FY 2009 Income
Limits
Frequently Asked Questions
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: http://www.huduser.org/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: http://www.huduser.org/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.
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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: http://www.huduser.org/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: http://www.huduser.org/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: http://www.huduser.org/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: http://www.huduser.org/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: http://www.huduser.org/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 http://www.huduser.org/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.org/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) |
Unit Size |
0 Bedroom |
1 Bedroom |
2 Bedroom |
3 Bedroom |
4 Bedroom |
50% MFI Unit Maximum Monthly Rent is 1/12 of 30% of: |
1-Person VLIL |
(1-Person VLIL + 2-Person VLIL)/2 |
3-Person VLIL |
(4-Person VLIL + 5-Person VLIL)/2 |
6-Person VLIL |
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60% MFI Unit Maximum Monthly Rent is 1/12 of 30% of: |
120% of 1-Person VLIL |
120 % of [(1-Person VLIL + 2-Person VLIL)/2] |
120% of 3-Person VLIL |
120 % of [(4-Person VLIL + 5-Person VLIL)/2] |
120 % of 6-Person VLIL |
NOTE: Maximum rents for larger units are set by assuming an additional 1.5 persons per bedroom. |
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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:
1 Person |
2 Person |
3 Person |
4 Person |
5 Person |
6 Person |
7 Person |
8 Person |
$17,950 |
$20,500 |
$23,100 |
$25,650 |
$27,700 |
$29,750 |
$31,800 |
$33,850 |
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