AMI Affordable Housing: Income Tiers, Rent Limits, and Programs

In affordable housing, AMI stands for Area Median Income — the household income that sits at the midpoint for a given metropolitan area or county, as published each year by the U.S. Department of Housing and Urban Development. Nearly every major affordable housing program uses AMI for affordable housing eligibility, capping who can apply and, in many cases, how much rent gets charged. If your household earns at or below a set percentage of your area’s AMI, you may qualify for a subsidized apartment, a housing voucher, or a below-market mortgage. The percentage that matters depends on the program.¹

The Income Tiers That Decide Eligibility

Federal law defines three core income categories, each tied to a share of the area’s median family income:²

Low income: at or below 80% of AMI.
Very low income: at or below 50% of AMI.
Extremely low income: at or below the higher of 30% of AMI or the federal poverty guideline for your household size.

The poverty-guideline floor on the extremely low tier matters in economically depressed areas. Where 30% of the local median would fall below the poverty line, HUD raises the extremely low limit to match the poverty guideline instead, so the threshold doesn’t drop to a level almost no one meets.²

Two more tiers show up often outside the core three. The Low-Income Housing Tax Credit program leans on a 60% AMI cap. Some rental and homeownership programs reach up to 120% of AMI for moderate-income households.¹

A common source of confusion: when someone says “AMI” without a percentage, they usually mean HUD’s raw median family income for the area. When it’s qualified — “60% AMI,” “80% AMI” — they mean the published income limit at that tier, which includes adjustments for household size and, in some places, for high housing costs. Those limits aren’t always a clean percentage of the raw median.¹

How AMI Translates Into Rent

Federal housing policy treats housing as affordable when it consumes no more than 30% of a household’s income, utilities included. That principle plays out very differently across programs.

In the Housing Choice Voucher program (Section 8), your share of the rent is tied to your actual income. Your Total Tenant Payment is the greatest of 30% of monthly adjusted income, 10% of monthly gross income, or a welfare rent where one applies. The voucher pays the difference between your share and the unit’s gross rent, which combines the landlord’s rent with a utility allowance for any utilities you pay directly.³ Income up, your share up. Income down, your share down.

LIHTC properties don’t work that way. Maximum rents on tax-credit units are set at 30% of the income limit for the unit’s designated AMI tier, not 30% of what any particular tenant earns. A tenant well below the limit pays the same posted rent as one right at the ceiling.¹ There’s no subsidy check filling a gap; the affordability comes from the cap itself.

Programs That Use AMI

AMI is the eligibility gateway for a short list of programs that touch most affordable housing in the country.

Housing Choice Vouchers (Section 8)

The voucher program is generally limited to very low income households, at or below 50% of AMI. Federal law also requires that at least 75% of the families newly admitted to a public housing agency’s voucher program have incomes at or below 30% of AMI.² Wait lists are long, so in practice the households that receive vouchers tend to earn well under the 50% cutoff.

Low-Income Housing Tax Credit (LIHTC)

LIHTC is the largest federal program for creating affordable rentals and has produced more than 3.5 million units since 1986. Developers get tax credits in exchange for restricting units to households at or below set AMI percentages, typically 50% or 60%. The imputed income limitation under the tax code sits at 60% of the area median.¹

HOME Investment Partnerships

HOME funnels block grants to state and local governments, and all its funds must benefit households at or below 80% of AMI. For rental units specifically, at least 90% of rental funds must go to households at or below 60% of AMI.⁴ HOME also underwrites homebuyer assistance, and more than half of the buyers it helps earn under 60% of AMI.

Homeownership Programs

AMI reaches into mortgage lending, too. Freddie Mac’s Home Possible mortgage caps borrower income at 80% of local AMI and allows down payments as low as 3%.⁵ Its Refi Possible product raises the ceiling to 100% of AMI for refinancing.⁶ Fannie Mae offers comparable products at similar thresholds.

Household Size and Where You Live Change the Number

AMI figures aren’t a single number for an area. They’re tables adjusted for household size, and the differences are real. HUD anchors its base calculation on a four-person family. Smaller households get lower limits, larger households get higher ones, and a nine-person family’s income limit sits at 140% of the four-person figure, with 8% added for each additional person beyond eight.⁷

Location matters even more. AMI in an expensive metro area can run two or three times the AMI of a rural county elsewhere. HUD calculates separate figures for each metropolitan statistical area and each non-metropolitan county, so limits track local economic conditions rather than a national average.⁸

In areas where rents are unusually high relative to local incomes, HUD adjusts very low income limits upward so that families in expensive markets aren’t locked out of “low-income” programs just because area wages happen to be higher. The 80% low income limit can also exceed the national median when high housing costs justify it.⁹ In especially low-income rural areas, HUD applies a state non-metropolitan floor so limits don’t drop to a level where almost nothing counts as affordable.¹

One boundary worth naming. HUD’s base calculation uses “median family income,” which the Census Bureau defines as a householder living with at least one relative by birth, marriage, or adoption. Single-person households and groups of unrelated roommates are excluded from that base calculation, though household-size adjustments and program rules bring them back in on the eligibility side.⁸

What HUD Counts as Income

Your AMI tier depends on your household’s annual income as HUD defines it, which is broader than taxable income in some ways and narrower in others.

