It’s the idea that a household should not spend more than 30% of its income on housing, because then they do not have the resources for other critical needs…food, clothing, medicine, transportation, etc..
Low-income is defined in many ways, by various entities. Typically it means a family whose income is 80% or less than the average median income for the area.
 The US Census Bureau and US Bureau of Labor Statistics include Ferndale in the Detroit-Warren-Dearborn metropolitan statistical area. The average median income for this area is $53,628. Generally families whose annual income does not exceed 80% of the area AMI are considered “low-income” and may qualify for affordable housing programs. In Ferndale, that means a family earning around $43,000; which includes people who work in jobs like, Clergy, Social Workers, Pre-school Teachers, 911 Dispatchers, Welders, Laborers, Truck Drivers, Administrative Assistants, and Medical Technicians.
Families whose annual income does not exceed 50% of the area AMI are considered “very-low income.” In Ferndale, that means a family earning around $27,000 which includes people who work as Teacher Assistants, Security Guards, Retail Sales Clerks/Cashiers, Home Health Aides, Wait Staff & Cooks, and Cleaning/custodial staff.
Families whose annual income does not exceed 30% of the area AMI are considered “extremely-low income.” In Ferndale, that means a family earning around $16,000. These would typically include people who work part-time at or near the minimum wage; or those whose age and/or disability requires they depend upon social security and/or disability benefits alone.