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1. Why Do Area Definitions Change for Median Incomes and Income Limits?
HUD, following OMB definitions of MSAs with some exceptions, updates area definitions for median incomes and income limits to reflect current commuting patterns and economic realities. According to research from the University of Texas at Austin’s McCombs School of Business, in July 2025, utilizing updated metropolitan area definitions enhances the accuracy of economic indicators. These changes, based on Census data updated through 2023, aim to minimize year-to-year volatility in estimates arising from geographic changes.
When new counties are added to or combined with existing metropolitan areas, HUD often keeps them separate as “HMFAs” (HUD Metro FMR Areas) rather than merging them, preserving existing area definitions. This approach avoids significant fluctuations in income limits caused by geographic reconfigurations. In cases where a county is removed from an MSA, HUD will adjust accordingly to ensure the FMR area is as localized as possible.
This practice ensures that income limits and related calculations remain stable and reflective of local economic conditions, crucial for maintaining fairness and accuracy in housing assistance programs.
2. What Is the Relationship Between Fair Market Rent Areas and Income Limit Areas?
FMR areas and Income Limit areas are typically identical with minor exceptions; however, the FY 2025 income limit areas and FY 2025 FMR areas do not match because HUD is using the latest OMB MSA definitions for the first time with FY 2025 income limits. HUD will adopt the latest area definitions for FMRs for FY 2026. HUD uses FMR areas in calculating income limits because FMRs are needed for the calculation of some income limits, specifically, to determine high and low housing cost adjustments. In cases where the FY 2025 FMR area definitions and FY 2025 Income Limit areas do not match, HUD has calculated an FMR-equivalent rent estimate for the new area for use in determining the high housing cost adjustment.
