How Does Housing Connect Calculate Annual Income?

Housing Connect calculates annual income by projecting what your entire household will earn in gross wages, benefits, and other qualifying payments over the next twelve months, then adding imputed returns on assets above a federal threshold. The system follows the federal definition of annual income at 24 CFR 5.609, so gross pay before taxes and deductions is what counts, every adult in the unit is included, and the marketing agent works forward from your current pay rate rather than backward from last year’s tax return.1eCFR. 24 CFR 5.609 – Annual Income Getting the figure right before you apply matters, because a miscalculation can push you outside a listing’s income band and cost you a unit months after you’ve already won a lottery spot.

The AMI Band Your Household Has to Fit

Every Housing Connect listing sets an income floor and ceiling as a percentage of Area Median Income for the New York City region. The 2025 AMI is $145,800 for a three-person family, and HUD updates the figures each year.2NYC.gov. Area Median Income – HPD A listing open to households at 40 to 60 percent of AMI means your annualized total has to land inside that band for your household size. Fall below the floor and you’re rejected as under-income; go over the ceiling and you’re rejected as over-income.

HPD groups affordable housing by these bands:

  • Extremely low income: 0 to 30 percent of AMI
  • Very low income: 31 to 50 percent of AMI
  • Low income: 51 to 80 percent of AMI
  • Moderate income: 81 to 120 percent of AMI
  • Middle income: 121 to 165 percent of AMI

The dollar figure inside each band shifts with household size, so before you apply, pull HPD’s income chart for your household size and the percentage the listing requires.2NYC.gov. Area Median Income – HPD

Whose Income Gets Counted

Your “household” for Housing Connect purposes is every person who will live in the apartment, regardless of relationship. A married couple, two roommates, and a parent living with an adult child all form a single household. The marketing agent counts the gross income of every household member who is 18 or older, plus the head of household and spouse regardless of age.1eCFR. 24 CFR 5.609 – Annual Income Wages earned by children under 18 are excluded.

Every qualifying person’s income gets totaled together, and that combined figure is what the AMI band is measured against. If you’re applying with a roommate, their paycheck is part of your application whether or not you share expenses.

What Counts as Income

The federal definition sweeps broadly. It starts with gross wages, salaries, overtime, bonuses, commissions, and tips. Gross means the figure on your pay stub before taxes, FICA, health insurance premiums, or retirement contributions come out. Take-home pay is irrelevant.

Beyond wages, the calculation picks up:

  • Recurring payments from Social Security, pensions, annuities, and insurance policies
  • Interest and dividends from savings accounts, stocks, and bonds, even if you never withdraw the earnings
  • Alimony and child support received
  • Net income from a business (covered in more detail below)
  • Regular, ongoing contributions or gifts from people outside the household
  • Unearned income of dependents under 18, such as a Social Security survivor benefit or trust distribution1eCFR. 24 CFR 5.609 – Annual Income

What Doesn’t Count

The same regulation carves out a long list of exclusions. None of these get added to your income total:

  • Earned wages of household members under 18
  • Foster care and kinship or guardianship care payments
  • Grants and scholarships used for tuition, books, supplies, room and board, and required institutional fees; for students who are not the head of household or spouse, reasonable housing costs while attending school are also excluded
  • Insurance settlements for personal or property losses, including health insurance reimbursements, motor vehicle insurance, and workers’ compensation
  • Amounts specifically received to cover health and medical care
  • Malpractice or negligence settlements tied to a household member’s disability
  • Income of a household member who qualifies as a live-in aide1eCFR. 24 CFR 5.609 – Annual Income

One exclusion catches applicants off guard: federal tax refunds and refundable tax credits, including the Earned Income Tax Credit, are excluded from income for 12 months after you receive them.3eCFR. 24 CFR 5.603 – Definitions A large EITC deposit sitting in checking during the verification window doesn’t inflate your income figure or your countable assets.

How Your Twelve Months Get Projected

The marketing agent doesn’t just copy what you earned last year. The calculation projects the next twelve months from your current gross pay rate. The multiplier depends on your pay frequency:

This forward-looking approach cuts both ways. A recent raise can push you over a ceiling even though your last W-2 shows a lower number. Losing a second job can drop your projection below what your tax return suggests.

For fluctuating or irregular income, such as seasonal work, variable commissions, or on-call schedules, the agent averages your earnings over a defined lookback period, usually the past year or the most recent six months. Bonuses get the same treatment: a quarterly bonus you’ve received consistently is built into the projection, while a one-time performance bonus from two years ago that never repeated carries less weight.4NYC Housing Connect. Applying for Affordable Housing: Applicant Income Guide

Self-Employment and Gig Work

Self-employed applicants report net income, not gross receipts. Start with total business revenue, subtract legitimate business expenses, and the remaining figure is what Housing Connect counts. On a federal return this shows up on Form 1040 line 12 (“Business income or loss”), with the detail on Schedule C line 31 (“Net profit or loss”). Net self-employment income of $400 or more per year must be reported.5NYC.gov. Applying for Affordable Housing: Applicant Income Guide

Marketing agents compare your most recent return against current year-to-date profit-and-loss statements. If your business has grown or shrunk since you filed, the agent may average several recent months to build a more realistic projection instead of relying only on last year’s numbers. Keep clean, updated records.

