimates more heavily influence results. For areas without local ACS estimates, update factors are generated using a combination of state-level 2000 Census to 2006 ACS MFI change and local area BLS wage change data. All estimates are then updated from December 2006 to April 2008 using a trend factor of 3.5 percent, which reflects the average annual change in median income from 1990 to 2000.

Due to several factors, ACS income estimates are known to be lower than those generated from the 2000 decennial Census when both are inflated to the same point in time. For additional details concerning the use of the ACS in HUD's calculations of Median Family Income, please see our FY 2008 Income Limits Briefing Materials, Attachment 2 (pages 15 - 18) which can be found at the following web address: https://www.huduser.gov/datasets/il/il08/IncomeLimitsBriefingMaterial.pdf. Additionally, full documentation of all calculations for Median Family Income and Income Limits is available in our FY 2008 Income Limits Documentation System. This system is available at this web address: https://www.huduser.gov/datasets/il/il2008_docsys.html.

3. Why did the area definitions change for the income limits and median family income estimates?
A: The area definitions used for income limits and median family income estimates follow the areas determined for the Fair Market Rents (FMRs) for that fiscal year. The definition of only a few areas changed in FY 2008 compared with FY 2007. These changes were due to changes published by OMB promoting two Micropolitan Statistical Areas to Metropolitan Statistical Areas (http://www.whitehouse.gov/omb/bulletins/fy2007/b07-01.pdf).

HUD uses FMR areas in calculating income limits because FMRs are used in the calculation of certain income limits and the two sets of definitions are linked in statutory history. For a complete description of the area definitions a used in the FY 2008 Income Limits, please review the FY 2008 Income Limits Area Definitions report: https://www.huduser.gov/datasets/il/il08/Area_Definitions_Report.pdf.

4.Why does my very low-income limit not equal 50% of my median family income (MFI) (or my low income limit not equal 80% of my MFI)?
A: There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas. These exceptions are detailed in the FY 2008 Income Limits Briefing Material report. Please review this report and pay special attention to Attachments 3 and 4 (beginning on page 19) that list the exceptions for metropolitan areas. Please also note that Tables 1 and 2 (beginning on page 5) show that most nonmetropolitan area income limits are based on state nonmetropolitan area medians.

For further information on the exact adjustments made to any area of the country, please see our FY 2008 Income Limits Documentation System. The documentation system is available at: https://www.huduser.gov/datasets/il/il2008_docsys.html. Once the area in question is selected, a summary of the area’s median family income estimate, Very Low-Income, Extremely Low-Income, and Low-Income Limits are displayed. Detailed calculations are obtained by selecting the relevant links.

5. What does the term "HMFA" mean?
A: HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB. See OMB’s bulletin establishing the current CBSA definitions at http://www.whitehouse.gov/omb/bulletins/fy2007/b07-01.pdf.

6. How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
A: The FY 2008 Income Limits Area Definitions report places a "CBSA" in front of those areas where all counties in the CBSA are used in the calculation; an "SA" is placed in front of those areas where only the counties or towns of the subarea are used. Note that HUD Metro FMR Areas (HMFAs) are not the same as CBSAs, but that an HMFA's income limits may be based on CBSA data. To determine if income estimates are based on the subarea or CBSA income, please review the FY 2008 Income Limits Area Definitions report at: https://www.huduser.gov/datasets/il/il08/Area_Definitions_Report.pdf.

7. How can 60 percent income limits be calculated?
A: HUD recommends you take 120 percent of the Very Low Income Limit. Do not calculate income limit percentages based on a direct arithmetic relationship with the MFI; there are too many exceptions made to the arithmetic rule in computing income limits. For the Low Income Housing Tax Credit program, Revenue Ruling 89-24 states that "…40 percent of the applicable units must be occupied by individuals or families having incomes equal to 120 percent or less of the income limit for a very low income family of the same size."

8. How are Low Income Housing Tax Credit maximum rents computed from the very low-income limits?
A: The imputed income limitation (as defined in 26USC Sec. 42(g)(2)) is 60 percent of the MFI. A rent may not exceed 30 percent of this imputed income limitation under 26USC Sec. 42(g)(2). Unit rents by number of bedrooms are derived from Very Low Income Limits (VLILs) for the different household sizes according to the following table:

9. What is the FY2008 State Non-Metro Median Family Income and what are the associated income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005?
A: A. The FY 2008 State Non-Metro Median Family Income is estimated to be $49,300. The 1-8 Person 50% Income Limits are as follows:

Frequently Asked Questions

• Why is my income limit unchanged from last year?
  
