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Humanizing Data: Area Median Income (AMI) and Affordable Housing Policy

March 13, 2023 Andy Marzo and Dan Stevens, AICP

A family standing in an open field holding different pieces of a house. One person holds the roof and chimney piece, one person holds the main floor and windows, and one person holds the entry stairs. The sun behind them shines through the windows of the main floor piece.Although much of the analytic work that we do is data-driven and metric-focused, our analytics team tries to add a human element to these figures to give a more holistic picture of a community’s unique situation. Uniting the human element with metrics and data results in tailored solutions and policies that address particular issues for our clients.

One metric that can be confusing to many and important to humanize is Area Median Income (AMI) and the associated AMI levels determined by the US Department of Housing and Urban Development (HUD) every year. Since AMI is used in determining eligibility for affordable housing programs at the federal and sometimes local levels, it’s particularly important that decision-makers and community members understand this metric and who, exactly, may be helped by those programs.Economic Development Navigator: Get timely, well-researched, and insightful articles about all things economic development delivered directly to your inbox each month. Click to subscribe.

Area Median Income: A Quick Overview

Each year, HUD calculates the area median income (AMI) for every geographic region in the country using data from the US Census-based American Community Survey. The area median income is the midpoint of a region’s income distribution, meaning that half of the households in a region earn more than the median and half earn less than the median. A household’s income is calculated by its gross income, which is the total income received before taxes and other payroll deductions.

In addition to calculating AMI, HUD defines and calculates different levels of AMI for geographic areas across the country by household size.

  • Low-income households earn less than 80% of the AMI
  • Very low-income households earn less than 50% of the AMI
  • Extremely low-income households earn less than 30% of AMI

These parameters help HUD identify households that are eligible for certain housing assistance programs administered (However, the number of tiers used, and the percentage of AMI required for eligibility varies by each housing program).

AMI levels are also used to determine housing needs beyond affordable housing, including workforce housing and market-rate housing. The full spectrum of income levels and housing price points, as shown below, is critical to meeting community housing needs.

A graphic shows the income and housing spectrum, from extremely low-income to upper income. Market Rate Housing is on the Upper Income end of the spectrum at more than 120% AMI. Workforce Housing is at the Middle Income point on the spectrum at 80%-120% AMI. Affordable Housing is at both the Low Income point on the spectrum at 50%-80% AMI and at the Very Low Income point on the spectrum at 30%-50% AMI. Supportive Services is on the Extremely Low Income end of the spectrum at below 30% AMI.

AMI Thresholds and HUD’s Housing Choice Voucher Program

A good example of how these thresholds are used at the federal level is HUD’s Housing Choice Voucher Program. The Housing Choice Voucher Program is the federal government’s primary program for helping very low-income families, the elderly, and the disabled afford decent, safe, and sanitary housing in the private market. To be eligible for a Housing Choice Voucher, household income must be at or below 50% of the AMI.

The chart below displays the three AMI levels for households of one to six people in Broome County, NY. In this example, a one-person household in Broome County would need to have a household income at or below $26,850/year to be eligible for a Housing Choice Voucher, a two-person household (which may include a child) would need annual household income at or below $30,700 to be eligible, and so on.This table, presented as a bar chart, details the HUD Income Limits for three different income categories based on Household Size for Broome County, NY, in Fiscal Year 2022. These limits are defined by percentages of the Area Median Income (AMI). The three income categories are: Extremely Low Income (ELI): 0–30% of AMI Very Low Income (VLI): 30–50% of AMI Low Income (LI): 50–80% of AMI The data for each household size is as follows, with the limits representing the maximum income allowed for that category. The total income range listed combines all three categories up to 80% of AMI. 1 Person Household: Extremely Low Income: $0 to $16,100 Very Low Income: $16,100 to $26,850 Low Income: $26,850 to $42,950 Total Range (0–80% AMI): Up to $42,950 2 People Household: Extremely Low Income: $0 to $18,400 Very Low Income: $18,400 to $30,700 Low Income: $30,700 to $49,100 Total Range (0–80% AMI): Up to $49,100 3 People Household: Extremely Low Income: $0 to $23,030 Very Low Income: $23,030 to $34,550 Low Income: $34,550 to $55,250 Total Range (0–80% AMI): Up to $55,250 4 People Household: Extremely Low Income: $0 to $27,750 Very Low Income: $27,750 to $38,350 Low Income: $38,350 to $61,350 Total Range (0–80% AMI): Up to $61,350 5 People Household: Extremely Low Income: $0 to $32,470 Very Low Income: $32,470 to $41,450 Low Income: $41,450 to $66,300 Total Range (0–80% AMI): Up to $66,300 6 People Household: Extremely Low Income: $0 to $37,190 Very Low Income: $37,190 to $44,500 Low Income: $44,500 to $71,200 Total Range (0–80% AMI): Up to $71,200

