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FY 2016 Income Limits Documentation System

FY 2016 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 FY2016 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 Richmond city, Virginia. 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 or increase more than 5 percent.

ROUNDING NOTE: The 4-person income limit is rounded to the nearest $50 in the case that ceiling or floor adjustments are applied. This is done 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.

4-Person Very Low-Income Limit Calculation for Richmond city, VA

The estimated FY2016 Median Family Income and preliminary 4-Person Very Low-Income Limit for Richmond city, Virginia are:

Area FY 2016 Estimate of
Median Family Income
Preliminary 4-Person
Very Low-Income Limit
Richmond city, VA $72,400 $36,200
  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
    $966 $9,853 $12,670 Is $12,670 < $9,853?
    No
    No
    4 Person VLIL
    =
    $36,200
  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
    $966 * 12
    =
    $11,592
    $11,592/0.3
    =
    $38,640
    $52,560 MAX ($38,640,$52,560)
    =
    $52,560
    $36,200 Is $36,200 > $52,560? No No
    4 Person VLIL
    =
    $36,200
  3. State non-metro Median Family Income Adjustment:
    50 Percent of State Non-Metro
    Median Family Income
    Comparison State Median Family Income Adjustment
    $52,300 * 0.5
    =
    $26,150
    Is $36,200 < $26,150?
    No
    No
    4 Person VLIL
    =
    $36,200
  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. FY2015 4 Person VLIL Change Comparison Final FY2016 4 Person VLIL
    $37,100 $36,200 / $37,100 - 1 = -0.024 Is -0.024 < -0.05 or > .05?
    No
    $36,200

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. The resulting low-income limit calculation for other family sizes are then rounded up to the nearest $50. Rounding up ensures that the income limit does not exceed the 5% decrease threshold.

Richmond city, VA requires no further adjustments. Therefore, the final FY 2016 Very Low Income Limits are listed below:

Area 1-Person 2-Person 3-Person 4-Person 5-Person 6-Person 7-Person 8-Person
Richmond city $25,350 $29,000 $32,600 $36,200 $39,100 $42,000 $44,900 $47,800

Very Low-Income Limit Calculation For Families With More Than 8 People

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