• Why did some area median family income (MFI) estimates decrease in FY2007 even though the OMB definition of the area did not change?
  
• Why did the area definitions change for the income limits and median family income estimates?
  
• Why can’t I find the income limits for a particular nonmetropolitan county or a metropolitan area?
  
• Why does my very low-income limit not equal 50% of my median family income (MFI) (or my low income limit not equal 80% of my MFI)?
  
• What does the term “HMFA” mean?
  
• How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
  
• How can 60 percent income limits be calculated?
  
• How are Low Income Housing Tax Credit maximum rents computed from the very low-income limits?
  
• What is the FY2007 State Non-Metro Median Family Income and what are the associated income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005?
  
  

1. Why is my income limit unchanged from last year?
A: Income limits may be unchanged from last year either because area incomes or other factors governing local income limits did not increase or because income limits would otherwise be lower but have been administratively frozen rather than allowed to decrease. HUD has in the past selectively frozen income limits in instances where a reduction resulted from changes in income estimates, income estimation methodology, or income limit methodology.

2. Why did some area median family income (MFI) estimates decrease in FY2007 even though the OMB definition of the area did not change?
A: Some area median family incomes changed because incomes are falling in the area. Others declined because FY2007 HUD MFI estimates reflect, for the first time, results from the fully implemented ACS, which was conducted in 2005. The manner in which the ACS data are used depends on the type of data available, which differs by place size. Local ACS MFI estimates are available for areas with populations of 65,000 or more, but the statistical reliability of these estimates differs. When local MFI estimates are available, HUD MFI estimates are based partly on local ACS estimates and partly on state-level ACS estimates. The higher the statistical reliability of local estimates, the more heavily they are used. Local ACS MFI estimates are used in inverse proportion to the size of their margins of error (the numbers computed by adding and subtracting the published margins of error, or MoEs, from the median family income estimates form the “90 percent confidence intervals” for the estimates. There is a 90 percent probability that any random sample of the same size from the population will yield an estimate of the median family income in this range).

In practice, estimates for areas with small MoEs are almost entirely based on local ACS estimates but, where MoEs are large, state-level estimates more heavily influence results. For areas without local ACS estimates, update factors are generated using a combination of state-level 2000 Census to 2005 ACS MFI change and local area BLS wage change data. All estimates are then updated from December 2005 to April 2007 using a trend factor of 3.5 percent, which reflects the average annual change in median income from 1990 to 2000.

Due to several factors, ACS income estimates are known to be lower than those generated from the 2000 decennial Census when both are inflated to the same point in time. For additional details concerning the use of the ACS in HUD’s calculations of Median Family Income, please see our FY2007 Income Limits Briefing Materials, Attachment 2 (pages 15 – 19) which can be found at the following web address: https://www.huduser.gov/datasets/il/il07/IncomeLimitsBriefingMaterial.pdf. Additionally, full documentation of all calculations for Median Family Income and Income Limits is available in our FY2007 Income Limits Documentation System. This system is available at this web address: https://www.huduser.gov/datasets/il/il2007_docsys.html

3. Why did the area definitions change for the income limits and median family income estimates?
A: The area definitions used for income limits and median family income estimates follow the areas determined for the Fair Market Rents (FMRs) for that fiscal year. The definition of only a few areas changed in FY2007 compared with FY2006. These changes were due to a change in the methodology for determining FMR area definitions. The actual calculation and comparison for an individual area can be seen in the FY2007 FMR Documentation System: https://www.huduser.gov/datasets/fmr/fmrs/index.asp?data=fmr07.

Most of the changes in area definition occurred in FY2006 and are discussed in detail by individual area in the FY2006 FMR Documentation system: https://www.huduser.gov/datasets/fmr/fmrs/index.asp?data=fmr06

In FY2006, HUD revised the area definitions for income estimates based on guidance from the Office of Management and Budget (OMB) that revised metropolitan areas using 2000 Census data. Under the new OMB area definitions, some former nonmetropolitan counties became part of metropolitan areas, and some metropolitan areas were subsumed within other areas, or their names have been significantly changed. In instances where OMB metropolitan area definitions changed, HUD’s areas may consist of subareas within the new OMB metropolitan area. In FY2007, subareas are established only if there are significant differences (5 percent or more) in rents or median incomes between the different old FMR area parts that comprise the new OMB metropolitan area.

