I. Oil prices (WTI) have already fallen to $76 per barrel. I share this because “experts” like Doomberg and Peter Zeihan have been telling us that so much oil infrastructure was knocked offline that it would take months for oil prices to fall this much at the war’s end. But, instead of months, it was minutes. Experts wrong again…
Rates are not falling in response, though, because other economic indicators are pushing rates higher. Today, it was a stronger-than-expected retail sales number.
II. Only in the SF Bay Area can a household pulling in nearly a quarter of a million dollars get lumped in with the “moderate income” crowd that needs a little help buying a home. Welcome to the wonderful world of Area Median Income – or AMI.
So, what is AMI (Area Median Income)? Every year, HUD publishes the median household income for each area in the country – basically the midpoint, with half of households above and half below. They matter so much because so many mortgage programs use AMI as the line that decides who qualifies for the goodies.
And the Bay Area lines are bonkers. For 2026, Santa Clara County leads all of California with a 100% AMI of $205,500 for a family of four. San Francisco, San Mateo, and Marin aren’t far behind at $200,800. Because Santa Clara is a designated “high-cost area,” the moderate-income ceiling for certain programs runs all the way up to 120% of that figure – roughly $246,600. Hence my sympathetic headline…
Lenders can look up AMIs for every area in the U.S. on Fannie Mae’s website: HERE.
Loan Programs Impacted by AMI
- First-Time Homebuyer Pricing Waivers. This is the biggie. First-time homebuyers are eligible for much lower rates than repeat homebuyers – as long as their incomes are lower than the required AMI %. In “high cost” areas (like the SF Bay Area), incomes can be as high as 120% of AMI (hence, my $246,000 figure). But, in most of the country, incomes need to be below 100% of AMI.
Rates are lower for first-time homebuyers because they are not affected by factors that typically push someone’s rate higher – such as low credit scores, low down payments, or disfavored property types like condos.
What is interesting and important for agents to note is that a surprisingly large % of first-time homebuyers have incomes that are too high to qualify for the improved pricing/interest rates. - Low-income programs. Shockingly, the many low-income programs that lenders offer focus on income. Who knew? The programs include 3% down loans with no PMI or very low PMI rates, as well as CRA (Community Reinvestment Act) loans that come with much lower rates. These loans typically require incomes to be at 80% of AMI or less.
- Down Payment Assistance Loans. There are hundreds of down payment assistance programs across the U.S., and almost all of them have income requirements. But, the requirements vary from 80% of AMI up to 120%.
AMIs are so important that lenders will often manipulate loan files to ensure buyers are under a required AMI limit. Lenders might, for example, kick a spouse off of a loan and only use the income of the remaining spouse to qualify for an income limit. Lenders will also use the most conservative estimates of bonus and overtime income to keep borrowers under a threshold.
