Defining Housing Affordability.

Housing programs in the United States have long measured housing affordability in terms of percentage of income. In the 1940s, the maximum affordable rent for federally subsidized housing was set at 20 percent of income, which rose to 25 percent of income in 1969 and 30 percent of income in 1981. Over time, the 30 percent threshold became the standard for owner-occupied housing, and it remains the indicator of afford-ability for housing in the United States.

Keeping housing costs below 30 percent of income is intended to ensure that households have enough money to pay for other non-discretionary costs; therefore, policymakers consider households who spend more than 30 percent of income on housing costs to be housing cost burdened.