Function

• Most housing experts agree that housing costs--rent and utilities--that exceed 30 percent of a family's household income are not affordable, according to the National Low Income Housing Coalition. Based on this standard, a full-time minimum wage earner cannot afford market rate rent on a one-bedroom apartment anywhere in the United States. HUD's low-income guidelines, in concert with its subsidized housing programs, strive to ensure that low-income families do not overextend their housing expenditures in relation to their income.
  
  

Classifications

• HUD uses three main classifications to set eligibility for its main low-income housing programs. The agency considers families earning 80 percent or less of their area's median income "low-income." HUD categorizes a family earning 50 percent or less as "very low-income" and a household earning 30 percent or less as "extremely low-income." HUD, as well as local governments, may use other percentages of median income to evaluate eligibility for subsidized housing initiatives.
  
  

Programs

• HUD's main low-income housing programs are Section 8 and public housing. To qualify for a HUD-managed public housing unit--with rents set at affordable levels--a family cannot earn more than 80 percent of its area's median income, notes HUD's public housing program website. For the Section 8 program, which provides a subsidy in the form of a voucher that allows renters to obtain housing in the private market, families cannot make more than 50 percent of its area's median income, according to HUD's Housing Choice Vouchers fact sheet.
  
  

Geography

• Where a family resides impacts HUD's income limits, which are based on location and family size. In the Denver metropolitan area, for example, 50 percent of the median income for a four-person household equals $37,950. In Boulder, Colorado, that number increases to $44,800. The differences in income limits may vary greatly between regions within the same state. In Texas, for example, 50 percent of the median income for a family of four in Dallas is $34,150. In other cities such as El Paso and Laredo, that figure drops to $23,250. These numbers are based on 2010 HUD estimates.
  
  

Considerations

• HUD uses American Community Survey data to set its income limits. While HUD publishes new figures annually, they do not always reflect present realities. As HUD notes at its income limits website, the agency derived the 2010 income limits from data collected between 2005 and 2008. This "lag" missed, to some extent, the economic downturn that intensified in 2008 and 2009, driving median incomes down for many areas.