HUD Handbook 4350.3 § 5-5
Methods for Projecting and Calculating Annual Income (HUD Occupancy Handbook 4350.3 REV-1 CHG-4)
HUD guidance — not codified law
In Force
Verified 9/24/2026 · Next check 10/1/2026
effective 9/24/2026FederalSection 8 HCVOperative Text
HUD Handbook 4350.3 § 5-5
A. The requirements for determining whether a family is eligible for assistance, and
the amount of rent the family will pay, require the owner to project or estimate the
annual income that the family expects to receive. There are several ways to
make this projection. The following are acceptable methods for calculating the
annual income anticipated for the coming year:
1. Generally the owner must use current circumstances to anticipate
income. The owner calculates projected annual income by annualizing
current income. Income that may not last for a full 12 months (e.g.,
unemployment compensation) should be calculated assuming current
circumstances will last a full 12 months. If changes occur later in the
year, an interim recertification can be conducted to change the family’s
rent.
2. If information is available on changes expected to occur during the year,
use that information to determine the total anticipated income from all
known sources during the year.
3. *Using EIV:
(a) The owner must not use the quarterly wage income reported on
the EIV Income Report for calculating the tenant’s annual income
from employment. The owner must confirm with the tenant that
the information in EIV is correct. If the tenant agrees that the
employment information reported in EIV is correct, the owner
must:
(1) Use the Income Report as third party verification of the
tenant’s employment; and
(2) Use tenant provided documents for calculating the tenant’s
annual income, e.g. 4-6 current, consecutive check stubs.
Example 1: EIV shows that John is working at Jack’s
Restaurant and John agrees that he is working there.
John has brought in his four most current, consecutive
check stubs. The owner must use the EIV Income Report
as third party verification that John is employed at Jack’s
Restaurant and use the gross pay shown on the check
stubs provided by the tenant for determining John’s
annual income. John is paid weekly.
Check stubs – gross pay 1) $120; 2) $145; 3) $125; 4)
$130 – total gross pay = $520
$520 / 4 = $130 average gross pay per week
$130 x 52 weeks = $6,760 gross annual income
Example 2: EIV shows Sally works at Beauty World and
Sally agrees that she is working there. Sally has brought
in a payroll summary report prepared by her employer
which shows that Sally works 30 hours per week and
earns $12.50 per hour. The owner must use the EIV
Income Report as third party verification that Sally is
employed at Beauty World and use the payroll summary
report prepared by Beauty World for determining Sally’s
annual income.
30 hours x 52 weeks = 1,560 hours per year
$12.50 per hour x 1,560 hours = $19,500 gross annual
income
b. The owner must not use the quarterly unemployment
compensation benefits reported on the EIV Income Report for
calculating the tenant’s annual income from unemployment. The
owner must confirm with the tenant that the unemployment
information in EIV is correct. If the tenant agrees that he/she is
receiving unemployment compensation benefits as reported in
EIV, the owner must:
(1) Use the Income Report as third party verification that the
tenant is receiving unemployment; and
(2) Use tenant provided documents for calculating annual
income, e.g. unemployment monetary benefit notice.
Example: Peter has brought in the unemployment benefit
notice he received showing he is being paid weekly
unemployment benefits of $175. The owner will use the
EIV Income Report as third party verification that Peter is
receiving unemployment benefits and the unemployment
benefit notice for determining Peter’s annual income.
$175 per week x 52 weeks = $9,100.00 gross annual
income
NOTE: If Peter’s unemployment is terminated during the
annual recertification period, Peter should report this to the
owner along with documentation supporting the date of
termination of the benefits. The owner will then prepare an
interim recertification removing the unemployment income.
If Peter is unable to provide documentation verifying
termination of unemployment compensation benefits, the
owner must verify the termination directly with the state
workforce agency (SWA) source.
c. If the tenant agrees with the social security benefit information on
the EIV Income Report, the owner must use the EIV Income
Report as third party verification, receiving social security benefits
and also for calculating the tenant’s annual income.
Example: The Income Report shows that Joe Smith is
receiving gross social security benefits of $980.40 per
month. Joe agrees that this is the amount he is receiving.
The owner will use the Income Report as third-party
verification that Joe is receiving social security benefits
and for calculating Joe’s annual income.
$980.40 x 12 months = $11,764.80 (rounded to $11,765)
gross annual income.
d. If the tenant disputes the employment and income information in EIV, the
owner must obtain third party verification from the source.*
B. Once all sources of income are known and verified, owners must convert
reported income to an annual figure. Convert periodic wages to annual income
by multiplying:
1. Hourly wages by the number of hours worked per year (2,080 hours for
full-time employment with a 40-hour week and no overtime);
2. Weekly wages by 52;
3. Bi-weekly wages (paid every other week) by 26;
4. Semi-monthly wages (paid twice each month) by 24; and
5. Monthly wages by 12.
To annualize other than full-time income, multiply the wages by the actual
number of hours or weeks the person is expected to work.
Example – Anticipated Increase in Hourly Rate
February 1 Certification effective date
$7.50/hour Current hourly rate
$8.00/hour New rate to be effective March 15
(40 hours per week x 52 weeks = 2,080 hours per year)
February 1 through March 15 = 6 weeks
6 weeks x 40 hours = 240 hours
2,080 hours minus 240 hours = 1,840 hours
(check: 240 hours + 1,840 hours = 2,080 hours)
Annual Income is calculated as follows:
240 hours x $7.50 = $1,800
$1,840 hours x $8.00 = $14,720
Annual Income $16,520
(See Appendix 8 for an explanation of the correct approach to
rounding numbers.)
C. Some circumstances present more than the usual challenges to estimating
anticipated income. Examples of challenging situations include a family that has
sporadic work or seasonal income or a tenant who is self-employed. In all
instances, owners are expected to make a reasonable judgment as to the most
reliable approach to estimating what the tenant will receive during the year. In
many of these challenging situations, midyear or interim recertifications may be
required to reflect changing circumstances. Some examples of approaches to
more complex situations are provided below.
Examples – Irregular Employment Income
Seasonal work. Clyde Kunkel is a roofer. He works from April through
September. He does not work in rain or windstorms. His employer is able
to provide information showing the total number of regular and overtime
hours Clyde worked during the past three years. To calculate Clyde’s
anticipated income, use the average number of regular hours over the past
three years times his current regular pay rate, and the average overtime
hours times his current overtime rate.
Sporadic work. Justine Cowan is not always well enough to work full-time.
When she is well, she works as a typist with a temporary agency. Last year
was a good year and she worked a total of nearly six months. This year,
however, she has more medical problems and does not know when or how
much she will be able to work. Because she is not working at the time of
her recertification, it will be best to exclude her employment income and
remind her that she must return for an interim recertification when she
resumes work.
Examples – Irregular Employment Income
Sporadic work. Sam Daniels receives social security disability. He reports
that he works as a handyman periodically. He cannot remember when or
how often he worked last year: he says it was a couple of times. Sam’s
earnings appear to fit into the category of nonrecurring, sporadic income
that is not included in annual income. Tell Sam that his earnings are not
being included in annual income this year, but he must report to the owner
any regular work or steady jobs he takes.
Self-employment income. Mary James sells beauty products door-to-door
on consignment. She makes most of her money in the months prior to
Christmas but has some income throughout the year. She has no formal
records of her income other than a copy of the IRS Form 1040 she files
each year. With no other information available, the owner will use the
income reflected on Mary’s copy of her form 1040 as her annual income.Source: Legislative text reproduced verbatim
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