What is AMI and Why Does it Matter for Your Mortgage?

Ever heard someone say “You might qualify for that program if you're under 80% AMI,” and thought, “Wait, what even is AMI?”

You’re not alone. AMI - or Area Median Income - is a term that shows up a lot when you're looking at mortgage programs, affordable housing, or down payment assistance. But despite being so important, it's something many homebuyers aren’t totally sure about.

So, let’s break it down in simple terms.

What Does AMI Stand For in Housing?

AMI stands for Area Median Income. It's the midpoint income of a specific area - meaning half the people in that area earn more, and half earn less.

The Department of Housing and Urban Development (HUD) calculates the area median income by county and household size each year. It’s used to decide who qualifies for affordable housing programs, mortgage assistance, and special homebuyer incentives.

So, if you’re asking, “What is the Area Median Income for my area?” - the answer changes based on where you live and how big your household is. That’s why AMI is such a hot topic in housing and mortgages.

Why AMI Matters for Your Mortgage

If you’re planning to buy a home, AMI matters a lot.

That’s because many mortgage programs and assistance options are based on AMI limits - typically 80%, 100%, or 140% of the area median income. If you fall below or within these limits, you may qualify for:

• Lower interest rates
  
• Down payment assistance
  
• Reduced private mortgage insurance (PMI)
  
• Special low-income loan programs
  
  

Let’s say you make $60,000 per year. In some counties, that could be under 80% AMI, making you eligible for extra help. In another county, that same income could be over the limit.

So knowing your local AMI affordable housing guidelines is key.

How is Area Median Income Calculated?

Each year, HUD collects income data by area - down to counties and metropolitan regions. They analyze household incomes and set a median income by area based on:

• Family size
  
• Cost of living
  
• Local income levels

For example, the area median income in San Francisco will be higher than in a rural area of Texas. That’s why a one-size-fits-all national limit wouldn’t work.

What Do AMI Levels Mean?

When programs mention “80% AMI” or “100 AMI,” they’re talking about your income compared to the median in your area.

Here’s a quick breakdown of typical AMI brackets:

These levels help determine eligibility for various programs, especially for first-time buyers and those living in competitive housing markets.

Programs That Use AMI

Many government and private mortgage programs are tied to AMI guidelines. Some popular ones include:

• Fannie Mae HomeReady® – for borrowers at or below 80% AMI
  
• Freddie Mac Home Possible® – also for those under 80% AMI
  
• Down Payment Assistance Programs – often based on 100% or 120% AMI
  
• Workforce Housing Programs – sometimes go up to the 140 AMI limit

Understanding where your income fits into the AMI chart for your area can open the door to more affordable financing and better terms.

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Real-Life Example

Let’s say you’re a family of 3 in Denver, Colorado.

According to the latest HUD data, the 100% AMI for Denver might be around $110,000.

If your household income is:

• $88,000 → You’re at 80% AMI
  
• $110,000 → You’re at 100% AMI
  
• $154,000 → You’re at 140% AMI
  
  

Depending on your level, you could qualify for down payment help, better mortgage rates, or reduced PMI.

This is why it’s so important to check the area median income for your area before starting your mortgage journey.

How Altgage Helps You Check Your AMI

At Altgage, we believe in making homeownership more accessible. That’s why we’ve built an easy AMI lookup tool that helps you instantly find your income eligibility by zip code.

✔️ Check if you qualify for programs based on 80 area median income
✔️ See how close you are to the 100 AMI threshold
✔️ Understand if you qualify under the 140 AMI limit for workforce housing

👉 Check Your AMI Here with Altgage

This tool simplifies the process, giving you more confidence and clarity before applying for any mortgage product.

Why AMI is More Important Than Ever

In today’s housing market, affordability is a major concern. Home prices and interest rates are up - but that doesn’t mean owning a home is out of reach.

Knowing your AMI level helps you unlock the right programs that make homeownership possible without draining your savings.

It’s not just about how much money you make - it’s about where you live and how your income compares to others in your area.

So instead of asking, “Can I afford a home?” - start by asking:

👉 “What is the area median income for my area?”

Because the answer might surprise you - in a good way.

Understanding what AMI is and how AMI impacts mortgages can be the difference between missing out and moving in.

If you’ve ever asked:

• “What is the area median income?”
  
• “How is area median income calculated?”
  
• “Do I qualify under 80% area median income?”
  

Then you’re already on the right track.

Let Altgage help you take the next step with tools and insights tailored to your unique income and location. Because smart homeownership starts with knowing where you stand.