HOME Program Occupancy Rules
The HOME Program requires that at least 20 percent of HOME-assisted units in each project be rented to households that initially qualify at incomes below 50-percent of HUD's area median income (AMI) level. This applies to projects with five or more HOME-assisted units. All remaining HOME-assisted units must be initially reserved for households with incomes below 80 percent of AMI. This requirement stays with the project throughout the period of affordability. As tenants' incomes change and units turn over, managers must make every effort to maintain compliance with this occupancy requirement. If there is noncompliance, a portion of the HOME funds may have to be repaid.
Although HOME-assisted units may technically serve households with incomes up to 80 percent of AMI, the HOME program requires that 90 percent of a participating jurisdiction's (PJ's) annual allocation of HOME funds for affordable rental housing must assist tenants who are at or below 60 percent of AMI at initial occupancy (of the unit). The remaining 10 percent may benefit people with incomes between 60 and 80 percent AMI. This is commonly referred to as the HOME "Program Rule". In order to comply with the Program Rule, many PJs require that all initial occupants have incomes at or below 60 percent of AMI.
These income-eligibility requirements should not be confused with rent setting requirements that are covered in Topic 5: Setting Rents of this training module. Under the HOME program, the income of a household when it initially qualifies for occupancy is generally determined by using HUD's Section 8 definition of income.
- Note that the Section 8 definition of income is found in the Code of Federal Regulations at 24 CFR Part 5. The HOME program provides guidance in using the Section 8 definition of income in the "Technical Guide for Determining Income and Allowances for the HOME Program". Additional guidance is available in HUD Handbook 4350.3.
- The LIHTC program also uses the Section 8 definition of income. The IRS has indicated that owners and managers of LIHTC projects may rely on HUD Handbook 4350.3 for purposes of determining tenant incomes.
The HOME program permits owners to use two alternative income definitions; however, because the LIHTC programs uses the Section 8 definition of income, PJs should expect owners of HOME-LIHTC properties to prefer the Section 8 definition. However, PJs can also establish household income through the Census Long Form definition or IRS adjusted gross income definition.