Most four-person low-income limits are the higher of: (a) 80 percent of the area median family income, or (b) 80 percent of the State non-metropolitan median family income level. Because the very low-income limits are not always based on 50 percent of median, strictly calculating low-income limits as 80 percent of median could produce anomalies inconsistent with statutory intent (e.g., very low-income limits could be higher than low-income limits). The calculation normally used, therefore, is to set the four-person low-income limit at 1.6 (i.e., 80%/50%) times the relevant four-person very low-income limit. The only exceptions are that the resulting income limit may not exceed the U.S. median family income level ($75,500 for FY 2019) except when justified by high housing costs; and once adjusted, the fourperson low-income limit decrease is limited to five percent or, if increasing, capped at the greater of five percent or twice the national change in median income (which is 10 percent for FY 2019). Use of very low-income limits as a starting point for calculating other income limits tied to Section (3)(b)(2) of the U.S. Housing Act of 1937 has the effect of adjusting low-income limits in areas where the very low-income limits have been adjusted because of unusually high or low housingcost-to-income relationships.

Table 2 summarizes the rules governing low-income limit determinations and how many areas are affected by each provision:

Table 2 Summary of Income Limits Determinations for FY 2019 Low-income Limits

	Type Income Limit Calculation	Non-metro Counties	Metropolitan Areas
1	Limits based proportional increases from very low-income limits (i.e., set at 80/50ths of the very low-income limits)	568	349
2	Limits based on State nonmetropolitan median family income level	1292	118
3	Four-person base low-income limit capped at the U.S. median of $75,500	16	36
4	Limits increased for high housing costs	19	35
5	Limits floored if they would otherwise be less than 95% of last year's low-income limit	19	12
6	Limits capped if they would otherwise increase by more than twice the increase in the National Median Income (i.e., would be more than 110% of last year's limit)	59	75
	Totals	1973	625

HUD has adjusted low-income limits for areas of unusually high or low income since passage of the 1974 legislation that established the basic income limit system now used. Underlying the decision to set minimum and maximum low-income limits is the assumption that families in unusually poor areas should be defined as low-income if they are unable to afford standard quality housing even if their incomes exceed 80 percent of the local median family income. Similarly, families in unusually affluent areas are not considered low-income even if their income is less than 80 percent of the local median family income level unless justified by area housing costs.

HUD uses 40th percentile rents instead of FMRs that include 50th percentile rents in some areas, to calculate high housing cost areas. This is to create a uniform national standard for the relationship between the rent and income distributions in defining the high- and low-housing cost adjustments, and, in the past, to prevent fluctuations in Low-Income Housing Tax Credit Difficult Development Area (DDA) determinations that result solely from high housing cost income limit fluctuations as areas go in and out of the 50th percentile FMR program. Beginning with the FY 2018 FMRs, no additional 50th percentile areas can be designated, so this use of 40th percentile rents only impacts the few remaining areas where the three-year 50th percentile FMR has not expired. All three of these areas will expire at the end of FY 2019.