notice

Subject: Transmittal of Fiscal Year (FY) 1996 Public Housing/Section 8 Income Limits

This notice transmits revisions in the income limits used to define the terms "very low-income" and "low-income" in accordance with Section 3(b)(2) of the United States Housing Act of 1937, as amended. These income limits are listed by dollar amount and family size. They are issued for each metropolitan and nonmetro-politan area using the Fair Market Rent (FMR) area definitions applied in the Section 8 Housing Assistance Payments program.

Public Housing/Section 8 income limits are used to determine the income eligibility of applicants for the Public Housing, Section 8, and other programs subject to Section 3(b)(2). The revised income limits are based on HUD estimates of median family income for FY 1996.

The most important statutory provisions relating to income limits are as follows:

• "very low-income" is defined as 50 percent of the median family income for the area, subject to specified adjustments for areas with unusually high or low incomes;
• "low-income" is defined as 80 percent of the median family income for the area, subject to adjustments for areas with unusually high or low incomes or housing costs;
• where the local median family income is less than the State nonmetropolitan median family income, income limits are based on the State nonmetropolitan median; and,
• income limits are adjusted for family size so that larger families have higher income limits.

Very Low-Income Limits:

More specifically, the very low-income limit for a four-person family is calculated as follows:

(1) 50 percent of the area median family income is calculated and set as the tentative four-person family income limit;

(2) if it would otherwise be lower, the four-person income limit is increased to the amount at which 35 percent of the family's income equals 85 percent of the two-bedroom Section 8 FMR;

(3) if it would otherwise be higher, the four-person income limit is reduced to the amount at which 30 percent of a four-person family's income equals 120 percent of the two-bedroom FMR;

(4) to to minimize program management problems, income limits are being held at FY 1995 levels in areas where FMR reductions would have resulted in lower income limits; and,

(5) in no instance are income limits less than if based on the State nonmetropolitan median family income level.

The purpose of the second calculation is to adjust for areas where rental housing costs are unusually high in relation to the median income level. The third calculation makes a parallel adjustment to constrain income limits in areas where rental housing costs are unusually low relative to income levels. The fourth step avoids the confusion that would occur from small decreases in uncome limits for a number of areas that would otherwise result from the change in the FMR standard from the 45th to the 40th percentile of rents paid by recent movers. The fifth step supersedes all other provisions in situations where it applies.

Low-Income Limits:

Family Size Adjustments:

Income limits for families with more than eight persons are not included in the printed lists because of space limitations. For each person in excess of eight, 8 percent of the four-person base should be added to the eight-person income limit. (For example, the nine-person limit equals 140 percent [132 + 8] of the relevant four-person income limit.) All income limits are rounded to the nearest $50 to reduce administrative burden.

Income Limit Area Definitions

HUD income limit areas are the same as FMR areas. HUD normally uses current Office of Management and Budget (OMB) Metropolitan Statistical Area (MSA) and Primary Metropolitan Statistical Area (PMSA) definitions to define income limits areas because they closely correspond to housing market area definitions. The exceptions are counties deleted from metropolitan areas because the OMB definitions were determined by HUD to be larger than the housing market areas.

The HUD exceptions to the OMB definitions are counties deleted from eight metropolitan areas whose revised OMB definitions encompass areas that were determined to be larger than the housing market areas. In such instances, the counties not considered by HUD to be core parts of the metropolitan areas were assigned their own income limits based on county-level data rather than on data for the metropolitan area as a whole. The eight metropolitan areas and the respective counties deleted from these areas and assigned separate income limits are as follows:

The only definitional changes from the FY 1995 income limits are due to the two newly OMB-designated metropolitan areas of Grand Junction (Colorado) and Flagstaff (Arizona and Utah). Grand Junction is defined as consisting of Mesa County, Colorado. OMB defines Flagstaff as consisting of Coconino County (AZ) and Kane County (UT), but HUD treats Kane County as a separate metropolitan income limit area because it is not an integral part of the Flagstaff housing market area.

For purposes of HUD programs, income limits previously approved using Indian Trust Land area definitions remain in effect unless superseded by higher FY 1996 income limits based on current income limit area definitions.

HUD Field Office Responsibilities:

Requests from the public for sets of national or regional income limits may be referred to HUD USER, whose toll-free number is 1-800-245-2691 (202-708-3178 in the Washington, DC area). Questions related to how these income limits apply to the programs of State and other Federal agencies should be referred to those agencies. Questions concerning the methodology used to develop these income limits are addressed in the FY 1996 Income Limits Briefing Material supplied to all HUD field economists. This document is also available from HUD USER.

Go to HUD Median Family Income Estimates for FY 96

Nicolas P. Retsinas
Assistant Secretary for Housing - FHA Housing Commissioner

Kevin E. Marchman
Acting Assistant Secretary for Public and Indian Housing

Attachments

Previous Editions are Obsolete
Distribution: W-3-1
HUD 21B (3-80)
GPO 871 902