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Dear Editor:

I’m writing partly in response to Hal Brown’s claim that we haven’t defined “affordable housing.”

Affordable housing in Chaffee County is defined by Housing and Urban Development annually published numbers. Based on household size, if you take the income limit for low-income (80 percent of area median income or AMI) for a two-person household ($43,100 gross income before taxes in 2018) and divide it by 12 months ($3,592 gross monthly pay, not take-home) then multiply it by 30 percent (standard used for maximum housing expense) you get $1,078.

This is the maximum that a low-income (below 80 percent AMI) three-person household in Chaffee County should be spending on their housing costs. Typically, this only includes rent or mortgage payments.

While some include utilities and HOA payments as they are real housing costs, the variability of these, depending on the home, makes it more consistent to exclude them when using the 30 percent of monthly gross income. So maximum rents for low-income households are as listed below.

Maximum monthly housing expense for households at 80 percent AMI
1-person household = $943/month. Maximum mortgage = $159,400. 80% AMI = $37,700.
2-person household = $1,077/month. Maximum mortgage = $186,00. 80% AMI = $43,100.
3-person household = $1,213/month. Maximum mortgage = $212,700. 80% AMI = $48,500.
4-person household = $1,346/month. Maximum mortgage = $239,100. 80% AMI = $53,850.

Definition of Affordable Housing: If your monthly housing costs are above these numbers for your household size and your total household income is below the 80-percent threshold, then you are what is called “housing burdened.” This means your housing is unaffordable.

Affordable housing for low-income renters is any home that charges less than the above numbers based on household size for monthly rent payments only.

Affordable housing for home buyers is calculated based on interest rates and the terms of the loan (typically 30 years). Many low-income buyers do not have funds for a down payment. For this reason, programs exist (USDA, CHFA, VA, etc.) that provide up to 100 percent financing or down payment assistance.

Affordable home ownership is calculated based on monthly payments, so if a buyer can provide a down payment, the amount borrowed (mortgage) will be less, and their monthly payments will be lower.

A low-income household in Chaffee County entering into a mortgage at 4.5 percent interest for 30 years with no additional mortgage insurance or fees can afford a maximum monthly payment as displayed in the table above. The maximum monthly household expense for both renters and homeowners is the same. Housing is affordable when monthly expenses are within these parameters.

While these numbers will vary based on household size, interest rates, terms, taxes and insurance, we can easily project whether a particular home or development will produce affordable homes that will meet the community’s needs. The Chaffee Housing Needs Assessment details what the need is (as of August 2016).

Read McCulloch
Director, Chaffee County Housing Trust