2021 Affordability Limits for Ownership and Rental Housing

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What is affordable housing?

The Metropolitan Council's 2040 Housing Policy Plan defines affordable housing as housing that is affordable to low- and moderate-income families.
 

Who qualifies for affordable housing?

For 2021, the affordability limit is 80% of the area median income for TBRA and 60% of the area median income for LCDA and LCDA-TOD. In 2021, the area median income (AMI) for a family* of four is $104,900. For details on how this is calculated, see the History of Median Income, below. 
 

The Council will use the following amounts as the upper limits for affordable housing in regard to the Livable Communities Act in 2021.

Annual updates of this page occur each spring dependent on timely updates of HUD data this page relies on. If you have questions about these values, please contact Hilary Lovelace hilary.lovelace@metc.state.mn.us
 

Rental housing

 

2021 Rental Housing

# Bedrooms	30% AMI	50% AMI	60% AMI	80% AMI
Efficiency	$550	$918	$1,101	$1,468
1 Bedroom	$590	$984	$1,180	$1,574
2 Bedrooms	$708	$1,181	$1,417	$1,889
3 Bedrooms	$817	$1,363	$1,635	$2,180
4 Bedroom	$912	$1,521	$1,825	$2,433

 

Ownership housing

For owner-occupied housing, the income limit includes principal, interest, property taxes and home insurance.

Assumptions include:

• Fixed-interest, 30-year home loan
• Interest rate of 3.000%**
• A 29% housing debt-to-family income ratio
• A 3.5% down payment
• A property tax rate of 1.25% of the property sales price
• Mortgage insurance at 0.85% of unpaid principal
• $100/month for hazard insurance

2021 Home Ownership

Family Income Level	Affordable Home Price
80% AMI ($79,900)	$316,000
60% AMI ($62,940)	$245,300
50% AMI ($52,450)	$201,500
30% AMI ($31,450)	$113,900

Applying an interest rate of 3.000% on a 30-year fixed-rate home loan for 2021 and other standard mortgage assumptions listed above to the 80% of AMI amount for a family of four ($79,900), yields an affordable purchase price of $316,000. With ongoing increases in HUD income limits and the recent decline in mortgage interest rates, the affordable purchase price has increased from the 2020 limit of $293,500 and the 2019 limit of $254,500.

*The term family is used here because that is how HUD calculates household incomes, and we wish to be consistent with language as HUD's calculated family incomes do differ than other household income calculations. The Council recognizes that many household units in the metro area are not defined by municipal code as "family units", and that calculating benefits by familial status is inequitable, when family status including marriage has not been available to all residents throughout the history of our nation. 
**This is the interest rate offered in April 2021 by the Minnesota Housing Finance Agency to first-time homebuyers with no origination fee. In previous years, this number was raised slightly to reflect likely increases in interest rates over the course of the year. This year, in a time of uncertain economic recovery, we have chosen to make no modifications to the interest rate currently offered.
 

History of area median income

Through 2010, the Council identified a purchase price ceiling for owner-occupied homes based on what a family of four with an income at or below 80% AMI could afford at prevailing interest rates. For affordable rental units, the limit was maximum monthly rents affordable for families at 50% AMI.

From 2011 through 2014, the Council used 60% AMI as the income limit for both rental and ownership costs. 

This level was consistent with the funding criteria preference adopted by the Metropolitan Housing Implementation Group (MHIG) in 2001 and was a commonly-used threshold for affordability in federal, state, and local housing programs. 

The table below lists the family incomes at previous levels of area median income, as calculated by the U.S. Department of Housing and Urban Development (HUD). Please note that due to constraints and adjustments used in HUD’s calculations, the income limits shown here do not necessarily equal the area median income multiplied by the given percentage. 
 

HUD's Area Median Income for a family of four for the Minneapolis-Saint Paul-Bloomington Metropolitan Statistical Area

AMI 2021 2020 2019 Area Median Income $104,900 $103,400 $100,000 80% of Area Median Income $79,900* $78,500* $75,500* 60% of Area Median Income $62,940 $62,040 $60,000 50% of Area Median Income $52,450 $51,700 $50,000 30% of Area Median Income $31,450 $31,000 $30,000

    *The 80% of Area Median Income limit is capped at the U.S. national median family income, so this figure is less than 80% of the Minneapolis-Saint Paul-Bloomington MSA’s median family income.