Affordable housing: Area Median Income and what it means

We are often asked, “how does the Atlanta BeltLine define affordability?” When we say “affordable,” we simply mean: does a low or moderate income family have enough monthly income to rent or purchase a house or apartment and still have money left for other necessities like food, clothing, medicines, etc.? Affordability is defined by the federal government as a household not paying more than 30% of their total income towards rent, mortgage payments, utilities, taxes, insurance and other related housing expenses.

In order to cities to determine how to best support their affordable housing needs, they look to Area Median Income (AMI) as a tool. AMI is a measure of residents’ median income in a broad area and is calculated annually by HUD, the U. S. Department of Housing and Urban Development. The City of Atlanta is in the Atlanta-Roswell-Sandy Springs Metropolitan Statistical Area (as defined by HUD). This HUD defined MSA includes 29 counties ranging from Dawson County to the north and Meriwether county to the south. HUD then calculates all of the annual income earned by families in the 29-county area and determines the income that is in the middle and calls that the AMI for the area. This number means half of the families earn more than the AMI and half of the families earn less than the AMI. When HUD did this calculation for our MSA, it established the 2020 AMI at $82,700 – the median amount one household with four family members earns in one year. HUD then adjusts the incomes based on the number of persons who may be in a family.

Using the AMI calculation, HUD then defines income limits as Low (≤80% of AMI), Very Low (≤50%), and Extremely Low (≤30%). Below is a chart that shows where household may fall into these categories.

Affordable rental housing generally serves families earning 80% of AMI or less and affordable home ownership funding serves families earning 120% of AMI. ABI recognizes an urgency to focus on affordable housing for families earning 60% of AMI or less – a significant need in Atlanta. We work closely with agencies to target a wide range of income levels. Our partners include Invest Atlanta, Atlanta Housing, City of Atlanta, Development Authority of Fulton County, and the Georgia Department of Community Affairs. We want to assure that an appropriate mix of affordable housing is represented in neighborhoods inside the Tax Allocation District (TAD) and broader Atlanta BeltLine Planning Area.

The creation and preservation of affordable housing includes both multifamily and single family new construction, preservation, and rehabilitation.

Let’s look at two examples.

Robert Jones is a fire fighter. His wife Beth works as a substitute teacher. Together, their family income is about $65,000 per year. Using the 30% rule, affordable housing for the Joneses would be about $19,500 per year ($1,625 per month). For a household of two, they make below the median income, but are not considered to be in the low category at 80% of AMI. If they had two children, they would be considered in the low category at 80% of AMI.

Let’s look at what affordable housing looks like for a family working at minimum wage. Michelle Smith and her husband John both work full-time jobs that pay $7.25 an hour, the federal minimum wage. Together, they earn $30,160 every year. Affordable housing for the Smiths would cost them $9,048 per year ($754 per month) to cover housing costs and utilities. If they were a household of two, they would be close to the very low category of 50% of AMI. If they had two children, for a household of four, they would be considered closer to the extremely low category of 30% of AMI.

When ABI talks about supporting households at varying degrees of AMI (50%, 60%, 80%, etc.), these are examples of families that we – along with partner agencies – are striving to assist.

How much should you be paying for housing costs? Below is a quick reference chart:

IncomeMaximum Affordable Monthly Housing Costs
Less than $20,000$500
$20,000-30,000$750
$30,000-40,000$1,000
$40,000-50,000$1,250
$50,000-60,000$1,500
$60,000-75,000$1,750
$75,000-100,000$2,000

Housing costs are just one part of the affordability equation. Good paying jobs and access to transportation also impact income and quality of life. This is why the Atlanta BeltLine is so focused on housing, economic development, and transit with the goal of implementing the BeltLine project in a way that ensures all Atlantans have the opportunity to participate in and benefit from its economic growth for generations to come.

We invite you to explore a number of tools and resources for both owners and renters at www.beltline.org/housing and www.beltline.org/empower.

5 thoughts on this article. Join the discussion below

  1. This article includes the use of abbreviations that aren’t clearly defined, e.g., “MSA”. Please make sure that when using abbreviations, they are first included following the full phrase or words, Metropolitan Statistical Area (MSA), before using that abbreviation alone later in the text.

    Also please avoid ambiguous phrases such as “income.” Are you referring to gross income before taxes, social security, medicare and any other possible benefits are taken out? Or are you referring to adjusted gross income (AGI) per a person’s tax return (which includes other forms of income in addition to salary) or is it a person’s take-home pay, the money they actually have to spend on housing and housing-related expenses?

    1. Hi Tryn, we try to be cognizant of our use of acronyms and always explain them, but appreciate the feedback and will continue to improve. “Income” in the case of Area Median Income refers to gross income before taxes and payroll deductions. Thank you! ~Jenny

  2. When determining someone’s eligibility based on their gross income do you compare their income to the given year. For example, you currently only have AMI data up to 2020. Would you compare someone’s 2021 salary to your 2020 data to determine eligibility?

    If so, would this be an truly be an accurate way to go about it? For example, a candidate’s 2021 gross income may fall between 121%-130% of the 2020 AMI. However, when 2021 AMI is published, it may become apparent that the individuals 2021 salary is in fact within 120% of the 2021 AMI.

    Also, do you consider the previous two years of tax returns to determine someone’s eligibility? If so, how do you compare their gross income to the AMI for that given year, provided the fact that salary is not stated on the 1040 tax form but instead Box 1 of the W2: Wages, Tips, and Other Compensation?

  3. Thank you for this information. AMI can be misleading as it doesn’t take into account the aggregation/segregation of low income and high income families. Can you please elaborate on any plans to provide housing at 0 or 30% AMI specifically in areas adjacent to the Beltline where people with these levels of incomes live? Thank you!

    1. Hi Madeleine, while the Atlanta BeltLine does not own or manage affordable housing around the Atlanta BeltLine, we work with many partners who provide housing around the BeltLine. We continue to work with our partners, such as Atlanta Housing, who specifically focus on reaching folks between 0-30% AMI.

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