Household income is the combined gross income of all members of a household who are 15 years or older, regardless of whether they are related.

Household Income: A Detailed Explanation

Household income is the sum of all earnings from all sources for every individual living in a single household above the age of 15.

To illustrate, consider a household made up of four people: a software engineer earning a salary, a retiree receiving a pension, a college student working part-time, and an individual receiving unemployment benefits. The total household income in this case is the combined amount of the software engineer's salary, the retiree's pension, the student's part-time earnings, and the unemployment benefits.

Household income also includes rental income from properties owned by a household member, dividends from investments, and income from a family-owned business.

In the context of homeownership, household income is important for first-time home buyer programs such as HomeReady and Home Possible. These programs, designed for low- to moderate-income borrowers, use household income to determine eligibility based on mortgage guidelines.

How is Household Income Calculated?

Household income is calculated by adding together all income sources from household members who are 15 years or older. This includes wages, business income, rental income, pensions, and investment returns. The figure is gross, meaning it represents income before taxes and other deductions.

Household Income: Chart

U.S. Census Bureau, Real Median Household Income in the United States [MEHOINUSA672N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MEHOINUSA672N, 7/17/2025.

Common Questions About Household Income

What is the difference between household income and family income?

Household income includes the incomes of all people living in a single house. In contrast, family income includes only the incomes of related individuals living in the same household.

What does median household income tell us?

The median household income is the midpoint of all household incomes, providing an indicator of the standard of living and economic health in a particular region.

Does household income include non-cash benefits?

No, household income generally includes only cash earnings, excluding non-cash benefits such as healthcare or food assistance.

How often is household income data updated?

Household income data is typically updated on an annual basis, which provides insight into economic trends and living standards over time.

What role does household income play in mortgage approvals?

Household income determines eligibility for certain mortgage programs, especially those focused on home affordability for low- to moderate-income households, such as Fannie Mae's HomeReady and Freddie Mac's Home Possible programs. Lenders verify household income to confirm that first-time home buyers meet the maximum allowable income for these programs.

How does household income affect eligibility for USDA loans?

USDA loans have household income limits that vary based on the region and the size of the household. These limits help determine eligibility for home buyers in rural and suburban areas who are applying for USDA loans.

Is household income the same as individual income in mortgage applications?

No, household income includes the combined income of all eligible household members, while individual income refers to the income earned by the primary applicant alone.

How often do mortgage programs update income limits based on household income?

Mortgage programs such as HomeReady and Home Possible update their income limits periodically to reflect changes in the area's median income, ensuring the programs remain focused on the intended income groups.