Income that counts includes:¹⁰

Wages and salaries before payroll deductions, plus overtime, commissions, tips, and bonuses.
Net income from a business or profession.
Interest, dividends, and net income from real or personal property.
Social Security, pensions, annuities, disability payments, and similar periodic payments.
Unemployment compensation, workers’ compensation, and severance.
Alimony, child support, and regular gifts from people outside the household.
Welfare assistance in full, with specific adjustments where the payment includes a designated shelter allowance.

Income that does not count includes:¹⁰

Earnings of children under 18.
Foster care payments.
Lump-sum additions to assets, such as inheritances, insurance payouts, capital gains, and legal settlements.
Amounts received specifically to reimburse medical expenses.
Student financial aid paid to the student or school, with a limited exception for certain Section 8 participants under 23 without dependents.
Hostile-fire pay for military members.
Temporary or sporadic income, including gifts.
Income of a live-in aide.

One detail that catches people out: if your household’s net assets exceed $5,000, HUD may count the greater of your actual investment income or an imputed return on those assets based on a passbook savings rate. A large balance in a low-yield account can still add to your counted income.

HOTMA Asset Limits

The Housing Opportunity Through Modernization Act layered an asset cap on top of income limits. New applicants for federal rental assistance must be denied if their net household assets exceed $100,000 (adjusted for inflation) or if they own residential real property suitable for occupancy. Housing agencies have no discretion on new applicants at that threshold.¹¹

Existing tenants face different rules. Agencies choose whether to enforce the asset limit at annual recertification, and their options run from non-enforcement, to full enforcement with termination within six months, to a middle-ground approach giving tenants up to six months to come back into compliance. Whatever the policy, it has to apply consistently and be written into the agency’s administrative plan. If your net assets are $50,000 or less, the agency can accept your own declaration without further verification.¹¹

How to Look Up Your Area’s AMI

HUD maintains an online Income Limits Documentation System where you can look up the exact limits for any area in the country. From HUD’s income limits page, select your state and county or metropolitan area. The tool then shows the area’s median family income along with the extremely low, very low, and low income limits broken down by household size, with links to the detailed calculations.¹

Look up limits based on where the housing is located, not where you currently live. If you’re applying for a unit in another county, that county’s AMI governs. And read the column that matches the number of people who will actually live in the unit, not just the four-person baseline. HUD updates the tables each year; the FY 2025 limits took effect April 1, 2025, and FY 2026 figures have been announced as forthcoming.¹

Staying Qualified After You Move In

Qualifying is not a one-time event. Households in AMI-restricted programs must recertify their income at least once a year, and many programs also require interim recertification when income or household composition changes significantly during the year.¹² Missing a recertification deadline can cost you your subsidy and leave you owing full unsubsidized rent.

Misrepresenting income carries real consequences. They range from repayment of subsidy you shouldn’t have received, to termination of assistance and eviction, to criminal prosecution in serious cases involving prolonged or large-dollar fraud.¹³ Most compliance trouble doesn’t start with deliberate fraud. It starts with an unreported new job or a household member’s income change, followed by a bill for back rent the tenant can’t cover once the agency catches up.

1
HUD USER. Income Limits
2
Office of the Law Revision Counsel. 42 US Code 1437a – Rental Payments
3
HUD.gov. Calculating Rent and Housing Assistance Payments
4
National Council of State Housing Agencies. HOME Investment Partnerships Program Frequently Asked Questions
5
Freddie Mac. Home Possible Income and Property Eligibility Tool
6
Freddie Mac. Qualify More Borrowers – Updated AMI Limits Released
7
HUD USER. HOME Income Limits
8
HUD User. Methodology for Calculating FY 2025 Medians
9
HUD User. Methodology for Determining FY 2023 Section 8 Income Limits
10
HUD.gov. Exhibit 5-1 – Income Inclusions and Exclusions
11
National Low Income Housing Coalition. HUD Provides Detailed Guidance Regarding HOTMA Asset Limits Provision
12
USDA Rural Development. Tenant Certification Process
13
HUD Office of Inspector General. Locking Out Tenant Fraud and Error