FY 2012 Income Limits Documentation System

FY 2012 Very Low-Income (50%) Income Limits Calculation

The Income Limits explained on this page are not for use with Multifamily Tax Subsidy Projects (IRC section 42 and 142 projects). Users interested in these programs should visit the FY2012 Multifamily Tax Subsidy Project Documentation System.

The 4-person Very Low-Income Limit (VLIL) is based on 50% of the median family income estimated for the Newark, NJ HUD Metro FMR Area. For a discussion, of the estimated median family income please read here.

Once the median family income is estimated and a preliminary 4-person Very Low-Income Limit is calculated (as 50% of median family income) a series of comparisons required by statute are made:

  1. High Housing Cost Adjustment: The 4-Person VLIL is increased if it would otherwise be less than the amount at which 35 percent of it equals 85 percent of the annualized two-bedroom Section 8 FMR (this adjusts income limits upward for areas where rental housing costs are unusually high in relation to median income);
  2. Low Housing Cost Adjustment:The 4-Person VLIL is reduced to the greater of 80 Percent of the U.S. median family income level, or the amount at which 30 percent of it equals 100 percent of the two-bedroom FMR (this adjusts income limits downward for areas of unusually high median family incomes);
  3. State Non-Metro Median Family Income Adjustment: The 4-Person VLIL is also adjusted if it would otherwise be lower than 50% of the State Non-Metro Median Family Income.

As of FY2010, HUD has discontinued its use of the hold harmless policy that has been in place for several years. For further information, please review our Federal Register Notice, released May 14, 2010. However, in order to minimize program management problems, HUD has devised and implemented a set of maximum and minimum changes for income limits. Consequently, the FY2012 Income Limits cannot change more than the greater of 5 percent or twice the national average change in median family income. For FY2012, the national change in median family income is -0.923 percent, therefore the maximum change amount is 5 percent.

NOTE: Income Limits are rounded to the nearest $50 and in order to make it easier for those wishing to replicate HUD's calculations, the rounded 4-person income limit is used to calculate other family size income limits instead of the unrounded 4-person income limit.

The results of the 4-Person Very Low-Income Limit Calculation Process

Newark, NJ HUD Metro FMR Area Results

The estimated FY2012 Median Family Income and preliminary 4-Person Very Low-Income Limit for Newark, NJ HUD Metro FMR Area are:

Area FY 2012 Estimate of
Median Family Income
Preliminary 4-Person
Very Low-Income Limit
Newark, NJ HUD Metro FMR Area
  1. The High Housing Cost adjustment calculations follow:
    Area 2BR FMR 85% of Annualized 2BR FMR 35% of Preliminary 4P VLIL Comparison High Housing Cost Adjustment
    Newark, NJ HUD Metro FMR Area Is <
    No
    No
    4 Person VLIL
    =
  2. The Low Housing Cost adjustment calculations follow:
    Area Annualized 2BR FMR 80% of US Median Income 30% of Preliminary 4P VLIL Comparisons Low Housing Cost Adjustment
    Newark, NJ HUD Metro FMR Area * 12
    =
    Is >
    No
    Is >
    No
    No
    4 Person VLIL
    =
  3. State non-metro Median Family Income Adjustment Newark, NJ HUD Metro FMR Area is not subject to the State non-Metro Median Family Income test as there are no non-metro areas to compare to.

Once the final 4-Person income limit has been established, calculation of income limits for other family sizes is straight-forward. The 1-Person family Income Limit is 70% of the 4-Person Income Limit. The 2-Person family Income Limit is 80% of the 4-Person Income Limit, the 3-Person family Income Limit is 90% of the 4-Person Income Limit, the 5-Person Income Limit is 108% of the 4-Person Income Limit, the 6-Person Family Income Limit is 116% of the 4-Person Income Limit, the 7-Person family Income limit is 124% of the 4-Person Income Limit, and the 8-Person Family Income Limit is 132% of the 4-Person Income Limit. For family sizes larger than 8 persons, the income limit can be calculated by adding an additional eight (8) percent per person to the next lower limit. For example a 9-Person Family Income Limit is 140% (132% + 8%), and so on.

4-Person Income Limits are rounded to the nearest $50, subject to caps and floors. All other Income Limits are rounded up to the nearest $50 to ensure that they do not violate the 5% floor. Also, in order to make it easier for those wishing to replicate HUD's calculations, the rounded 4-Person income limit is used to calculate other family size income limits instead of the unrounded 4-Person income limit.

Although the Newark, NJ HUD Metro FMR Area received No Adjustments as calculated above, the preliminary Income Limit Value of is not the final 4-person Income Limit of . Consequently, the final 4-Person Income Limits associated with Newark, NJ HUD Metro FMR Area are subject to HUD's floor on the annual change in Income Limits.

Because HUD no longer enforces the Hold Harmless Policy from past years, HUD determined that allowing income limits to fall precipitously was not in the best interests of managing the section 8 housing choice voucher program. Therefore, as stated above, the maximum decrease that can be experienced in any area in one year is 5%.

The table below depicts the unrestricted income limits for FY2012, the maximum limits allowed at 5.0%, and the final FY2012 Income Limits.

FY 2012 Income Limit Change Comparison
Newark, NJ HUD Metro FMR Area
Income Limit Information 1-Person 2-Person 3-Person 4-Person 5-Person 6-Person 7-Person 8-Person
FY 2012 Prelim VLIL
FY 2011 VLIL
Maximum Change (5.0%) from
FY 2011 Final VLIL
Floor Required? No No No No No No No No
FY 2012 FINAL VLIL
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