USDA Rural Development Final Rule Aligns MFH Income and Asset Calculations with HOTMA

Effective April 13, 2026

The U.S. Department of Agriculture’s Rural Housing Service (RHS) has finalized a regulatory update affecting Section 515 Rural Rental Housing and Section 514/516 Farm Labor Housing programs. The rule aligns USDA Rural Development (RD) Multifamily Housing (MFH) income and asset calculation requirements with the Housing Opportunity Through Modernization Act of 2016 (HOTMA).

For owners and management agents managing RD properties—especially those with layered funding—this marks a significant move toward complete alignment with HUD methodology.

Big Picture: USDA Is Now Following HUD’s HOTMA Framework

RD no longer uses a standalone method for income and assets. RHS has updated its regulations at 7 CFR Part 3560 to directly follow HUD definitions and calculation rules.

Annual income must now be calculated in accordance with 24 CFR 5.609(a) and (b), and net family assets must be calculated in accordance with 24 CFR 5.603(b).

What Changed in the Regulation

Annual Income Calculation (7 CFR 3560.153(a))

Annual income must now adhere to HUD’s HOTMA-based definition. This ensures consistency with HUD income inclusion and exclusion rules and removes prior RD-specific interpretations that contradict HUD regulations.

Net Family Assets (7 CFR 3560.153(c))

For the first time, RHS explicitly defines net family assets in accordance with HUD standards. This includes standardized valuation approaches and alignment with HOTMA asset calculation methods.

Why This Matters

Standardization Across Programs

For layered properties, this change reduces conflicting rules and simplifies compliance—assuming staff are properly trained.

Increased Reliance on HUD Guidance

RD compliance now requires a working understanding of HUD HOTMA rules, including income calculation and asset verification requirements.

Immediate Impact on Certifications

This affects move-in, annual, and interim certifications. Forms, policies, and software must reflect HOTMA methodology.

What Did Not Change

No new reporting requirements, forms, or procedural frameworks were introduced. However, the definitional changes drive how compliance must be performed.

Effective Date

The rule is effective April 13, 2026, and should be treated as immediately applicable unless additional RD guidance provides otherwise.

Practical Compliance Takeaways

Update policies and procedures to align with HOTMA definitions.

Ensure certification forms properly capture income and asset calculations.

Retrain staff on HUD methodology.

Review recent certifications for accuracy under the new standards.

Final Thought

USDA Rural Development has effectively adopted HUD’s framework for income and asset calculations. For experienced operators, this creates an opportunity for consistency across programs. For others, it highlights the need for immediate training and adjustment to avoid compliance risk.