If both Melia and Pono were looking at the same rental property, which costs $2,000 a month, Melia might say that it’s a tight budget, but doable for her. Pono may see that number and call it unaffordable. When Pono sees that number that is unaffordable to him, he may consider reducing his paycheck contributions to retirement savings or health insurance to make that number more affordable, but he should not have to choose between having a retirement fund or housing in order to survive.

Regardless of what either Melia or Pono thinks affordability looks like, there are additional definitions set by both the federal and state governments—and even departments within each sector—that draw different boundaries for affordability.

The standard that has been set by the U.S. Department of Housing and Urban Development considers housing officially cost-sustainable when a household spends no more than 30% of its income on total housing costs, including utilities.

For Melia, this means she should spend at most 30% of her $5,500 monthly income on housing, which totals to $1,650 a month—less than what she personally considered to be affordable. In Pono’s case, he should only spend at most 30% of $2,740 of his monthly income, which totals to $822 a month. 

By the HUD definition, these amounts are what is considered “affordable” for Melia and Pono. If the two of them were looking at that $2,000 a month rental property now, neither one of them could call it affordable based on this definition.

To understand the government definition of “affordable” further, we need to take a look at Area Median Incomes (AMI). AMI as a federal housing concept originates with the Housing Act of 1937 (Wagner-Steagall Act), which established income-based eligibility for public housing programs. The main goal of this act was to create safe and sanitary dwellings for low-income families, and the income limits were deliberately set low to prevent public housing from competing with the private housing market. AMI is the midpoint of a specific area’s income distribution and is calculated on an annual basis by HUD. With housing policy, it is used to determine benchmarks for eligibility with housing assistance programs.

Based on where your income falls in relation to the AMI, you are eligible for different “affordable housing” programs categorized into four tiers: Extremely Low Income (30% or lower AMI), Very Low Income (between 30 and 50% AMI), Low Income (between 50 and 80% AMI), and Moderate Income (between 80 and 120 % AMI).

In Hawai‘i, the cost of living varies significantly between each county. For example, in Honolulu County for 2025, 100% of the AMI was $129,300 for a family of four. Melia’s $115,000 salary puts her at 108% AMI, or moderate income, as an individual household, while Pono’s $47,840 salary puts him at 45% AMI, or very low income, as an individual household.

There is a flaw in the calculation of AMI. In Hawai‘i, HUD’s established AMIs vary greatly from county to county because median wages vary. But Honolulu County encompasses the entire island of O‘ahu, meaning the AMI is the same from Kailua to Nanakuli.

Because AMI is calculated using metro-wide geographies, high-income suburbs inflate the AMI for urban cores—making “affordable” units less accessible to the lowest-income households they're meant to serve. The 100% AMIs in each county are $98,300 for Hawai‘i County, $133,400 for Honolulu County, $120,100 for Kaua‘i County, and $148,000 for Maui County, with variation to the limits based on household size.

To complicate this dynamic further, the Hawai‘i Community Development Authority (HCDA) uses one AMI for the entire state, meaning it’s the same from Līhu‘e to Hilo: 100% AMI is $133,400 for a four-person household. 

The Hawai‘i Housing Finance and Development Corporation (HHFDC) has Affordable Housing programs specifically for helping locals buy homes at below-market prices. Most of these programs target people in the 70% to 140% AMI range—what is essentially considered to be low to workforce income. HCDA also has a similar program called the Reserved Housing program, which targets people in the 80% to 140% AMI range.

The Low-Income Housing Tax Credit (LIHTC) that was introduced with the 1986 Tax Reform Act establishes 60% AMI as the benchmark for affordable housing, which is the most commonly used benchmark today across state and county housing programs.

Similar to the different AMI tiers used by the federal government, each of the state agencies (HCDA and HHFDC) use AMI metrics to define ranges of affordability. However, there is not one standard across the board, so it’s possible to qualify for one and not the other—which only adds to the confusion surrounding the term and enforces limitations that conflict even more with personal ideas of affordability.

Considering Melia’s $115,000 salary that puts her around 108% AMI, she would not qualify for the subsidized rent bracket for the LIHTC workforce population by the state’s 60% AMI baseline, but she could qualify for Reserved Housing programs. Pono, on the other hand, (with a $47,840 salary) would sit at 45% AMI and qualify for the LIHTC housing, but would not be within the target range for Reserved Housing programs. So, even with AMI, the definition of what is considered affordable and who qualifies for these programs depends on who is dictating the limits.