HUD Limits Income Eligibility for Affordable Housing

The new standard could impact rent increases and communities' financial viability. 

By Ben Harrold |

2 minute read

On April 1, 2024, the U.S. Department of Housing and Urban Development (HUD) changed how renter households’ income limits are calculated to be eligible for Section 8 and other federally assisted housing programs, including housing financed by the low-income housing tax credit (LIHTC).  

The new absolute cap of 10 percent means not only that fewer low-income renters and families will be eligible to receive government support for housing, but also that LIHTC properties could be more deeply rent restricted because their rent increases are tied to HUD’s income limits. 

HUD’s methodology defines income limits for “low-income” andvery low-income” households per federal law. Prior to the April 1 change, HUD also maintained a year-over-year cap to restrict the amount that these income limits could increase or decrease at any one time: 5 percent or double the percent change in national median family income, whichever is greater. Now increases are subject to a maximum of 10 percent.

This update will already impact the market for affordable housing as the income limit increase for FY 2024 would have been 14.8 percent. The 10 percent cap means that low-income households with modest income increases may lose their eligibility for housing assistance despite the rising cost of living. Properties that are dedicated as affordable housing through the LIHTC program could see their rental income no longer align with market fluctuations, threatening the feasibility of new projects and the viability of existing ones. Ultimately, the combined effect of this decision from HUD could result in fewer homes for fewer people. This is not the right approach to address the nation’s housing affordability and availability challenges.  

The National Apartment Association (NAA) continues its federal advocacy efforts to voice the rental housing industry’s perspective in policy conversations. Alongside our real estate coalition partners, NAA cautioned HUD of the unintended consequences of this change and urged the Department to reconsider these actions. Read our coalition press release in response to this announcement. Our advocacy with the Administration continues, and NAA stands ready to assist its members in understanding any new federal compliance responsibilities.