HUD uses FMR areas in calculating income limits because FMRs are used in the calculation of certain income limits and the two sets of definitions are linked in statutory history. For a complete description of the area definitions a used in the FY2007 Income Limits, please review the FY2007 Income Limits Area Definitions report: https://www.huduser.gov/datasets/il/il07/Area_Definitions_Report.pdf

4. Why can’t I find the income limits for a particular nonmetropolitan county or a metropolitan area?
A: There were few changes in the area definitions between FY2006 and FY2007 income limits. Some additional subareas were created, but most changes were made in FY2006. The FY2006 area definition changes are discussed in detail for individual areas in the documentation system for Fair Market Rents (FMRs) https://www.huduser.gov/datasets/fmr/fmrs/index.asp?data=fmr06. HUD uses FMR areas in calculating income limits because FMRs are used in the calculation of certain income limits and the two sets of definitions are linked in statutory history.

In FY2007, median family incomes and income limits area definitions were changed only in cases where there were significant differences (greater than 5%) in median incomes between the subarea and the Core Based Statistical area, even though the Fair Market Rents show no significant difference. The area definitions report for income limits designates the basis of each submarket’s income limits. Please review at https://www.huduser.gov/datasets/il/il07/Area_Definitions_Report.pdf

To understand the more significant area definition changes in FY2006, please review the FY2006 Income Limits Area Definitions report: https://www.huduser.gov/datasets/il/il06/Definitions06.doc

5. Why does my very low-income limit not equal 50% of my median family income (MFI) (or my low income limit not equal 80% of my MFI)?
A: There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas. These exceptions are detailed in the FY2007 Income Limits Briefing Material report. Please review this report and pay special attention to Attachments 3 and 4 (beginning on page) that list the exceptions for metropolitan areas. Please also note that Tables 1 and 2 (beginning on page 7) show that most nonmetropolitan area income limits are based on state nonmetropolitan area medians.

For further information on the exact adjustments made to any area of the country, please see our FY2007 Income Limits Documentation System. The documentation system is available at: https://www.huduser.gov/datasets/il/il2007_docsys.html. Once the area in question is selected, a summary of the area’s median family income estimate, Very Low-Income, Extremely Low-Income, and Low-Income Limits are displayed. Detailed calculations are obtained by selecting the relevant links.

6. What does the term "HMFA" mean?
A: HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB. See OMB’s bulletin establishing the current CBSA definitions at http://www.whitehouse.gov/omb/bulletins/fy2006/b06-01.pdf.

7. How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
A: The FY2007 Income Limits Area Definitions report places a “CBSA” in front of those areas where all counties in the CBSA are used in the calculation; an “SA” is placed in front of those areas where only the counties or towns of the subarea are used. Note that HUD Metro FMR Areas (HMFAs) are not the same as CBSAs, but that an HMFA’s income limits may be based on CBSA data. To determine if income estimates are based on the subarea or CBSA income, please review the FY2007 Income Limits Area Definitions report at: https://www.huduser.gov/datasets/il/il07/Area_Definitions_Report.pdf

8. How can 60 percent income limits be calculated?
A: HUD recommends you take 120 percent of the Very Low Income Limit. Do not calculate income limit percentages based on a direct arithmetic relationship with the MFI; there are too many exceptions made to the arithmetic rule in computing income limits. For the Low Income Housing Tax Credit program, the Revenue Ruling 89-24 states that “…40 percent of the applicable units must be occupied by individuals or families having incomes equal to 120 percent or less of the income limit for a very low-income family of the same size.”

