Affordable Housing 101: Defining "Affordable"

Affordable housing is a critical issue for many people and communities across the U.S., including Denton. While the definition of affordable housing varies, it is generally understood to mean that low- to moderate- income households should not pay more than 30% of their income on housing costs, including rent and utilities.

What constitutes affordable housing?

There are different tools available for determining housing affordability. When discussing affordability in relation to the policies, programs, and advocacy under the Affordable Housing Toolkit, as well as grants and community programs under Community Services, the City of Denton strives to make our definitions uniform, accessible, and understandable by all stakeholders. Therefore, the City refers to affordability using the Department of Housing and Urban Affairs (HUD)’s defined terms.

HUD has established guidelines for determining affordability based on the Area Median Family Income (AMFI) estimates and Fair Market Rent (FMR) area definitions for each metropolitan statistical area (MSA). Denton is a part of the Dallas, TX HUD Metro MSA which contains: Collin County, TX; Dallas County, TX; Denton County, TX; Ellis County, TX; Hunt County, TX; Kaufman County, TX; and Rockwall County, TX.

HUD’s income limits for different household sizes and locations ensure that affordable housing programs are accessible to household of different sizes, incomes levels, and needs. An area’s median family income (MFI) is the midpoint of a region’s income distribution, where half of the population earns more and half earns less. Income qualified households fall in a percentage below MFI.

For the Dallas Metro MSA based on MFI the AMFI is currently set at $105,600 per year.

Source: HUD 2023 HOME Income Limits

Income categories:

• Moderate Income – Households with incomes between 80% and 120% of AMFI
• Low-income (LI) – Households with incomes between 50% and 80% of AMFI
• Very low-income (VLI) - household incomes between 30% and 50% of AMFI
• Extremely Low-Income (ELI) – Households 30% or below of AMFI

Income limits for a family of four:

• Moderate Income – $82,500 or more
• Low-income (LI) – $82,500
• Very low-income (VLI) - $51,550
• Extremely Low-Income (ELI) – $30,950

HUD defines affordable housing as housing that costs no more than 30% of a household’s income. Using the HUD data in income limits, categories, and household size, rent limits necessary to meet the 30% affordability standard can be determined.