CommunityScale uses HUD’s Income Limits as an anchor for grouping households into income groups for the purpose of identifying income-aligned and affordable housing demand. However, there are several key terms and methodologies embedded in HUD’s Income Limits that we want to unpack, including Median Family Income (MFI) and Area Median Income (AMI). 

HUD’s Income Limits (IL) are widely understood in the industry and are used to calculate Fair Market Rent and by programs like LIHTC, HOME, and State programs. Increasingly, HUD’s IL are also used by local programs like inclusionary zoning. Of note, HUD’s Income Limits are not based on Median Household Income (ACS table B19013), but are instead based on Median Family Income (MFI, ACS table B19113), which is calculated using a subset of all households, specifically excluding nonfamily households, such as single people living alone and with roommates. 

CommunityScale’s methodology applies to all households, but uses MFI and AMI to create income groups that are both technically rigorous and directly comparable to the standards that shape funding and compliance across the housing field. While household income and family income are not precisely equivalent, the AMI remains the clearest and most widely recognized framework for aligning income groups across programs and policies.

HUD’s MFI and AMI

Let’s start with HUD Income Limits FAQ:

Q. What is the difference between HUD’s Median Family Income (MFI) and Area Median Income (AMI)?

HUD estimates Median Family Income (MFI) annually for each metropolitan area and non-metropolitan county. The metropolitan area definitions are the same ones HUD uses for Fair Market Rents (except where statute requires a different configuration). HUD calculates Income Limits as a function of the area’s Median Family Income (MFI). The basis for HUD’s median family incomes is data from the American Community Survey, table B19113 – MEDIAN FAMILY INCOME IN THE PAST 12 MONTHS.

The term Area Median Income is the term used more generally in the affordable housing industry. If the term Area Median Income (AMI) is used in an unqualified manner, this reference is synonymous with HUD’s MFI. However, if the term AMI is qualified in some way – generally percentages of AMI, or AMI adjusted for family size, then this is a reference to HUD’s income limits, which are calculated as percentages of median incomes and include adjustments for families of different sizes.

In short, MFI and AMI are synonymous. MFI is based on “Median Family Income in the Past 12 Months” from the American Community Survey (ACS) table B19113. AMI is a stylized version of MFI used by the industry to talk about percentages of MFI, i.e. 80% AMI is 80% MFI. 

Calculating MFI

HUD has a published methodology (page 2) for calculating current-year MFI using the latest ACS data:

HUD uses the 2023 ACS and PRCS median family income data (as opposed to household income data) as the basis of FY 2025 income limits for all areas of geography, except for the U.S. Virgin Islands and Guam, American Samoa, and the Northern Mariana Islands (the Pacific Islands). In the past, HUD has used an inflation forecast from the Congressional Budget Office (CBO) in updating ACS estimates. However, starting this FY and going forward, HUD is using the projected change in per capita wage growth, also based on CBO estimates. HUD found that the new approach would have significantly improved the accuracy of earlier MFI calculations. For FY 2025, CBO has produced a wages and salaries forecast of 47,460, which divided by the annual 2023 value of 43,920 is 1.08 (an increase of 8 percent).

HUD’s IL dataset has an MFI for most, but not all, places. For example, in most States HUD has an MFI for the county but not individual towns and cities, whereas in the northeast, HUD has an MFI for towns and cities but not counties. Sometimes we want to have an MFI for a place not in HUD’s dataset, for example to compare the local community’s income distribution against the region’s. 

HUD adjustments between MFI and Income Limits

HUD’s “Preliminary 4-Person Low-Income Limit” is a simple calculation of percent MFI, also known as AMI in the business. Therefore, 80% 4-Person household is simply 80% of the MFI.

However, HUD has subsequent calculations that cause Income Limits and strict “percent of MFI” to diverge. Some examples are:

• Low-Income (80% of AMI) Ceiling: Capped so that Low-Income limit ≤ U.S. Median Family Income, except in certain Statutory Exception Areas (e.g., Westchester, Rockland, Columbia MD).
• Low/High Housing Cost Adjustment: If local housing costs are unusually low or high relative to income, HUD can lower or raise the income limits.
• Year-to-year growth caps: Annual increases in income limits are capped against a multiplier of change in national median income.

Due to the complexity involved with converting MFI to HUD Income Limits, CommuntiyScale’s methodology applies a direct percent of MFI calculation for the purpose of creating household income bins, as described in the next section.

Practical application of Median Family Income for creating household income bins

In practice, CommunityScale retrieves HUD’s published AMI for each county, metro area, or individual town, depending on availability. We then use HUD’s Income Limits to define standard AMI percentage thresholds (e.g., 30%, 50%, 80%, 100%, 120% of AMI) and convert these into actual dollar amounts that form the income bins that are then applied to all household incomes. Household counts are then rebinned into these HUD-aligned ranges, allowing us to consistently measure how many households fall into categories that matter for funding eligibility, local policy, and affordability analysis.

This approach captures all households, not just family households; ensures that our income groups are comparable across geographies and years; and are aligned with the definitions that govern affordable housing programs nationwide.