The very lowincome limits (usually based on 50 percent of median incomes) are the basis of all other income limits, as they are the bestdefined income limits and have been the subject of specific, limited legislative adjustments subsequent to reviews of the HUD calculation methodology. In addition, a number of other income limit calculations are tied by legislation or regulation to their calculation.
There are currently several legislated income limit standards (e.g., 30%, extremely lowincome limits, 50%, 60%, 65%, 80%, 95%, 100%, 115%, 125%) that were intended to have progressive relationships. To ensure that this occurs, the very lowincome limits have been used as the basis for deriving other income limits unless that relevant statutory language has no references or relationship to low and very lowincome limits as defined by the U.S. Housing Act of 1937. If this were not done, for instance, HUD lowincome limits would be less than very lowincome limits in areas where very lowincome limits had been adjusted upward by more than 60 percent because of unusually low area median family incomes relative to the Section 8 Fair Market Rents (FMRs).
Very lowincome limits are calculated using a set of formulae as follows. The first step is to calculate a fourperson income limit equal to 50 percent of the area median family income. Adjustments are then made if this estimate is outside formula constraints. More specifically, the very lowincome limit for a fourperson family is calculated as follows:
(1) 50 percent of the area median family income is calculated and set as the preliminary fourperson family income limit;
(2) the fourperson very lowincome limit is increased if it would otherwise be less than the amount at which 35 percent of it equals 85 percent of the annualized twobedroom 40th percentile rent. This adjusts income limits upward for areas where rental housing costs are unusually high in relation to the median income;
(3) the fourperson very lowincome limit is reduced to the greater of 80 percent of the U.S. median family income level, or the amount at which 30 percent of a fourperson family's income equals 100 percent of the twobedroom 40th percentile rent. This adjusts income limits downward for areas of unusually high median family incomes;
(4) the fourperson income limit is increased if it is less than 50 percent of the relevant state nonmetropolitan median family income level,
^{3} and;
(5) the fourperson income limit is increased if it is less than 95 percent of last year's very lowincome limit and reduced to the greater of 105 percent of last year’s very lowincome limit or twice the change in the national median family income estimate if that amount would be larger than 5 percent. For FY 2020 income limits, twice the increase in the national median income compared to the FY 2019 median income is 7.9 percent, so the cap on increases is set at 7.9 percent. HUD uses FMRs to calculate high and low housing cost areas. Beginning with the FY 2020 FMRS, effective October 1, 2019, there are no 50th percentile FMRs; all FMRs are calculated at the 40th percentile.
Table 1 summarizes the rules governing very lowincome limit determinations:
Table 1 Summary of Income Limits Determinations for FY 2020 Very Lowincome Limits

Type Income Limit Calculation 
Nonmetro Counties 
Metropolitan Areas 
1 
Limits based on 50% of local median family income 
604 
339 
2 
Limits based on State nonmetropolitan median family income level 
1236 
118 
3 
Limits increased to the amount at which 35% of 4person family's income equals 85% of the 2bedroom 40th percentile rent 
11 
26 
4 
Limits decreased to the greater of 80% of the U.S. median family income or the amount at which 30% of a 4person family's income equals 100% of the 2 bedroom 40th percentile rent 
1 
0 
5 
Limits floored if they would be less than 95% of last year's limit 
12 
17 
6 
Limits capped if they would otherwise increase by more than twice the increase in the National Median Income (i.e., would be more than 110% of last year's limit) 
109 
125 
7 
TOTALS 
1973 
625 
Footnotes:
^{3} A Housing and Community Development Act of 1987 amendment directed that nonmetropolitan area income limits should never be set at less than if they were based on the State nonmetropolitan median family income level. In implementing this provision, HUD used its discretion to apply this policy to metropolitan areas to avoid inequities that would otherwise result. Doing so avoids the anomaly of assigning higher income limits to a nonmetropolitan county than are assigned to an adjacent metropolitan area where the median family income is less than the State nonmetro level but above the level for the nonmetro county.