9. How are Low Income Housing Tax Credit maximum rents computed from the very low-income limits?
A: The imputed income limitation (as defined in 26USC Sec. 42(g)(2)) is 60 percent of the MFI. A rent may not exceed 30 percent of this imputed income limitation under 26USC Sec. 42(g)(2). Unit rents by number of bedrooms are derived from Very-Low Income Limits (VLILs) for the different household sizes according to the following table:

10. 10. What is the FY2007 State Non-Metro Median Family Income and what are the associated income limits used for certain provisions of the Gulf Opportunity Zone (GO Zone) Act of 2005?
A: A. The FY2007 State Non-Metro Median Family Income is estimated to be $47,300. Since this is less than the FY2006 estimate of $47,700, the associated income limits will be held harmless and maintained at the FY2006 level. The 1-8 Person 50% Income Limits are as follows:

Frequently Asked Questions

• Why did the area definitions change for the income limits and median family income?
  
• Why can't I find the income limits for a particular nonmetropolitan county or a metropolitan area?
  
• Why does my very low income limit not equal 50% of my median family income (MFI) (or my low income limit not equal 80% of my MFI)?
  
• Why is my income limit lower or unchanged from last year?
  
• Why did some area median family income estimates decrease in FY2006 even though the OMB definition of the area did not change?
  
• Why were the Bergen-Passaic, Monmouth-Ocean, Fort Lauderdale and West Palm Beach areas treated differently?
  
• What does the term “HMFA” mean?
  
• How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
  
• How can 60 percent income limits be calculated?
  
• How are Low Income Housing Tax Credit maximum rents computed from the very low income limits?
  
• Has the rounding policy for medians and income limits changed since last year?
  

1. Why did the area definitions change for the income limits and median family income estimates?
A: In a Federal Register notice published December 16, 2005, HUD proposed changes in the metropolitan area definitions used to calculate HUD median family income estimates and income limits. These new definitions, which match FY2006 FMR areas, were used in the new HUD estimates that became effective March 8, 2006. The new definitions are based on the current Office of Management and Budget (OMB) metropolitan statistical area (MSA) definitions, but divide OMB areas along the old FMR area lines in cases where significant differences in rents or median incomes exist. OMB revises metropolitan area definitions after each Decennial Census. It issued its 2000 Census-based definitions in 2003, which contained substantial changes to several metropolitan area definitions. These changes were made to better reflect metropolitan area commuting and patterns of economic integration. The OMB metropolitan area definitions are used on a widespread basis throughout the federal government for both data collection and program administrative purposes.

For further explanation, please review the December 16, 2005 Federal Register notice in which HUD proposed changes in the metropolitan areas definitions used to calculate HUD median family income estimates and income limits: https://www.huduser.gov/datasets/il/il06/FY06_ProposedMeth.pdf.

2. Why can’t I find the income limits for a particular nonmetropolitan county or a metropolitan area?
A: HUD revised the FMR and income limit area definitions based on guidance from the Office of Management and Budget (OMB) that revised metropolitan areas using 2000 Census data. Some former nonmetropolitan counties are now part of metropolitan areas, and some metropolitan areas have been subsumed within other areas, or their names have been significantly changed. In instances where OMB metropolitan area definitions have changed, HUD’s FMR areas may consist of submarket areas within the new OMB metropolitan area. Submarkets are established only if there are significant differences in rents or median incomes between the different old FMR areas that comprise the new OMB metropolitan area. HUD uses FY2006 FMR areas in calculating FY2006 income limits because FMRs are used in the calculation of certain income limits and the two sets of definitions are linked in statutory history. For a complete description of OMB metropolitan area definitions and HUD FMR area definitions, please review the FY2006 Income Limits Area Definitions report: https://www.huduser.gov/datasets/il/il06/Definitions06.doc.

3. Why does my very low income limit not equal 50% of my median family income (MFI) (or my low income limit not equal 80% of my MFI)?
A: There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas. These exceptions are detailed in the FY2006 Income Limits Briefing Material report. Please review this report and pay special attention to Attachments 3 and 4 (beginning on page 19), that list the exceptions for metropolitan areas. Please also note that Tables 1 and 2 (beginning on page 7) show that most nonmetropolitan area income limits are based on state nonmetropolitan area medians: https://www.huduser.gov/datasets/il/il06/BRIEFING-MATERIALs.pdf.

