housing cost/income ratio
(5) Adjustment of income requirement based on relation of high housing costs to income (A) In general If the residence (for which financing is provided under the issue) is located in a high housing cost area and the limitation determined under this paragraph is greater than the limitation otherwise applicable under paragraph (1), there shall be substituted for the income limitation in paragraph (1), a limitation equal to the percentage determined under subparagraph (B) of the area median gross income for such area. (B) Income requirements for residences in high housing cost area The percentage determined under this subparagraph for a residence located in a high housing cost area is the percentage (not greater than 140 percent) equal to the product of— (I) 115 percent, and (II) the amount by which the housing cost/income ratio for such area exceeds 0.2. (C) High housing cost areas For purposes of this paragraph, the term “high housing cost area” means any statistical area for which the housing cost/income ratio is greater than 1.2. (D) Housing cost/income ratio For purposes of this paragraph— (i) In general The term “housing cost/income ratio” means, with respect to any statistical area, the number determined by dividing— (I) the applicable housing price ratio for such area, by (II) the ratio which the area median gross income for such area bears to the median gross income for the United States. (ii) Applicable housing price ratio For purposes of clause (i), the applicable housing price ratio for any area is the new housing price ratio or the existing housing price ratio, whichever results in the housing cost/income ratio being closer to 1. (iii) New housing price ratio The new housing price ratio for any area is the ratio which— (I) the average area purchase price (as defined in subsection (e)(2)) for residences described in subsection (e)(3)(A) which are located in such area bears to (II) the average purchase price (determined in accordance with the principles of subsection (e)(2)) for residences so described which are located in the United States. (iv) Existing housing price ratio The existing housing price ratio for any area is the ratio determined in accordance with clause (iii) but with respect to residences described in subsection (e)(3)(B).