What Are HOME Rent Limits?
HOME Rent Limits are a key tool provided by the U.S. Department of Housing and Urban Development (HUD) to guide affordable housing programs and real estate professionals working with federally assisted rental housing. Available annually from Fiscal Year 1998 to the present, these limits establish the maximum rents allowed under the HOME Investment Partnerships Program, ensuring affordability for low- and very low-income households.
The limits are defined under 24 CFR Part 92.252 and are designed to balance affordability for tenants with financial sustainability for housing providers. For practitioners, they offer a reliable benchmark for structuring rents in HOME-assisted properties and for evaluating whether a project meets federal requirements.
How HUD Determines HOME Rent Limits
HOME rents are capped at the lower of two calculations:
- Fair Market Rents (FMRs): HUD's estimate of the cost of renting comparable housing in a local market, published annually under 24 CFR 888.111.
- Income-Based Rents: 30% of the adjusted income of a family earning 65% of the area median income (AMI), adjusted by family size and unit bedroom count.
HUD publishes the rent limits with assumptions about average occupancy per unit and adjusted income to provide consistency in application across housing providers.
Additional Requirements for Larger Projects
In rental developments with five or more HOME-assisted units, at least 20% of the units must be set aside for very low-income households. These units must meet one of two rent standards:
- Fixed 50% AMI Rents: The rent cannot exceed 30% of the income of a family earning 50% of AMI, with adjustments for household size. If this amount exceeds the standard maximum HOME rent under 92.252(a), the lower 92.252(a) calculation applies.
- Adjusted Income Rents: If a unit receives federal or state project-based rental subsidies, and the tenant pays no more than 30% of adjusted income, the maximum rent is the amount allowed by the subsidy program.
This ensures that projects not only remain affordable but also reach the households with the greatest housing needs.
Fair Market Rents and Larger Unit Sizes
HUD establishes Fair Market Rents (FMRs) annually for the Section 8 Housing Choice Voucher program, and these values are central to HOME Rent Limits. For units larger than four bedrooms, FMRs are scaled upward to account for added space:
- 5 BR = 1.15 × 4 BR FMR
- 6 BR = 1.30 × 4 BR FMR
- 7 BR = 1.45 × 4 BR FMR
- 8 BR = 1.60 × 4 BR FMR
- 9 BR = 1.75 × 4 BR FMR
- 10 BR = 1.90 × 4 BR FMR
- 11 BR = 2.05 × 4 BR FMR
- 12 BR = 2.20 × 4 BR FMR
This formula ensures consistent scaling for larger households without requiring separate market studies for every possible unit size.
Why HOME Rent Limits Matter
For real estate professionals, developers, and housing agencies, HOME Rent Limits provide a practical framework for:
- Project Planning: Establishing rents that comply with federal rules while maintaining feasibility.
- Compliance Monitoring: Ensuring that income and rent restrictions are met across mixed-income projects.
- Market Evaluation: Comparing allowable HOME rents with prevailing market rents to assess financial viability.
- Policy Analysis: Understanding how affordability requirements intersect with local housing market conditions.
By translating federal rules into clear, data-driven benchmarks, HOME Rent Limits enable practitioners to align their investment, compliance, and affordability objectives. Whether structuring a new development, evaluating subsidies, or analyzing portfolio performance, these limits serve as an essential guide for maintaining affordability in federally assisted housing.