Apply Three Income Calculation Rules to Section 221(d)(3) BMIR Units that Don’t Get Other Assistance
For Section 221(d)(3) and (d)(4) BMIR multifamily housing, HUD subsidizes an owner’s mortgage by lowering the mortgage interest rate. Sites subsidized under this program are sometimes referred to as Below Market Interest Rate (BMIR) property. Rents aren’t based on a percentage of a tenant’s income, but are a flat amount that HUD approves. In a number of these developments, however, there may be other rental assistance under the Rent Supplement or Section 8 project-based assistance programs for some or all units that will change these rent rules.
If you own or manage a Section 221(d)(3) BMIR site with households in units that don’t get any other additional assistance, such as Section 8, you need to apply three special income calculation rules in HUD Handbook 4350.3 when certifying or recertifying these households’ income and rent. Because these rules don’t apply to other types of assisted households, you may be confused about them.
We’ll tell you about the three special income calculation rules you must apply when certifying or recertifying households that get only BMIR assistance and how they differ from the rules for certifying and recertifying households that get other types of assistance.
Rule #1: Don’t ‘Impute’ Income to Assets
Generally, when assisted households have assets that exceed $5,000, HUD requires you to “impute” income to those assets and include either the imputed income or the assets’ actual income in the household’s annual income, whichever is greater. But if the household gets only BMIR assistance, don’t impute income to assets. Include only actual asset income in annual income—no matter how large the household’s assets are [HUD Handbook 4350.3, par. 5-7(B)].
Rule #2: Don’t Count Assets Disposed of for Less than Fair Market Value
Generally if, at the time you certify or recertify an assisted household, you discover that it has disposed of any assets for less than fair market value within the past two years, HUD requires you to continue to count these disposed assets. But this rule doesn’t apply to households that get only BMIR assistance, says HUD. So don’t count any assets that the household disposed of for less than fair market value within the past two years [Handbook 4350.3, par. 5-7(G)(8)].
Rule #3: Don’t Compute Adjusted Income
At most assisted sites, the amount of rent a household pays is based on its adjusted income, after deducting allowable household expenses and other deductions from annual income (for example, for dependents, child care, or disability assistance). But because there’s no rent calculation for BMIR sites (households pay a HUD-approved BMIR rent), you don’t need to compute adjusted income for households getting only BMIR assistance [Handbook 4350.3, sec. 2]. Households must meet income eligibility limits for BMIR sites based on annual income without any deductions. At move-in or initial occupancy, the household pays the contract rent. And at recertification, they continue to pay the same rent unless their income is equal to or higher than 110 percent of the BMIR income limit. If the income has risen to 110 percent of the BMIR income limit, they pay the higher of the BMIR market rent or the amount they now pay.