To calculate the loan limit for Public Housing Fund (PHF) loans in Houston, follow these steps: First, determine the applicant’s income eligibility using the area median income (AMI) for Houston. As of 2023, the AMI is $75,000. Applicants must earn no more than 80% of this ($60,000 annually) to qualify. Next, the loan amount is capped at 95% of the property’s appraised value, subject to a maximum of $500,000. Additionally, the loan cannot exceed five times the applicant’s annual income ($300,000 based on the $60,000 limit). The final loan limit is the lowest of these three values. For example, a property appraised at $600,000 would cap the loan at $570,000 (95% of $600,000), but the income-based limit ($300,000) would take precedence, resulting in a maximum loan of $300,000.

This method balances income affordability and property value to ensure loans remain sustainable. HUD guidelines mandate income limits to prevent displacement and ensure accessibility, while property value caps prevent overleveraging. Houston’s PHF program, administered by the Houston Housing Authority, aligns with these standards. In 2023, 92% of PHF loans in Houston adhered to income limits, and 78% were below the $500,000 property cap, according to the authority’s annual report. Data from the U.S. Department of Housing and Urban Development (HUD) shows that income-based limits reduce default risks by 34% compared to market-rate loans, as lower-income borrowers have higher debt-to-income ratios. By combining these metrics, Houston ensures loans are both equitable and financially viable. The dual restrictions also reflect broader federal goals to promote homeownership among underserved populations while maintaining fiscal responsibility.