Income Determinations

The process of making income-eligibility determinations for applicants who will reside in a HOME and/or LIHTC unit is substantially the same for both programs. The property manager must determine the household’s annual gross income and compare it to the current income limits for the applicable program. The PJ must define income so that the property manager knows what income to “count.” If the applicant’s income is greater than the income limit that applies to that unit, the household cannot occupy the unit.

Definition of Income

The HOME Program permits the PJ to choose the definition of income from three options: the Part 5 definition (also known as the “Section 8” definition); the IRS 1040 Adjusted Long Form; or the U.S. Census. However, the LIHTC program requires the use of the Part 5 (Section 8) definition. Therefore, for HOME-LIHTC projects, the PJ should adopt the Part 5 definition so that it complies with both programs. The PJ must provide this definition to the owner (ideally in the written agreement between the PJ and the owner) and provide guidance on how to apply the definition to the income determination process.

Income Calculation

For both HOME and LIHTC, when determining the tenant household’s income, the following rules apply:

  • The income of all adult household members must be included.
  • The determination must be based on income that is expected in the next twelve months.
  • For the initial income-eligibility determination, property managers must examine income source documents to verify the accuracy of the income information that the tenant reports on the application.

There is not an asset limit or “asset test” in the HOME Program; however, the LIHTC program requires tenants to certify asset amounts and asset income that are more than $5,000. The HOME Program requires all asset income to be verified with source documentation regardless of definition. Therefore, all asset income must be verified for the applicant of any unit that is counted as both an LIHTC and a HOME unit.

Comparing Household Income to Applicable Income Limits

Once the property manager determines the tenant household’s annual gross income, it must compare the household’s income amount to the current income limits for the property, based upon the unit type, whether the unit is HOME-assisted only, LIHTC-assisted only, or HOME-and LIHTC-assisted. When the unit carries both designations, the lesser of the income limits applies.

Note that income limits are published by HUD for both programs, but the income limits for each may be published and effective at different times. Managers must be sure to check the income limits posted for each of the programs, as applicable, and note the effective dates.

The following tools can help the property manager determine tenant income:

  • Online Income Calculator. The Online Income Calculator calculates a household’s income and determines if it meets HOME income-eligibility requirements. It is available as a Tool on the HOME Program website at http://www.hud.gov/homeprogram/.
  • HUD Publication. The HOME Program’s model program guide, Technical Guide for Determining Income and Allowances for the HOME Program, Third Edition (HUD 1780-CPD, issued January 2005) provides instructions and forms to determine tenant income for the HOME Program. This guide is available at no cost from the HOME Program website at http://www.hud.gov/homeprogram/.


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