Freelancers and gig workers should gather every 1099-NEC and 1099-K for the year. Payment apps and online marketplaces are required to send Form 1099-K when your total payments exceed $20,000 across more than 200 transactions, and some platforms send one voluntarily below that threshold.6Internal Revenue Service. Understanding Your Form 1099-K Even if you never receive a 1099-K, gig earnings still have to be reported, and the agent will want documentation covering the full picture.

Lump Sums, Windfalls, and Settlements

Inheritances, lottery winnings, and legal settlements trip up applicants who assume these will be counted as income. Under HUD’s rules following the Housing Opportunity Through Modernization Act (HOTMA), most one-time payments are excluded from annual income. Lottery winnings and other nonrecurring lump sums are treated as additions to assets instead.7Administration for Community Living. A Deep Dive into HUD’s New Income and Asset Rules Insurance settlements for personal or property losses are excluded entirely from income.

The catch is on the asset side. A lump sum doesn’t count as income, but it does get added to net family assets, and once your assets cross the threshold below, the imputed income rules kick in. An $80,000 inheritance sitting in savings won’t appear as income, but the interest it generates will, and the imputed return calculation may attach to it as well. Settlements from civil rights litigation follow the same pattern: excluded from income, generally counted as an asset going forward.7Administration for Community Living. A Deep Dive into HUD’s New Income and Asset Rules

Assets and Imputed Income

Net family assets are the combined cash value of your savings, stocks, bonds, real property, and other investments, minus what it would cost to dispose of them.3eCFR. 24 CFR 5.603 – Definitions Assets matter to the income calculation in two ways.

First, if your net family assets exceed $52,787 (the 2026 threshold) and the actual return on a given asset can’t be determined, the agent calculates an imputed return using HUD’s passbook savings rate, which is 0.40 percent for 2026. That imputed return gets added to your annual income. Assets under $52,787 can be self-certified without additional documentation.8HUD User. 2026 HUD Inflation-Adjusted Values and Passbook Rate

Second, for the Housing Choice Voucher program, net family assets above the 2026 ceiling of $105,574 can disqualify a household outright.

Several categories of assets are excluded from the calculation entirely:

  • Retirement accounts recognized by the IRS: IRAs, 401(k)s, employer pensions, and self-employed retirement plans
  • Education savings: 529 plans, Coverdell accounts, ABLE accounts, and government-funded “baby bond” accounts
  • Necessary personal property, plus non-necessary personal property worth less than the annual threshold (adjusted from a $50,000 base)
  • Federal tax refunds, for 12 months after receipt
  • Family Self-Sufficiency accounts3eCFR. 24 CFR 5.603 – Definitions

The retirement exclusion is the one that matters most for middle-income applicants. A household with $200,000 in a 401(k) isn’t penalized because that balance is invisible to the asset calculation. But $30,000 in a regular brokerage account counts in full.

Documents That Drive the Calculation

The marketing agent won’t ask for documentation until after your log number comes up in the lottery, but starting early prevents the last-minute scramble that costs people apartments. Plan on producing:

  • Your most recent IRS Form 1040 with all schedules. Self-employed applicants should have Schedule C ready.
  • W-2s and every 1099, including 1099-NEC and 1099-K forms from gig platforms.
  • Consecutive pay stubs covering roughly the last three to six months. The agent uses gross year-to-date, not net deposit.
  • Current benefit award letters from Social Security, public assistance, pensions, or disability programs, showing payment amount and frequency.
  • Three to six months of bank statements for all accounts.

The single most common application error is reporting net take-home pay instead of gross. Your gross figure sits near the top of the pay stub, before deductions for FICA, insurance, and retirement contributions. That is the number the calculation uses.

Applicants on public assistance may be able to substitute an HRA Budget Letter, provided it lists every household member, both earned and unearned income, the payment frequency, and was issued within the past 12 months.9NYC HDC. Using HRA Budget Letter to Determine Income Eligibility Households with no income should expect to sign an affidavit of zero income, a sworn statement that no member receives any wages, benefits, or compensation.

After You Move In

Approval isn’t the end of the income conversation. If your household composition or earnings change after move-in, whether from a new baby, a roommate moving out, a job loss, or a significant raise, you’re expected to report it. Housing authorities must give 30 days’ notice before any resulting rent increase takes effect, provided you reported the change on time.10eCFR. 24 CFR 960.257 – Family Income and Composition: Annual and Interim Reexaminations Fail to report on time and rent increases can be applied retroactively to the first of the month after the change occurred. Annual reexaminations run regardless, so unreported changes surface eventually, and the back-rent hit is worse than the proactive report.