Lending by Neighborhood Relative Income Level | Consumer Financial Protection Bureau (2024)

FAQs

How do you define low to moderate income? ›

Moderate-income individuals have an annualized family income between 50% and 80% of the HUD area median income. Low-income individuals have an annualized family income of less than 50% of the HUD area median income. Median incomes for every county in the United States can be found on HUD's website.

The group definitions include:

Moderate income (relative income 50% to less than 80%) Middle income (relative income 80% to less than 120%) Upper income (relative income of 120% or higher)

Responsible lending obligations require that lenders make an assessment of a consumer's "unsuitability" for entry into a credit arrangement before providing credit or a loan to them. A credit provider must not provide credit assistance to a consumer if the credit contract would be "unsuitable" for that consumer.

Each lender has its own method for analyzing a borrower's creditworthiness. Most lenders use the five Cs—character, capacity, capital, collateral, and conditions—when analyzing individual or business credit applications.

According to the Census Bureau's Income in the United States: 2022 report, the median household income is $74,580 (a 2.3% decline from 2021), while household income levels for each class level are as follows: Lower class: less than or equal to $30,000. Lower-middle class: $30,001 – $58,020.

(1) In general The term “low-income community” means any population census tract if— (A) the poverty rate for such tract is at least 20 percent, or (B) (i) in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, ...

The Truth in Lending Act (TILA) protects you against inaccurate and unfair credit billing and credit card practices.

Responsible Lending Policies

Sellers must: seek to offer the lowest-cost product with the lowest-risk loan terms for which they qualify, not steer borrowers toward a particular loan program to qualify the borrower for a loan in an effort to misrepresent the borrower's true credit or income related qualifications, and.

The 5 C's of credit are character, capacity, capital, collateral and conditions. When you apply for a loan, mortgage or credit card, the lender will want to know you can pay back the money as agreed. Lenders will look at your creditworthiness, or how you've managed debt and whether you can take on more.

What is the Equal lending Act? ›

Lending Discrimination Statutes and Regulations

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.

It is illegal to:

Refuse you credit if you qualify for it. Discourage you from applying for credit. Offer you credit on terms that are less favorable, like a higher interest rate, than terms offered to someone with similar qualifications.

Summary. Low-Income Housing Tax Credit Qualified Census Tracts must have 50 percent of households with incomes below 60 percent of the Area Median Gross Income (AMGI) or have a poverty rate of 25 percent or more.

CRA classifies as low-income those geographies having a median family income of less than 50 percent of the area median income, and moderate-income those geographies having a median family income of at least 50 percent and less than 80 percent of the area median income.

More Definitions of Moderate Income

Moderate Income means gross household income adjusted for family size that is at or below 115 percent (115%) of Area Median Income, but more than Eighty percent (80%) of Area Median Income.

The term low and middle-income country (LMIC) is often used interchangeably with "developing country" but refers only to the economy of the countries.