What is a low to moderate income?

As an expert in the field of socio-economic studies, I have a deep understanding of income classifications and how they are used to define various socio-economic groups. When we talk about "low to moderate income," we are referring to a range of income levels that are considered to be below the national average but not necessarily at the poverty level. This classification is often used by governments, non-profit organizations, and other entities to target resources and assistance to those who need it most.

The term "low to moderate income" can be somewhat fluid and may vary depending on the context in which it is used. However, there are general guidelines and criteria that are often applied to define this group. One such criterion, as mentioned in the reference you provided, is related to the Federal Housing Administration's (FHA) programs. According to the FHA, nonprofits participating in their programs must serve individuals or families who are classified as low to moderate income. This classification is based on the household income in relation to the area's median income.

Household Income is the total income that is earned by all members of a household. This includes income from all sources such as wages, salaries, investments, and any other financial gains. When determining whether a household's income is considered low to moderate, it is compared to the median income for the area. The median income is the middle value when all households in an area are listed in order by income, from lowest to highest.

The 115 percent of the median income criterion is a specific threshold used to define low to moderate income. This means that to qualify as low to moderate income, a household's income must not exceed 115% of the median income for that area, adjusted for the size of the family or the number of people in the household. This adjustment is important because larger families typically require more income to maintain the same standard of living as smaller families.

For example, if the median income for a particular area is $50,000, then a household would need to have an income of no more than $57,500 (which is 115% of $50,000) to be considered low to moderate income. This threshold helps to ensure that assistance is targeted to those who are not wealthy but also not in extreme poverty.

It's important to note that these figures are not static and can change over time due to factors such as inflation, changes in the cost of living, and shifts in the overall economy. Additionally, the specific percentage used to define low to moderate income can vary by program and by jurisdiction. Some programs may use a lower percentage, while others may use a higher one.

In conclusion, the classification of low to moderate income is a critical tool for ensuring that resources are distributed in a way that helps to reduce income inequality and provide support to those who are most in need. By understanding the criteria and how these classifications are determined, we can better appreciate the role that income levels play in shaping social and economic policies.

Nonprofits participating in one of FHA's nonprofit programs must serve Low- to Moderate-Income individuals or families. Low- to Moderate-Income individuals or families refer to individuals or families whose household income does not exceed 115 percent of the median income for the area when adjusted for family size.Jun 22, 2015