What Is Area Median Income (AMI)?
Area median income is an important benchmark when determining housing eligibility for affordable housing properties.
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Area median income — often referred to as simply AMI — is a key metric in affordable housing. Area median income is defined as the midpoint of a specific area’s income distribution and is calculated on an annual basis by the Department of Housing and Urban Development. HUD refers to the figure as MFI, or median family income, based on a four-person household.
Why is AMI important?
This metric is important because many of HUD’s housing programs are based on the value for a metropolitan statistical area or MSA, impacting renter eligibility determinations among other uses. Because the HUD figure is tied to a four-person household, these values are not absolute and can be adjusted depending on the size of a household. For an affordable housing community which reserves units for households earning 50% of AMI, a two-person household would have a lower threshold than a five-person household, for example.
What is AMI used for?
Using AMI benchmarks for renter eligibility is typically a requirement if your property benefits under the Low-Income Housing Tax Credits, or LIHTC, program. For these programs, generally eligibility is set at a percentage of AMI, usually less than 100%.
Specifically for housing under HUD’s Section 8 program, eligibility is determined by three rigid tiers of renters by income:
Low Income (at or below 80% of AMI)
Very Low Income (at or below 50% of AMI)
Extremely Low Income (at or below 30% of AMI)
To see the median family income or AMI for an area, visit HUD’s data service which provides data annually, typically in the second quarter of the year.
Area Median Income by State
State | Total | Metro | Non-Metro |
|---|---|---|---|
Alabama | $73,600 | $78,000 | $63,200 |
Alaska | $102,200 | $109,600 | $92,200 |
Arizona | $82,800 | $84,300 | $55,400 |
Arkansas | $69,400 | $74,800 | $60,200 |
California | $101,600 | $102,100 | $80,300 |
Colorado | $105,800 | $109,800 | $82,500 |
Connecticut | $112,600 | $112,600 | $112,600 |
Delaware | $96,900 | $96,900 | $71,300* |
District of Columbia | $144,800 | $144,800 | $71,300* |
Florida | $79,300 | $79,900 | $60,700 |
Georgia | $83,200 | $88,000 | $64,100 |
Hawaii | $107,200 | $111,100 | $95,200 |
Idaho | $80,400 | $84,400 | $71,600 |
Illinois | $97,600 | $101,700 | $76,100 |
Indiana | $82,100 | $85,100 | $74,500 |
Iowa | $86,900 | $93,600 | $78,900 |
Kansas | $87,800 | $95,500 | $73,400 |
Kentucky | $73,600 | $82,800 | $61,700 |
Louisiana | $72,400 | $75,700 | $56,600 |
Maine | $84,800 | $94,700 | $72,100 |
Maryland | $117,500 | $118,200 | $93,600 |
Massachusetts | $120,400 | $120,500 | $119,400 |
Michigan | $84,200 | $87,900 | $71,500 |
Minnesota | $104,000 | $112,800 | $83,600 |
Mississippi | $65,000 | $72,000 | $58,800 |
Missouri | $81,700 | $89,200 | $63,500 |
Montana | $81,200 | $80,500 | $81,600 |
Nebraska | $89,000 | $93,800 | $80,900 |
Nevada | $84,600 | $84,900 | $81,800 |
New Hampshire | $108,000 | $117,000 | $94,500 |
New Jersey | $117,500 | $117,500 | $71,300* |
New Mexico | $68,700 | $70,800 | $63,800 |
New York | $99,500 | $101,700 | $76,700 |
North Carolina | $80,100 | $83,900 | $66,900 |
North Dakota | $96,800 | $100,800 | $93,100 |
Ohio | $83,300 | $85,800 | $74,900 |
Oklahoma | $76,000 | $82,300 | $64,700 |
Oregon | $91,800 | $97,000 | $71,800 |
Pennsylvania | $90,100 | $92,900 | $72,900 |
Rhode Island | $99,300 | $99,300 | $71,300* |
South Carolina | $78,400 | $81,700 | $58,800 |
South Dakota | $85,400 | $91,000 | $81,200 |
Tennessee | $77,800 | $82,700 | $64,700 |
Texas | $85,300 | $87,800 | $68,800 |
Utah | $95,800 | $97,200 | $83,200 |
Vermont | $92,800 | $109,000 | $85,700 |
Virginia | $103,900 | $111,600 | $67,800 |
Washington | $105,300 | $108,700 | $79,600 |
West Virginia | $67,700 | $73,300 | $59,300 |
Wisconsin | $91,000 | $95,300 | $81,500 |
Wyoming | $88,900 | $91,900 | $87,600 |
United States | $90,000 | $92,900 | $71,300 |
Source for table: hud.gov
Related Questions
What is the definition of Area Median Income (AMI)?
