What is AMI in Real Estate?
What is AMI in Real Estate?
In real estate, AMI (Area Median Income) is a key metric used to determine affordability and eligibility for housing assistance programs. It represents the median household income for a specific geographic area, typically defined by the U.S. Department of Housing and Urban Development (HUD) at the metropolitan or county level.
How AMI is Used:
- Affordable Housing Qualification – Many housing programs, such as Low-Income Housing Tax Credit (LIHTC), Section 8, and inclusionary zoning, use AMI to set income limits for tenants.
- Rent Restrictions – Affordable housing units often have maximum allowable rents based on a percentage of AMI (e.g., 30%, 50%, 60%, or 80% AMI).
- Homebuyer Assistance – Programs that help first-time homebuyers may have income caps tied to AMI.
- Subsidized Housing Eligibility – Federal and local governments use AMI to determine eligibility for housing vouchers and public housing.
Common AMI Tiers:
- Extremely Low Income: ≤30% of AMI
- Very Low Income: ≤50% of AMI
- Low Income: ≤80% of AMI
- Moderate Income: ≤120% of AMI
Example:If the AMI for a metro area is $100,000, a household earning:
- $30,000 or less (30% AMI) is considered extremely low-income.
- $50,000 or less (50% AMI) qualifies for many affordable housing programs.
- $80,000 or less (80% AMI) may still be eligible for certain affordable units.
HUD updates AMI figures annually, and local governments or housing agencies may use slightly different income limits based on regional cost-of-living factors.
