AMI (Area Median Income) is a statistic published by HUD. It is the household income of the median (middle) household (in terms of wealth) in a region. HUD releases the AMI for areas across the USA every year, utilizing it to determine who qualifies for its federal housing programs.

HUD collects statistics of income limits for families within a specified region and compiles the data. This data can be used to determine Median Family Income (MFI) for any area in the country. The statistics garnered from this research help the housing department decide which areas qualify for certain federal housing programs.

The USDA provides a chart listing the AMIs across America, which lists the AMI for all major cities and urban areas througout the U.S.

In relation to HUD 221(d)(4) loans, the LIHTC, or Low Income Housing Tax Credit program, which allows developers to get a 10-year tax credit, requires that they allot 40% of the units in a development for tenants earning less than or equal to than 60% of AMI, (the 40/60 test). Or, they must allot 20% of the units in a projects for tenants earning less than or equal to 50% of the AMI (the 20/50 test).

AMI (Area Median Income) is a statistic published by HUD. It is the household income of the median (middle) household (in terms of wealth) in a region. HUD collects statistics of income limits for families within a specified region and compiles the data. This data can be used to determine Median Family Income (MFI) for any area in the country. The USDA provides a chart listing the AMIs across America, which lists the AMI for all major cities and urban areas througout the U.S. Since economic and monetary factors, like inflation, can constantly change an area's income, HUD releases a new set of statistics each year. Therefore, you need to make sure you're using the most recent statistics when attempting to calculate the potential rent limits on a multifamily property.

The benefits of using AMI in commercial real estate are that it helps developers and owners determine the exact rent rates they need to offer to qualify for affordable housing benefits. HUD's income limits guide (https://www.huduser.gov/portal/elist/2017-april_25.html) provides developers with the AMI for any area in the country, which can be used to determine the Median Family Income (MFI) for that area. This data can then be used to decide which areas qualify for certain federal housing programs. Additionally, the USDA provides a chart (https://www.rd.usda.gov/files/RD-GRHLimitMap.pdf) listing the AMIs across America, which lists the AMI for all major cities and urban areas throughout the U.S.

The drawbacks of using AMI (Asset-Backed Mortgage Investment) in commercial real estate include:

• Not serviced by initial CMBS lender (Source)
• Strict enforcement of prepayment penalties (Source)
• Higher closing costs (Source)
• Dishonest tranche ratings can have serious negative effects for borrowers and investors (Source)
• Less autonomy in the operation of the property and limited flexibility to deviate from the terms of the loan documents (Source)
• Difficulty in releasing collateral (Source)
• Expensive to exit (Source)
• Lock outs often prevent prepayment or up to two years (Source)
• Reserves required (Source)
• Secondary financing (i.e. mezzanine debt or preferred equity) not always allowed (Source)

AMI (Area Median Income) affects financing for commercial real estate in that it is used to determine who qualifies for federal housing programs. HUD collects statistics of income limits for families within a specified region and compiles the data. This data can be used to determine Median Family Income (MFI) for any area in the country. The statistics garnered from this research help the housing department decide which areas qualify for certain federal housing programs.

The USDA provides a chart listing the AMIs across America, which lists the AMI for all major cities and urban areas througout the U.S.

The most common uses of AMI in commercial real estate are to determine eligibility for the Low-Income Housing Tax Credits (LIHTC) program and HUD's Section 8 program. For LIHTC, eligibility is typically set at a percentage of AMI, usually less than 100%. For HUD's Section 8 program, eligibility is determined by three rigid tiers of renters by income: Low Income (at or below 80% of AMI), Very Low Income (at or below 50% of AMI), and Extremely Low Income (at or below 30% of AMI). To see the median family income or AMI for an area, visit HUD's data service which provides data annually, typically in the second quarter of the year.