Area Median Income, usually shortened to AMI, is the income level that splits a region’s households in half: half earn more, half earn less. The U.S. Department of Housing and Urban Development publishes AMI figures every year for metropolitan areas and non-metropolitan counties, and those numbers decide who qualifies for nearly every major affordable housing program and how much rent can be charged in a restricted unit. If you’re applying for a voucher, moving into an income-restricted apartment, or looking at a low-down-payment mortgage, your household’s income compared to your local AMI is almost always the first thing checked.
How HUD Builds the Number
HUD calculates AMI from median family income, not median household income. In Census Bureau terms, a “family” is two or more related people living together, which leaves out single people living alone and unrelated roommates. Because single-person households generally earn less than families, AMI figures tend to run higher than they would if every household were counted.
The baseline is built for a four-person family. HUD pulls data from the Census Bureau’s American Community Survey and applies trend factors to project income growth forward to the current fiscal year.1HUD User. Methodology for Calculating FY 2025 Medians From that median, HUD derives the income limits that programs actually apply, with adjustments for household size and local cost of living.2HUD USER. Income Limits
You’ll sometimes see “MFI” (median family income) used interchangeably with AMI. They refer to the same underlying number. When someone in affordable housing says “80% AMI,” they mean 80% of HUD’s median family income for a four-person household in that area, adjusted for your actual household size.
The Income Tiers That Decide Eligibility
HUD sorts households into categories based on how their earnings compare to the local AMI. These categories are the gatekeepers for most federal housing programs:
- Extremely low income — at or below 30% of AMI. Gets priority for Housing Choice Vouchers and public housing.
- Very low income — at or below 50% of AMI. The general eligibility ceiling for Housing Choice Vouchers.
- Low income — at or below 80% of AMI. Used by many homeownership assistance programs and some rental programs.
Some programs reach higher. The Low-Income Housing Tax Credit program allows tenants up to 80% of AMI under its income-averaging option, and several state and local down payment assistance programs serve households up to 120% of AMI.2HUD USER. Income Limits
How Household Size Changes Your Limit
AMI is calculated for a four-person family, but the number that applies to you depends on how many people live in your household. HUD adjusts the limits upward for larger households and downward for smaller ones. A single person at 50% AMI has a much lower income limit than a family of six at the same tier in the same zip code.
Who counts can trip people up. Everyone living in the unit is generally counted toward household size, with a few carveouts. A live-in aide’s income is excluded. Foster children and foster adults are counted as household members, but payments received for their care aren’t counted as income.3U.S. Department of Housing and Urban Development. Exhibit 5-1 – Income Inclusions and Exclusions
What Counts as Income
When a housing authority or property manager measures your income against AMI limits, they use HUD’s definition of “annual income,” which is broader than a paycheck. It includes wages, salaries, overtime, tips, and bonuses before payroll deductions. It also includes Social Security payments, pensions, annuities, disability benefits, unemployment compensation, alimony, child support, regular gifts from people outside the household, and net income from a business or rental property.4U.S. Department of Housing and Urban Development. Attachment A – Section 8 Definition of Annual Income
Some sources are excluded. Earnings of children under 18 don’t count, including foster children. Lump-sum payments like inheritances, insurance payouts, and capital gains are excluded, as are medical reimbursements and most student financial aid paid directly to the student or school.
The figure that matters is what your household expects to receive over the twelve months following your application or annual recertification, not what you earned last year. If your circumstances recently changed, tell the housing authority. An old tax return alone may not reflect where you actually stand.4U.S. Department of Housing and Urban Development. Attachment A – Section 8 Definition of Annual Income
How AMI Sets the Rent in Restricted Units
The federal standard for affordable housing is that housing costs shouldn’t exceed 30% of a household’s income. That benchmark sets rent ceilings in AMI-restricted buildings. If a unit is restricted to tenants at 60% of AMI, the maximum gross rent is 30% of the income a household at 60% AMI would earn, divided by twelve. “Gross rent” here includes both base rent and a utility allowance.
Utility allowances matter more than most renters realize. When you pay your own electric, gas, or water bills separately from rent, the housing authority estimates what those utilities cost and subtracts that amount from the maximum allowable rent. The landlord charges less in base rent, and the gap is meant to cover the utility bills.5HUD.gov. Utility Allowances and Resources Where utilities are included in the rent, no separate allowance applies. Two apartments restricted to the same AMI level can have noticeably different posted rents depending on which utilities are bundled in, so ask before comparing.
