Community Investment: Loan
Qualifications
Owner Occupied Housing
A loan supporting owner occupied
housing could be qualified based on
the income of the borrower, or if
the loan was originated in a
target area.
For loans qualified by Income:
In
both rural and urban areas, a
borrower’s household income must be
at or below 115% of the area median
income (AMI) for a family of four.
(see HUD income guidelines)
If you are qualifying a
residential loan to a borrower based
on their household income, you will
need to calculate 115% of area
median income. To perform this
calculation, take the amount for
very low income (50% AMI) in the HUD
income guidelines and double it.
Multiply that amount by 1.15. For
example, if very low income is
$20,000, then 115% of area median
income is ($20,000 x 2) x 1.15) =
$46,000.
For loans qualified by Target
Area:
A loan would be eligible if it is
located in a target area. There are
several target areas, but the one
most commonly used is targeted by
income. For both rural and urban
areas, a loan would be eligible if
the project was located in a census
tract with income at or below 115%
of the median income for the area.
To determine the income for a census
tract, members can utilize the
Geocoding/Mapping System on the
FFIEC
website.
Other targeted areas include:
- Federal Champion Community
as designated by the Secretary
of HUD or Secretary of the USDA
- Federal Enterprise Community
as designated by the Secretary
of HUD or Secretary of the USDA
- Federal Empowerment Zone as
designated by the Secretary of
HUD or Secretary of the USDA
- Indian Area as designated by
the Native American Housing
Assistance and
Self-Determination Act
