What's in this article?
Area median income (AMI) serves as a crucial benchmark for assessing housing eligibility in affordable properties—making it important for homebuyers at lower income levels.
The FHFA recently released its updated AMI limits but what does that mean for you?
If you’re interested in buying a home but have difficulty getting a mortgage due to low income or savings, this is a must-read article for you.
What is area median income?
Area median income (AMI) is a crucial measure in affordable housing. It represents the midpoint of income distribution within a particular area. In other words, half of the area’s households have income above that figure and half below it.
This figure is annually determined by the Department of Housing and Urban Development (HUD).
HUD refers to this value as median family income (MFI), which is based on a four-person household. Understanding AMI plays a pivotal role in housing affordability.
Why Is AMI so important?
AMI serves as the basis for several of HUD’s housing programs, specifically those that rely on the value assigned to a metropolitan statistical area (MSA).
These values have a direct impact on determining eligibility for mortgage loan programs from the government.
For instance, if you’re looking at an affordable housing community that reserves units for households earning 50% of that area’s median income (AMI), then a two-person household would have a lower threshold compared to a five-person household.
The same holds true for lenders who use AMI levels for mortgage loan programs.
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See Today’s RatesAMI limits raised by FHFA
The Federal Housing Finance Agency (FHFA) recently unveiled the updated area median income (AMI) limits for 2023 and 2024—an increase of approximately 7.73% across the majority (95%) of counties in the United States.
This revision was put into effect to expand opportunities for homeownership, creating a pathway for more borrowers to enter the market.
Area median income by state
Here are the 2023 AMI figures by state, according to HUD.
| State | Total | Metro | Non-Metro |
| Alabama | $79,600 | $84,400 | $65,700 |
| Alaska | $106,900 | $111,800 | $94,000 |
| Arizona | $91,600 | $93,100 | $63,100 |
| Arkansas | $74,200 | $81,100 | $63,400 |
| California | $109,200 | $110,000 | $83,800 |
| Colorado | $114,500 | $118,200 | $90,900 |
| Connecticut | $119,500 | $119,900 | $114,700 |
| Delaware | $97,700 | $97,700 | $76,800 |
| District of Columbia | $152,800 | $152,800 | $76,800 |
| Florida | $85,500 | $86,000 | $65,800 |
| Georgia | $90,600 | $95,200 | $69,100 |
| Hawaii | $113,200 | $118,700 | $93,700 |
| Idaho | $89,700 | $92,800 | $81,300 |
| Illinois | $101,900 | $105,500 | $82,300 |
| Indiana | $88,900 | $90,800 | $82,700 |
| Iowa | $95,200 | $102,000 | $86,300 |
| Kansas | $92,700 | $99,900 | $79,900 |
| Kentucky | $78,600 | $89,100 | $64,900 |
| Louisiana | $75,200 | $78,800 | $57,900 |
| Maine | $92,900 | $103,000 | $80,600 |
| Maryland | $124,500 | $125,700 | $87,800 |
| Massachusetts | $127,700 | $127,500 | $130,000 |
| Michigan | $90,300 | $93,600 | $79,800 |
| Minnesota | $111,700 | $119,000 | $90,400 |
| Mississippi | $71,800 | $78,900 | $64,200 |
| Missouri | $88,700 | $95,400 | $71,000 |
| Montana | $89,700 | $95,500 | $85,100 |
| Nebraska | $99,300 | $106,400 | $88,400 |
| Nevada | $88,100 | $87,400 | $92,500 |
| New Hampshire | $121,400 | $128,900 | $106,500 |
| New Jersey | $123,500 | $123,500 | $76,800 |
| New Mexico | $76,000 | $81,800 | $67,100 |
| New York | $103,700 | $105,800 | $83,700 |
| North Carolina | $87,000 | $92,100 | $70,400 |
| North Dakota | $100,400 | $104,600 | $95,700 |
| Ohio | $90,600 | $94,000 | $79,500 |
| Oklahoma | $78,500 | $83,900 | $68,700 |
| Oregon | $98,800 | $103,600 | $77,600 |
| Pennsylvania | $98,100 | $101,500 | $77,800 |
| Rhode Island | $109,100 | $109,100 | $76,800 |
| South Carolina | $82,900 | $86,100 | $65,200 |
| South Dakota | $92,600 | $97,600 | $87,900 |
| Tennessee | $83,800 | $88,800 | $69,500 |
| Texas | $90,100 | $92,300 | $73,200 |
| Utah | $103,400 | $105,100 | $87,400 |
| Vermont | $101,600 | $115,700 | $94,700 |
| Virginia | $113,000 | $120,000 | $73,800 |
| Washington | $114,600 | $117,600 | $86,000 |
| West Virginia | $74,800 | $81,300 | $64,200 |
| Wisconsin | $96,300 | $101,100 | $86,000 |
| Wyoming | $94,000 | $92,100 | $94,600 |
| United States | $96,200 | $99,500 | $76,800 |
Why did the FHA update AMI limits?
The main goal of this decision is to create a more accessible environment for affordable homeownership opportunities, opening doors for a broader range of individuals.
By raising these limits, a larger portion of the population now has the opportunity to meet the eligibility criteria for mortgage programs like Home Possible® and HomeReady.
Are area median income limits updated frequently?
AMI limits are regularly updated to reflect economic shifts and the latest income trends. The FHFA assesses and revises these limits to accurately capture each area’s current median income levels.
It’s crucial for prospective borrowers to stay informed about these updates as they directly affect eligibility for various mortgage programs.
Staying up-to-date empowers individuals to assess their eligibility and make informed decisions about homeownership.
How does an increase in AMI limits benefit homebuyers?
By expanding the pool of borrowers eligible for low-income programs, more individuals can now realize their dream of homeownership.
This results in enhanced affordability of financing options, along with increased flexibility for lenders to accommodate a broader range of income levels.
Government-sponsored loan programs offer favorable terms to borrowers earning 80% or even 100% of the median income in a given area. As income levels rise, the pool of eligible borrowers expands.
In short, if your income used to be too high to be eligible for such mortgage programs, it’s time to recheck your eligibility
What to do if you’re still not eligible
If you’re still not eligible for these programs even after the new AMI limit increase, don’t lose hope. Numerous programs exist to assist you—including special mortgage loans, down payment assistance (DPA) programs, and more.
For instance, you could explore a conforming loan with a 3.5% down payment or a government-backed FHA, VA, or USDA loan. These options are also especially beneficial for borrowers with low-to-moderate incomes.
You can also consider focusing on improving your credit score, as it can open doors to various other loan programs and lower mortgage rates.
If you need assistance with the down payment, most states offer DPA programs that you could qualify for as well.
The bottom line—contact a loan officer to see what you can afford
Even if you’re not sure that you qualify for a mortgage due to your income, it’s worth it to speak with a mortgage professional such as the experienced team at Homefinity.
There are dozens of mortgage programs and an unlimited number of personal financial scenarios—it’s our job to match the right home loan product to your situation.
We can provide you with a customized rate and guide you through the available mortgage options and assistance programs based on your financial snapshot.
If you or someone you love has hesitated to pursue homeownership due to limited income, now is a great opportunity to evaluate your eligibility.
Get started with Homefinity today.
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