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Affordable Housing Municipal Obligation FAQs

Click on each question below to expand the answer.  For a printable document of the FAQ - Click Here.

What is Affordable Housing?

In its 1975 Southern Burlington County NAACP v. Mt. Laurel Twp. (Mount Laurel) decision, the New Jersey Supreme Court determined that each municipality in NJ has a Constitutional obligation to provide zoning within its borders for housing available to low and moderate-income households (referred to as “affordable housing”) where the housing must be affordable to household that have gross annual incomes within certain income parameters according to the median income for the NJ housing region within which the municipality is designated.  Through a series of successive “Mount Laurel” decisions since 1975, the NJ Supreme Court has repeatedly affirmed this municipal zoning requirement. 

There are three categories of “affordability” defined for affordable housing, including:

  • Moderate income (between 80 and 50 percent of the median income).
  • Low income (50 percent or less of median income).
  • Very low income (30 percent or less of median income).

Affordable housing eligibility is determined by a household’s gross annual income and whether it falls within affordability limits on a chart (2021 New Jersey Affordable Housing Regional Income Limits) that identifies eligible household income according to the number of persons that live in a household.  The income limits on the chart are derived from US Department of Housing and Urban Development data and updated annually. 

By way of example, and according to the most recent income limits set for Region 3 (including Somerset, Middlesex and Hunterdon Counties), a family of three persons earning a gross annual income of $80,000 would be considered a moderate-income household and eligible to buy or rent a moderate-income affordable housing dwelling unit.  This is because that income is 72% of median income for a 3-person household in Region 3 (more than 50% of median, but less than 80% of median). 

To qualify as affordable housing, a dwelling unit must be income controlled and remain available to an affordable household for at least 30-years.  Affordable housing may be either for-sale or rental housing.  It may be available for occupancy to families, the elderly or people with special needs, but municipalities are required to ensure that affordable housing address at least the needs of families and there are certain minimum requirements on the municipality for that. 

In 1985, the NJ Legislature enacted the New Jersey Fair Housing Act (FHA) and created a State administrative agency to oversee affordable housing in NJ.  The FHA established legal requirements that include a variety of affordable housing mechanisms and mandatory requirements for municipalities to provide their “fair share” of affordable housing.  The FHA requires that the municipal plans for affordable housing units provide at least 50% of the affordable dwelling units addressing the fair share obligation to be for low-income households and the remaining 50% of the obligation for moderate-income households.  13% of the affordable units must be available to very low-income households, which count toward the 50% low-income requirement.  Regulations establish a specific bedroom mix for the affordable units consisting of 1, 2, and 3-bedroom units.

The FHA requires that at least 50% of all affordable units provided in the municipality to be available to families and at least 25% of all affordable units to be affordable rental units (rental obligation).  At least one-half of the rental obligation must be available to families.  The FHA allows up to 25% of the units provided to be age-restricted – that is limited to occupancy by elderly households (persons over 62).