Defining Affordable Housing and Affordability Levels

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Defining affordable housing

Based on Federal and State definitions, affordable housing means only 30% of your household’s monthly income should go to housing related expenses. When it becomes more than that, it affects a community members ability to buy food and support other essentials like healthcare. This is true for whether you rent or own a home.

When we use the term affordable housing, we mean housing that is in some way designed for lasting affordability (like City regulatory restrictions) to ensure households are not paying more than 30% of their monthly income on housing related expenses, such as rent and utilities or a mortgage.

Defining affordability levels and income limits

The Area Median Income definition is updated annually by the United States government and varies by household size. For San Mateo County, the 2018 median income for a household of 4 persons is $118,400.

Affordability levels have both Federal and State definitions. There are generally four levels defined as “lower income households”

  • Extremely Low Income Households: Households with annual income of 30% or less of the AMI
  • Very Low Income Households: Households with annual income of 50% or less of the AMI
  • Low Income Households: Households with annual income of 80% or less of the AMI
  • Moderate Income Households: Households with annual income of 120% or less of the AMI

Extremely low-income households are on some form of fixed income such as social security or disability. These are often seniors or people with disabilities. The 2018 Income Limit for a household of one person is $30,800 a year, or approximately $2,567 a month, maximum. While social security benefits can range dramatically depending on when a person began receiving the benefit and other factors, the average monthly benefit is $1,342. 

The current average rent for a one bedroom apartment is $2,821 (Source: Rent Café 2018)

Very low-income households include a broad range of household types that can include nonprofit employees, school teachers, single parent and other working households that earn lower wages. The 2018 Income Limit for a household of four  is $73,300 a year, or approximately $6108 a month.

For a household of four people making the maximum income an affordable rent cost including utilities would be $1,832 a month.  The average rent for a two bedroom apartment is currently $3,708 (Source: Rent Café 2018).

Low-income households generally include working small and large families, retired persons receiving pensions, public employees and often include two household members that are working full time at lower wages.  The 2018 Income Limit for a household of four  is $117,400 a year, or approximately $9,7--83 a month, maximum.  Many households in this category have two full time working household members. 

For a household of four people making the maximum income an affordable rent cost including utilities would be $2,935 a month.  The average rent for a two bedroom apartment is currently $3,708 (Source: Rent Café 2018).

Moderate-income households have incomes that are slightly higher than the median, but still not high enough to afford market rents or home purchase prices.  The 2018 Income Limit for a household of four persons is $142,100 a year, or approximately $11,842 a month, maximum.  Most households in this income category have two full time employed members. 

For a household of four people making the maximum income an affordable rent cost including utilities would be $3,553 a month.  The average rent for a two bedroom apartment is currently $3,708 (Source: Rent Café 2018).

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