4. Why is my income limit lower or unchanged from last year?
A: Income limits may be unchanged from last year either because area incomes or other factors governing local income limits did not increase or because income limits would normally be lower but have been administratively frozen rather than allowed to decrease. HUD has in the past selectively frozen income limits in instances where a reduction resulted from changes in income estimates, income estimation methodology, or income limit methodology. The widespread scope of the area definitional changes for the FY2006 income limits made the application of a simple hold harmless policy difficult. A primary area hold harmless policy was applied to the FY2006 income limits. Under this policy, if a new metropolitan area included parts of two old FMR/income limit areas, the income limits would not be allowed to fall below the FY2005 income limits of the largest part of the new area in FY2006. The only areas where income limits were decreased in FY2006 were those that were merged into a more populous income limit area and the larger area’s income limits were less than the smaller area’s FY2005 income limits.

5. Why did some area median family income estimates decrease in FY2006 even though the OMB definition of the area did not change?
A: A modest number of areas had decreases in their FY2006 median family income estimates. This sometimes occurred because of changes in OMB metropolitan area definitions that resulted in new estimates that were lower than the FY2005 estimates for parts of the new area. Decreases were more likely to occur, however, in areas where median family income estimates had decreased but the medians had been frozen at previous year’s levels. Given the widespread definitional changes that occurred in FY2006, HUD determined that it was inconsistent to allow some areas to retain higher than calculated median family income estimates while applying decreases to areas that were subject to new OMB definitions. As noted previously, however, most income limits were “held harmless” in areas where median family incomes were reduced.

6. Why were the Bergen-Passaic, Monmouth-Ocean, Fort Lauderdale and West Palm Beach areas treated differently?
A: These areas were singled out for special consideration in the Federal Register notice of December 16, 2005 because of the magnitude of the decreases in income limits, which ranged from 10% in Fort Lauderdale to 18% in Bergen-Passaic and would have otherwise occurred under the primary area hold harmless policy. The manner in which FMR submarkets were permitted in new OMB metropolitan areas eliminated most large changes in metropolitan area income limits. In these four instances, however, previously distinct metropolitan areas were merged into much larger metropolitan areas with similar rents but much lower median family incomes.

7. What does the term “HMFA” mean?
A: HUD Metro FMR Area. This term indicates that only a portion of the OMB-defined core-based statistical area (CBSA) is in the area to which the income limits (or FMRs) apply. HUD is required by OMB to alter the name of metropolitan geographic entities it derives from the CBSAs when the geography is not the same as that established by OMB. See OMB’s bulletin establishing the current CBSA definitions at https://www.whitehouse.gov/sites/default/files/omb/bulletins/fy2006/b06-01_rev_2.pdf.

8. How can you tell if the entire CBSA or just the subarea (SA) is used to calculate the income limits?
A: The FY2006 Income Limits Area Definitions report places a “CBSA” in front of those areas where all counties in the CBSA are used in the calculation; an “SA” is placed in front of those areas where only the counties or towns of the subarea are used. Note that HUD Metro FMR Areas (HMFAs) are not the same as CBSAs, but that an HMFA’s income limits may be based on CBSA data. Please review the report: https://www.huduser.gov/datasets/il/il06/Definitions06.doc.

9. How can 60 percent income limits be calculated?
A: HUD recommends you take 120 percent of the Very Low Income Limit. Do not calculate income limit percentages based on a direct arithmetic relationship with the MFI; there are too many exceptions made to the arithmetic rule in computing income limits. For the Low Income Housing Tax Credit program, the Revenue Ruling 89-24 states that “…40 percent of the applicable units must be occupied by individuals or families having incomes equal to 120 percent or less of the income limit for a very low-income family of the same size.”

10. How are Low Income Housing Tax Credit maximum rents computed from the very low income limits?
A: The imputed income limitation (as defined in 26USC Sec. 42(g)(2)) is 60 percent of the MFI. A rent may not exceed 30 percent of this imputed income limitation under 26USC Sec. 42(g)(2). Unit rents by number of bedrooms are derived from Very-Low Income Limits (VLILs) for the different household sizes according to the following table:

11. Has the rounding policy for medians and income limits changed since last year?
A: Two rounding changes have been made to the calculation of medians and income limits. Median incomes, which historically have been rounded to the nearest 100, were mistakenly rounded to the nearest 50 for FY2005 median income publications. FY2006 medians are rounded to the nearest 100.

Also, the rounded 4-person income limit is now being used to calculate other family size income limits instead of the unrounded 4-person income limit. This will reduce some of the complexity in reproducing HUD calculations and was done in response to requests to simplify the calculations.