Area Median Income (AMI) is defined as the midpoint of a specific area’s income distribution and is calculated on an annual basis by the Department of Housing and Urban Development (HUD). HUD refers to the figure as MFI, or median family income, based on a four-person household. The most recent MFI calculations can be found on the HUD User web portal.
AMI is used extensively for assessing affordable housing eligibility. For instance, most affordable housing properties require that the income of a prospective resident falls under a specified percentage of AMI to lease a unit. These AMI requirements are generally mandatory to take advantage of low-income housing tax credits, or LIHTC. This metric is also essential for forecasting rental income. Typically, affordable housing rents are locked to a maximum of 30% of a household’s monthly income, though in some cases this may be higher.
How is Area Median Income (AMI) calculated?
Area Median Income (AMI) is calculated each year by the Department of Housing and Urban Development (HUD). HUD calculates AMI on the basis of household size for every metropolitan area and region in the U.S. The most recent MFI calculations can be found on the HUD User web portal.
What are the benefits of using Area Median Income (AMI) for financing?
Using Area Median Income (AMI) for financing can provide a number of benefits. AMI is used to calculate the maximum amount of rent that can be charged to tenants, allowing investors to make accurate financial projections regarding their potential investment. Additionally, AMI is used to determine eligibility for HUD 223(f) loans, LIHTC credits, and the HUD Section 8 program. These programs can provide investors with access to lower interest rates, longer loan terms, and more flexible underwriting criteria.
For more information, please see the following sources:
How does Area Median Income (AMI) affect financing for commercial real estate?
Area Median Income (AMI) affects financing for commercial real estate by determining who qualifies for certain federal housing programs. HUD collects statistics of income limits for families within a specified region and compiles the data. This data can be used to determine Median Family Income (MFI) for any area in the country. The statistics garnered from this research help the housing department decide which areas qualify for certain federal housing programs. The USDA provides a chart listing the AMIs across America, which lists the AMI for all major cities and urban areas througout the U.S.
What are the different types of Area Median Income (AMI) loans?
The most common type of Area Median Income (AMI) loan is the HUD 221(d)(4) loan. This loan is a long-term, non-recourse, fully amortizing loan that is used to finance the construction or substantial rehabilitation of multifamily rental housing. It is insured by the Federal Housing Administration (FHA) and is available for market-rate rental housing, affordable housing, and senior living developments. The loan is typically used to finance the construction of new multifamily rental housing, or to refinance existing debt on a multifamily rental housing project. The loan amount is based on the area median income (AMI) of the area in which the project is located. The loan term is typically 40 years, with a fixed interest rate.
The Low Income Housing Tax Credit (LIHTC) program is another type of AMI loan. This program allows developers to get a 10-year tax credit, and requires that they allot 40% of the units in a development for tenants earning less than or equal to than 60% of AMI, (the 40/60 test). Or, they must allot 20% of the units in a projects for tenants earning less than or equal to 50% of the AMI (the 20/50 test).
How can I use Area Median Income (AMI) to qualify for a loan?
You can use Area Median Income (AMI) to qualify for a loan by using it to calculate the maximum amount of rent that you can charge tenants. This will help you make accurate financial projections regarding your potential investment. HUD releases a new set of AMI statistics each year, so you need to make sure you're using the most recent statistics when attempting to calculate the potential rent limits on a multifamily property. For more information on HUD 223(f) loans, please visit https://www.hud223f.loans/loan-facts/. For more information on HUD 221(d)(4) loans, please visit https://hud221d4.loan/hud-221-d4-faqs/ami-area-median-income/.