HUD Issues Income Limits for Fiscal Year 2024

The trend in limit increases has continued.

On April 1, HUD issued the fiscal year 2024 income limits that determine eligibility for various HUD-assisted housing programs including the Public Housing, Section 8 Project-Based, Section 8 Housing Choice Voucher, Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities programs. The income limits are based on data from the American Community Survey and other sources. And the published income limit for affordable housing programs is the maximum income a household can earn to qualify or be targeted for assistance.

Eligibility for HUD programs is based on three income levels—extremely low income (less than 30 percent of the median family income), very low (less than 50 percent of the median family income), and low (less than 80 percent of the median family income). Those income limits are then adjusted according to family size and in areas with unusually high or low incomes relative to housing costs. From there, the limits are then used to determine eligibility for specific HUD programs.

If you’ve found that the income limits in your area have increased, check any files denied over the past few months to see if any slightly over-income households may qualify under the new limits. The recently issued income limits became effective immediately and can be found at www.huduser.gov/portal/datasets/il.html.

With the latest published limits, the trend in limit increases has continued. Most areas have an increase in income limits with the average increase across all counties at just under 6 percent. And this year, HUD has modified the methodology for determining the cap on how much income limits can go up in a single year in any individual Fair Market Rent (FMR) area.

How Income Limits Are Calculated

Increasing income limits will be helpful to families who are receiving pay increases, whether related to minimum wage increases across the country or other income adjustments. As income limits increase, more people will be able to qualify for affordable housing. And more people qualifying will increase the demand for affordable housing, which is beneficial to property owners, but puts even more strain on those looking for affordable housing.

When talking about HUD income limits, we’re actually talking about two income parameters. One of them is HUD’s estimate of median family income, and the other involves the income limits derived from that estimate. HUD calculates a median family income for each metropolitan area and each nonmetropolitan county throughout the country. HUD uses American Community Survey (ACS) data as the basis for that calculation. For FY 2024 median incomes, HUD used 2022 ACS median family incomes. For all places in the U.S. including Puerto Rico, the estimates are then inflated from 2022 to the current fiscal year using the Consumer Price Index forecast from the Congressional Budget Office.

New 10% Cap on Increases

This year HUD is implementing its new 10 percent ceiling on the annual cap. Since 2009, HUD has limited the year-to-year increase in income limits as the higher of 5 percent or twice the percentage change in national median family income. Now, HUD is putting an additional parameter such that if twice the change in national median income is over 10 percent, the cap in that year can’t be greater than 10 percent. HUD is calling this the “cap-on-cap,” and it issued a notice in January 2024 seeking comment on this change. After considering the comments, HUD decided to move forward with the change.

For FY 2024, about 20 percent of areas are capped at 10 percent. If HUD hadn’t instituted this 10 percent ceiling, the cap for FY 2024 would’ve been 14.8 percent. HUD says it believes cap-on-cap is a very reasonable limitation. According to HUD, it is making this change for three reasons:

Tenant protection. By limiting increases in income limits, HUD decreases the burden on low-income households who otherwise would face a large single-year rent increase resulting from higher income limits.

Statistical error. The data used to determine income limits in some FMR areas may not have a large sample size, and thus statistical error could lead to a change in the estimated local median income that’s greater than actual change. 

Stability and certainty. With the adoption of this methodological change, HUD also hopes to assist affordable housing development by providing additional certainty on future maximum income limit increases and the data used to determine that limit.

Use New Income Limits for New Certifications

All new certifications effective April 1 or later will include the new income limits. Managers should remember that income limits are considered only at move-in and, in very limited cases, at the initial certification [HUD Handbook 4350.3, par. 3-4]. Income limit changes don’t affect current residents’ eligibility for the HUD Multifamily Housing programs (Section 8, PRAC, etc.) when that resident is already receiving subsidy/housing assistance.

If you’ve already extended a unit offer and your new resident’s income exceeds the new income limit, you can still honor that move-in. According to HUD’s RHIIP ListServ #293, if a unit becomes available and an applicant is selected from the waiting list, is processed for eligibility, and meets all eligibility requirements at the time of processing, the applicant is eligible to move into the unit even if new income limits have been published. If this situation applies, be sure to document the household file appropriately.