Programs That Use AMI
Housing Choice Vouchers
Housing Choice Vouchers, formerly called Section 8, are the largest federal rental assistance program. General eligibility caps income at 50% of AMI for your area and household size, but federal law imposes a sharper targeting rule: at least 75% of the vouchers a housing authority issues each year must go to households at or below 30% of AMI.6eCFR. 24 CFR 982.201 – Eligibility and Targeting In practice, waiting lists are long enough that most families admitted sit well below 50% AMI.
Low-Income Housing Tax Credit (LIHTC)
LIHTC properties are the country’s largest source of new affordable rental housing. Under the most common qualifying test, at least 40% of a building’s units must be reserved for tenants at 60% or less of AMI.7Office of the Law Revision Counsel. 26 USC 42 – Low-Income Housing Credit An income-averaging option lets developers designate individual units anywhere from 20% to 80% of AMI, provided the average across the restricted units stays at 60% or below.
HOME Investment Partnerships Program
The HOME program funds rental housing and homeownership activities through state and local governments. Its income limits follow the same methodology as the Section 8 program, with eligibility generally capped at 80% of AMI for homeownership assistance and lower thresholds for rental units.8HUD Exchange. HOME Income Limits Maximum rents in HOME-funded projects follow HUD’s published High HOME Rent and Low HOME Rent limits, which vary by bedroom count and area.
AMI-Based Mortgage Programs
AMI isn’t only a renter’s concern. Two widely available low-down-payment mortgage products tie eligibility directly to local AMI. Fannie Mae’s HomeReady program caps qualifying income at 80% of AMI for the property’s location.9Fannie Mae. HomeReady Mortgage Loan and Borrower Eligibility Freddie Mac’s Home Possible program uses the same 80% ceiling.10Freddie Mac. Home Possible Income and Property Eligibility Tool Both allow down payments as low as 3% and offer reduced mortgage insurance costs compared with conventional loans. Many state and local down payment assistance programs also use AMI thresholds, typically running from 80% to 120% of AMI.
What Happens If Your Income Rises Above the Limit
Getting into affordable housing is one thing; staying is another. In public housing, if your income climbs above the over-income limit, which is set at roughly 120% of AMI, a 24-month grace period begins. Nothing changes immediately. But if your income is still above the limit after 24 consecutive months, the housing authority must either move you to a market-rate lease at an alternative rent or terminate your tenancy within six months.11HUD Exchange. Over-Income Limits for Public Housing Families Fact Sheet
If your income drops back below the limit at any point in that 24-month window, the clock resets and you stay as a regular participant. A temporary spike from a one-time bonus or a stretch of overtime won’t necessarily jeopardize your housing, but a sustained raise might. Housing Choice Vouchers work differently: your subsidy decreases as your income rises, but you generally keep the voucher until your share of rent reaches the full contract amount.
AMI vs. Fair Market Rent
AMI and Fair Market Rent (FMR) are related but do different jobs, and mixing them up is easy. AMI measures what people in an area earn and decides who qualifies for programs. FMR measures what it costs to rent in an area and decides how much a housing voucher will cover.
HUD sets FMRs at the 40th percentile of gross rents, meaning 40% of the area’s rental units are priced below the FMR and 60% are above. For voucher holders, the FMR (or a locally adjusted “payment standard”) caps the total rent the voucher will subsidize. You can rent a unit that costs more than the FMR, but you’ll pay the difference yourself. AMI decides whether you get the voucher; FMR decides what it’s worth.
How to Look Up Your AMI
HUD publishes updated income limits once a year, typically effective in early April. The most reliable source is the HUD User Income Limits page, where you can search by state and county.2HUD USER. Income Limits The results show the 30%, 50%, and 80% income limits broken down by household size for your specific area.
For HomeReady or Home Possible mortgage eligibility, Fannie Mae has a lookup tool that searches by property address or census tract.12Fannie Mae. HomeReady Mortgage Freddie Mac provides a similar eligibility map for Home Possible.10Freddie Mac. Home Possible Income and Property Eligibility Tool
Local AMI can shift meaningfully from year to year, especially where jobs or population are moving. An income that qualified you last year may not qualify you this year if the limits tightened, and you may newly qualify if the median rose. Check the current numbers before you apply, not a figure from an old acceptance letter or a calculator that hasn’t been updated.