Affordable Housing 101

Alliance is a developer and provider of deeply affordable housing, but the term “affordable housing” encompasses a wide range of homes and can mean many different things. So, what do we mean when we use it? 

WARNING: Lots of numbers ahead. 

To understand “affordable housing” the first step is understanding “area median income” or AMI. AMI is the midpoint of a geographic area’s income distribution and is calculated annually by the Federal Department of Housing and Urban Development (HUD). Minneapolis is a part of the Minneapolis-St. Paul-Bloomington region, which includes slightly more than the 7-county Metro Area, and as of May 12, 2025, the AMI for our region is $92,700 for an individual and $132,400 for a family of 4. 

Housing is considered affordable to any household when it spends no more than 30% of its income on housing costs, which includes utilities. (Aside: Is your housing affordable for you/your family? Many people, including a lot of homeowners may be surprised if they run the numbers!) “Affordable housing” is therefore housing that requires a household earning less than the local AMI to pay no more than 30% of its income for its home. 

Most Alliance’s homes are considered “deeply affordable.” This means our homes are affordable to a household earning 30% of the AMI or less. In our region, this amount is $27,800 for an individual and $39,700 for a family of 4. Often when developers (both non-profit and for profit) discuss “affordable housing” they may be referring to homes affordable at 50%-60% AMI (generally termed workforce housing) or even 80% AMI. While the Twin Cities Metro Area is in desperate need of more housing at all these incomes, it is important to include affordability level in any discussion of housing. 

It is also important to note that the AMI in Minneapolis proper is substantially less than in the wider HUD region and varies substantially within the City itself. For example, in Longfellow, where Minnehaha Commons and Hiawatha Commons are located, the median income is $82,678 or nearly $50,000 less than the AMI for the region. In Near North, where Gateway Lofts is located, the median income is $48,355 or more than $80,000 less than the AMI. 

As noted above, however, even these substantially lower numbers remain the midpoint of the neighborhoods’ income distribution. So, half of resident households of each neighborhood make less than the listed amount. At Alliance we recently ran the data and learned the average household income for our residents (regardless of family size) is $18,217.90. Fortunately, there are governmental programs such as Federal Section 8 Housing Vouchers (for now at least) and State Housing Support that help us keep rents deeply affordable while keeping buildings safe and maintained, but. However, many of our homes, including all our scattered site buildings, do not have these programs. In order to keep these homes deeply affordable we rely on our fundraising. 

If you, or an organization you belong to (perhaps your neighborhood organization or congregation?), would like to learn more about affordable housing, please reach out to our Director of Development Craig Freeman. He’d be happy to get even further into the weeds of this complicated term and welcome more people into Alliance’s work. Because to get to all residents of Minneapolis living in affordable housing, it’s going to take all of us working together!