HUD Handbook 7465.1 § 3-1

a.      POLICY

         (1)      PHAs must use the HUD-prescribed income limits.
                  PHAs may not set their own income limits or modify
                  the HUD-prescribed income limits.

         (2)      HUD usually sets the lower income limits at 80% of
                  the median income for the area, adjusted for
                  family size. HUD may establish a level higher or
                  lower than 80% because of prevailing construction
                  costs or unusually high or low family incomes in
                  the area.

         (3)      HUD usually sets the very low income limits at
                  50/', of the median income for the area, adjusted
                  for family size. HUD may establish a level higher
                  or lower than 50% because of unusually high or low
                  family incomes in the area.

    b.      DISCUSSION

            (1)   Because income limits vary from area to area, an
                  applicant may be eligible at one PHA but not at
                  another.

            (2)   Because the number of family members is a factor
                  in setting the income limits, a change in the
                  number of family members may affect an applicant's
                  eligibility.

            (3)   Annual income, not adjusted income, is used in
                  determining whether an applicant is eligible.
                  While a family may be entitled to large deductions
                  in determining its rent, no deductions are
                  permitted in determining the family's eligibility.

            (4)   The lower income limits and very low income limits
                  are set at the same level for Section 3 as they
                  are for public housing.

    c.      HUD RESPONSIBILITIES

            HUD sets income limits for each county or Metropolitan
            Statistical Area (MSA). HUD updates the income limits
            from time to time and advises PHAs of the new figures.

The 80% of median income and 50% of median income figures
            are derived for a family of four and adjusted for other
            size families.

       d.   REFERENCES

         U.S. Housing Act of 1937, as amended, Sections 3(a) and
  3(b)(1) and (2)

           24 CFR 913.103 - 913.105, and definitions in 913.102
       and 913.106