Calculate HUD's Income Calculation from Assets

Introduction

Understanding how the Department of Housing and Urban Development (HUD) calculates income from assets is crucial for applicants of HUD programs. This calculation affects eligibility and the amount of assistance one might receive. HUD considers various types of assets, such as savings accounts, stocks, and real estate, to determine annual income from assets. For instance, a passbook savings rate or the current rate of return on investments may be used.

The process can seem complex due to the specific inclusion and exclusion criteria HUD applies. This varies depending on the type of asset and its generating income. Navigating these calculations accurately ensures that applicants receive the correct level of housing assistance, aligning with federal guidelines.

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How HUD Calculates Income from Assets: Examples

Example 1: Regular Savings Account

Consider a savings account balance of $10,000. HUD calculates income from this asset using the current passbook savings rate, typically set at 0.06%. The annual income from the asset is calculated as $10,000 x 0.06% = $6.

Example 2: Investment Property

If a person owns an investment property valued at $300,000 and the expected net rental income after expenses is $12,000, HUD counts the full $12,000 as income from the asset, as it exceeds the calculated income using the HUD passbook rate.

Example 3: Stocks and Bonds

For stocks and bonds, assume a value of $50,000. Using the passbook savings rate of 0.06%, the derived income is $50,000 x 0.06% = $30. However, if actual dividends are higher, such as $500 annually, HUD will use the higher amount of $500.

Example 4: Certificates of Deposit

For a Certificate of Deposit (CD) of $20,000 with an annual interest of 2%, the income calculated would be $20,000 x 2% = $400. This figure is used directly in HUD's income calculations.

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Conclusion

Understanding how HUD calculates income from assets is crucial for accurately applying for housing aid. The HUD considers various types of assets, including savings, bonds, and real estate, and applies specific formulas. To determine the income from these assets, HUD generally uses a percentage calculation represented as Asset Value x 0.02. This simplifies to an annual income estimation from the asset’s current value.

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