HUD Handbook 4350.3 § 5-9
Key Requirements for Determining Adjusted Income (HUD Occupancy Handbook 4350.3 REV-1 CHG-4)
Operative Text
A. There are five possible deductions that may be subtracted from annual income
based on allowable family expenses and family characteristics. The remainder,
after these deductions are subtracted, is called adjusted income. Adjusted
income is generally the amount upon which rent is based. See Section 4 of this
chapter for information about specific rent calculation methods. This section
focuses on the calculation of annual adjusted income. Before rent is calculated,
annual adjusted income is converted to monthly adjusted income.
B. Of the five possible deductions, three are available to any assisted family, and
two are permitted only for elderly or disabled families.
1. The three types of deductions available to any assisted family are:
a. A deduction for dependents;
b. A child care deduction; and
c. A disability assistance deduction.
2. The two types of deductions permitted only for families in which the head,
spouse, or co-head is elderly or disabled are:
a. An elderly/disabled family deduction; and
b. A deduction for unreimbursed medical expenses.
NOTE: A family may not designate a family member as head or co-head
solely to become eligible for these additional benefits. The remaining
member of a family listed in paragraph 5-9 B.2 who is not 62 or older or a
person with disabilities is not eligible for these allowances.Under HUD Handbook 4350.3 REV-1 CHG-4 § 5-9, assisted housing programs allow up to five deductions to be subtracted from a household's annual income before rent is calculated, producing what is called 'adjusted income.' Three of these deductions—for dependents, child care, and disability assistance—are available to any assisted family, while two additional deductions for elderly or disabled families apply only when the head, spouse, or co-head meets the qualifying criteria. The rule also prohibits households from designating a family member as head or co-head solely to gain access to the elderly or disabled deductions.
Plain English — not legal advice.
Operators administering HUD-assisted properties under HUD Handbook 4350.3 REV-1 CHG-4 § 5-9 are generally expected to apply the correct set of income deductions when calculating each household's adjusted income before determining rent. Compliant operators verify which of the five deductions a household qualifies for—confirming, for example, that claims to elderly or disabled family deductions are supported by the actual status of the head, spouse, or co-head rather than a strategic designation. Maintaining thorough documentation of family composition and qualifying characteristics helps support accurate rent calculations and withstand management reviews or audits.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
HUD Handbook 4350.3 REV-1 CHG-4 § 5-9 establishes that eligible households may have certain expenses and family characteristics deducted from annual income before rent is set, which can meaningfully reduce the amount owed. Tenants who believe an applicable deduction—such as for dependents, child care, disability assistance, or unreimbursed medical expenses—was not applied to their income calculation may raise that concern with their property manager or request a review of their file. Tenants who believe their rights under this provision have not been honored can also contact the U.S. Department of Housing and Urban Development or a local tenant-rights organization for guidance on available options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 25, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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