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Understanding HUD Income Limits and Maximum Rent Calculations for Affordable Housing

This guide provides insights into the annual HUD income limits for counties and MSAs, explaining the significance of the 30%, 50%, and 80% median income tables. It emphasizes that all LIHTC calculations should rely on the 50% median table, not the 80% low-income table. The document also elucidates how maximum rent is determined based on the number of bedrooms, rather than household size, and outlines allowable rent criteria since 1990. Special attention is given to utility allowances and gross monthly rent calculations, ensuring compliance and understanding for housing stakeholders.

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Understanding HUD Income Limits and Maximum Rent Calculations for Affordable Housing

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  1. Calculating Maximum Incomes & Rents Michael Kotin Kay-Kay Realty Corp.2007

  2. HUD Income Tables HUD Publishes income limits for all counties and MSAs in the country on an annual basis. HUD publishes 30%, 50% and 80% of median tables.

  3. HUD Income Tables The 80% table is called the “Low Income” table. But don’t use it! All LIHTC calculations based upon 50% table using a “conversion” table.

  4. Conversion Factors PublishedConversionDesired 50% X 1.00 = 50% 50% X 1.20 = 60% 50% X 0.60 = 30% 50% X 0.70 = 35% 50% X 0.80 = 40% 50% X 0.90 = 45%

  5. Maximum Incomes Number in HH 1 2 3 4 5 50% of Median 18,000 20,000 22,000 24,000 26,000 Conversion Factor 1.2 1.2 1.2 1.2 1.2 60% of Median 21,600 24,000 26,400 28,800 31,200

  6. Maximum Rent Since 1990 Maximum Rent is based upon the number of bedrooms in the unit, not the number of residents. Allowable rent is the same for a particular unit size no matter how many people actually live in the unit.

  7. Maximum Rent For purposes of calculating maximum allowable rent, we assume a household with 1.5 persons per bedroom.

  8. Maximum Rent Number of BedroomsImputed Household Size 1 1.5 2 3.0 3 4.5

  9. Maximum Rent Number in HH 1 2 3 4 5 60% of Median 21,600 24,000 26,400 28,800 31,200 Bedrooms 1 2 3 Imputed Household Size 1.5 3.0 4.5 Imputed Income Limit 22,800 26,400 30,000

  10. Maximum Rent Bedrooms 1 2 3 Imputed Income Limit 22,800 26,400 30,000 Percentage to Housing 30% 30% 30% Total Gross Annual Rent 6,840 7,920 9,000 12 12 12 GROSS MONTHLY RENT 570 660 750

  11. Maximum Rent Bedrooms 1 2 3 GROSS MONTHLY RENT 570 660 750 Less: Allowance for Utilitiies < 75> < 100> < 125> NET MONTHLY RENT 495 560 625

  12. Maximum Rent Utilities to consider:Don’t consider: Heat Telephone Cooling Cable T.V. “Plug ins” DSL / Internet Cooking Hot Water Water SewerTrash

  13. Gross Rent Floor Provides protection to owners for drops in published area median incomes. GROSS rent never drops below the amount permissible at time of election (generally PISD year) Does not protect against increases in utility allowances and therefore decreases in NET rent.

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