Section 538 income eligibility is tested at initial occupancy only, and a tenant's income may rise afterwards

rd538.income_eligibility.income_is_tested_only_at_initial_occupancy · v1.0.0

Housing units subject to a Section 538 guaranteed loan must be available for occupancy only by low or moderate-income families or individuals whose incomes AT THE TIME OF INITIAL OCCUPANCY do not exceed 115 percent of the area median income. After initial occupancy a tenant's income may exceed those limits. The regulation's own definition of income eligibility says the same thing: it is 'a determination that the income of a tenant at initial occupancy does not exceed 115 percent of the area median income as such area median income is defined by HUD or a successor agency'. Section 538 therefore imposes no continuing income test, no over-income surcharge and no requirement that an over-income household move.

Confidence

high

Effective from

1998-07-22

Last reviewed

2026-08-30