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FY 2018 Income Limits Documentation System

FY 2018 Very Low-Income (50%) Income Limits Calculation

The Income Limits explained on this page are not for use with Multifamily Tax Subsidy Projects (IRC section 42 and 142 projects). Users interested in these programs should visit the FY2018 Multifamily Tax Subsidy Project Documentation System.

The 4-person Very Low-Income Limit (VLIL) is based on 50% of the median family income estimated for the $inputname$. For a discussion of the estimated median family income please read here.

Once the median family income is estimated and a preliminary 4-person Very Low-Income Limit is calculated (as 50% of median family income) a series of comparisons required by statute are made:

  1. High Housing Cost Adjustment: The 4-Person VLIL is increased if it would otherwise be less than the amount at which 35 percent of it equals 85 percent of the annualized two-bedroom Section 8 40th percentile FMR (this adjusts income limits upward for areas where rental housing costs are unusually high in relation to median income);
  2. Low Housing Cost Adjustment: If the 4-Person VLIL exceeds 80% of the U.S. median family income, and the two bedroom 40th percentile fair market rent is affordable (less than or equal to 30% of the preliminary VLIL), the VLIL will be reduced to the greater of 80% of U.S. median familiy income or the amount at which 30 percent of it equals the two-bedroom 40th percentile FMR (this adjusts income limits downward for areas of unusually high median family incomes);
  3. State Non-Metro Median Family Income Adjustment: The 4-Person VLIL is also adjusted if it would otherwise be lower than 50% of the State Non-Metro Median Family Income.
  4. Ceilings and floors for changes: In lieu of holding income limits harmless, HUD does not allow Income Limits to decrease more than 5 percent, or increase more than the greater of 5 percent or twice the national average increase (if any) in median family income. For FY2018, the national change in median family income is -0.776 percent, therefore the maximum change amount is 5 percent.

NOTE: Income Limits are rounded to the nearest $50 and in order to make it easier for those wishing to replicate HUD's calculations, the rounded 4-person income limit is used to calculate other family size income limits instead of the unrounded 4-person income limit.

The results of the 4-Person Very Low-Income Limit calculation process for:

$inputname$

The estimated FY2018 Median Family Income and preliminary 4-Person Very Low-Income Limit for

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$inputname$ are:

Area FY 2018 Estimate of
Median Family Income
Preliminary 4-Person
Very Low-Income Limit
  1. The High Housing Cost adjustment calculations follow:
    2BR 40th percentile FMR 85% of Annualized 2BR FMR 35% of Preliminary 4P VLIL Comparison High Housing Cost Adjustment
    Is < ?
    No
    No
    4 Person VLIL
    =
  2. The Low Housing Cost adjustment calculations follow:
    Annualized 2BR 40th percentile FMR Income that can afford annualized 2BR FMR paying 30% for rent 80% of US Median Income Maximum allowable 4P VLIL Preliminary 4P VLIL Comparison Low Housing Cost Adjustment
    * 12
    =
    /0.3
    =

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    $###,###

    MAX (

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    $###,###,)
    =

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    Is >

    ODBscript Error: Non-numeric expression: (null) / .3
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    ?

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    No

    No
    4 Person VLIL
    =
  3. State non-metro Median Family Income Adjustment: is not subject to the State non-Metro Median Family Income test as there are no non-metro areas to compare to.
  4. Ceilings and floor adjustment — Only the 4 person limit is shown here, although the ceilings and floors are applied to limits of all family sizes:
  5. FY2017 4 Person VLIL Change Comparison Final FY2018 4 Person VLIL
    / - 1 =

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    Is

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    < -0.05 or > .05?

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    Yes

    ODBscript Error: Non-numeric expression: (null) / (null)
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    ROUND( * .95) =

Once the final 4-Person income limit has been established, calculation of income limits for other family sizes is straight-forward. The 1-Person family Income Limit is 70% of the 4-Person Income Limit. The 2-Person family Income Limit is 80% of the 4-Person Income Limit, the 3-Person family Income Limit is 90% of the 4-Person Income Limit, the 5-Person Income Limit is 108% of the 4-Person Income Limit, the 6-Person Family Income Limit is 116% of the 4-Person Income Limit, the 7-Person family Income limit is 124% of the 4-Person Income Limit, and the 8-Person Family Income Limit is 132% of the 4-Person Income Limit. For family sizes larger than 8 persons, the income limit can be calculated by adding an additional eight (8) percent per person to the next lower limit. For example a 9-Person Family Income Limit is 140% (132% + 8%), and so on.

4-Person Income Limits are rounded to the nearest $50, subject to caps and floors. All other Income Limits are rounded up to the nearest $50 to ensure that they do not violate the 5% floor. Also, in order to make it easier for those wishing to replicate HUD's calculations, the rounded 4-Person income limit is used to calculate other family size income limits instead of the unrounded 4-Person income limit.

Because HUD no longer enforces the Hold Harmless Policy from past years, HUD determined that allowing income limits to fall precipitously was not in the best interests of managing the section 8 housing choice voucher program. Therefore, as stated above, the maximum decrease that can be experienced in any area in one year is 5%.

The table below depicts the unrestricted income limits for FY2018, the limits allowed under HUD's floor and ceiling, and the final FY2018 Income Limits.

FY 2018 Income Limit Change Comparison
Income Limit Information 1-Person 2-Person 3-Person 4-Person 5-Person 6-Person 7-Person 8-Person
FY 2018 Prelim VLIL
FY 2017 VLIL
Maximum Change (5.0%) from
FY 2017 Final VLIL
Floor Required? No No No No No No No No
FY 2018 FINAL VLIL

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