Humanizing AMI to Help Inform Communities and Housing Policies

In addition to HUD, many local housing programs use AMI levels to govern eligibility for affordable housing programs. However, when initial housing policies are being contemplated, community leaders, decision makers, and other stakeholders can be left confused and wondering who, exactly, they may be helping through their housing policies. To overcome this, it can be helpful to add context and create graphics that humanize AMI metrics so that decision-makers know who they may be assisting and/or targeting through their affordable housing programs.

Below is an example of how this can be done using the data from the table above. In this figure, we overlay the median income of various occupations in the area with its AMI data. By doing this and aligning it with the individual household income level figures along the axis, it is easier to tell who fits into these AMI levels and would be eligible for local affordable housing assistance programs.

For example, if you were considering establishing a local affordable housing voucher program targeting households that earn at or below 50% of the AMI, you can now see that a family of four (two adults and two children) where one parent is a truck driver and the other takes care of the children during the day would not qualify because the household income ($46,000/year) is above the 50% AMI threshold for a family of four ($38,350).

This image displays a number line graph that plots the annual incomes of eight selected occupations against the HUD (Department of Housing and Urban Development) income limit thresholds for a 4-Person Household. The income limits are based on the Area Median Income (AMI). 1. HUD Income Limits for a 4-Person Household The chart uses vertical orange dashed lines to denote the AMI thresholds and a corresponding blue box to show the maximum income for each limit: 30% AMI (Extremely Low Income): $27,800 50% AMI (Very Low Income): $38,350 80% AMI (Low Income): $61,350 100% AMI (Area Median Income): $76,400 2. Occupations and Their Relationship to AMI Limits The following eight occupations and their typical annual salaries are plotted on the chart, showing where they fall relative to the affordable housing income limits: Farm Worker ($26,000 per year): Falls below the 30% AMI limit, placing this occupation in the Extremely Low Income category. Fast Food Worker ($28,000 per year): Falls just above the 30% AMI limit of $27,800. Administrative Assistant ($37,000 per year): Falls just below the 50% AMI limit of $38,350, placing this occupation in the Very Low Income category. Truck Driver ($46,000 per year): Falls between the 50% AMI and 80% AMI limits. Construction Worker ($48,000 per year): Falls between the 50% AMI and 80% AMI limits. Social Worker ($50,000 per year): Falls between the 50% AMI and 80% AMI limits. Plumber ($63,000 per year): Falls just above the 80% AMI limit of $61,350. Nurse ($74,000 per year): Falls between the 80% AMI and 100% AMI limits, but below the 100% AMI of $76,400.

Looking at the data and metrics in this light provides more human context to the reader or decision maker by informing them about who the local program can assist based on the eligibility requirements being contemplated. They can then adjust the eligibility requirements if desired before implementing new programs.

With more and more aspects of our lives and local policies focusing on data and metrics, it is important to continue to use the human context to make the data more impactful and meaningful and help stakeholders better understand who benefits from local or regional affordable housing assistance programs.

Camoin Associates’ Real Estate Development Team offers a wide variety of housing-related services to local, state, and regional governments, non-profit organizations, and private developers. Learn more.

This article was originally published in Camoin Associates’ Economic Development Navigator blog in January 2020 and was updated in March 2023.

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