Starting July 1, 2025, Public Housing Agencies that administer Housing Choice Voucher (HCV) and Public Housing (PH) programs must comply with select provisions of the Housing Opportunity Through Modernization Act of 2016 (HOTMA).
These provisions—outlined in Sections 102 and 104 of HOTMA—have technically been in effect since January 1, 2024. However, because of pending system updates, HUD delayed enforcement until agencies could reasonably comply.
That grace period ends now. HUD has confirmed that effective July 1, 2025, it will enforce compliance with the provisions that can be implemented without HIP system upgrades—even for agencies still operating in IMS/PIC.
This article breaks down what’s changing, what’s not, and what your agency can do now to stay in compliance.
Why This Matters
Whether you’re processing recertifications or updating your agency’s Admin Plan, these changes affect the way income is calculated, how HUD terms are defined, and how minor errors are handled.
According to HUD Notice PIH 2024-38, if a transaction has an effective date of July 1 or later, your agency is required to follow these new rules.
Three HOTMA Provisions PHAs Must Implement by July 1
1. Updated income exclusions (24 CFR 5.609(b))
Certain types of income are no longer counted when determining rent and eligibility. These updated exclusions include:
- Student financial assistance
- Adoption assistance payments
- Income earned by full-time dependent students (under age 24)
- Veterans’ aid and attendance
- Lump-sum settlements (such as insurance or legal awards)
- Foster care and guardianship payments
- Income from ABLE accounts, 529 plans, Coverdell education savings accounts, and certain specials needs trusts
- Certain loan proceeds and tribal payments
These changes could reduce adjusted income for many families and help PHAs streamline verification and calculation processes.
A full list is included in 24 CFR 5.609(b) and detailed in Notice PIH 2024-38.
2. Required use of revised definitions (24 CFR 5.100, 5.403, 5.603)
HUD has revised several key definitions to improve clarity and consistency. These updated terms must be used for any transactions with an effective date on or after July 1, 2025.
Definitions you must begin using include:
- Earned income and unearned income
- Family, dependent, minor, and foster child/foster adult
- Day laborer, independent contractor, and seasonal worker
- Health and medical care expenses
These updates help ensure income calculations and eligibility determinations are consistent across all HUD-funded programs. For a more detailed breakdown, refer to the implementation FAQs.
3. De minimis error policy now applies (24 CFR 5.609(c)(4))
HUD has formally implemented a de minimis error threshold of $30 per month to guide PHAs in addressing small discrepancies in rent calculations. If the difference between the rent charged and the correct amount—whether an overcharge or undercharge—is $30 or less, no corrective action is required unless the error results in a financial disadvantage to the family.
The goal is to reduce unnecessary administrative burden and avoid punitive consequences for immaterial miscalculations that don’t significantly impact the family or the PHA. It also provides clearer audit guidance when minor errors are identified during quality control reviews or reexams.
This provision is detailed in 24 CFR 5.609(c)(4) and reinforced in HUD Notice PIH 2024-38.
What’s Not Required—Yet
Not all HOTMA provisions are enforceable at this time. HUD has delayed compliance with any rules that require system updates, including:
- Asset limits and asset income calculation
- Medical/disability deduction threshold changes
- Self-certification of assets
- Permissive deductions (HCV-specific)
- Elderly/disabled deduction updates
- Triennial reexaminations for fixed income
- Revised rules for interim reexams
HUD will issue further guidance once system development is complete and PHAs can submit updated HUD-50058 forms through HIP.
It’s important to note that while HUD has extended the HOTMA compliance deadline for Multifamily Housing Owners, that extension does not apply to Public Housing or HCV programs. HUD’s June 16, 2025 email to PHA executive directors confirmed this distinction.
Action Steps for Your Agency
If your team hasn’t already made these adjustments, now is the time. HUD expects PHAs to:
- Train staff on the new income exclusions and definitions
- Update policies and procedures immediately to reflect July 1 enforcement
- Coordinate with your software provider to avoid errors in reporting
- Begin using these rules for reexaminations with effective dates of July 1, 2025 or later
Since reexaminations are typically processed 90–120 days before their effective date, many PHAs are already working with affected files. Early adoption is not only allowed—it’s encouraged.
Since reexaminations are typically processed 90–120 days before their effective date, many PHAs are already working with affected files. Early adoption is not only allowed—it’s encouraged.
What To Do If You Need Some Help with HOTMA
HUD has established a support line at HOTMAQuestions@hud.gov and continues to provide updates via the HOTMA implementation page.
You can also download:
About AMA Consulting Group
Even if your agency isn’t fully ready by July 1, there’s still time to align with HUD’s expectations and avoid compliance risks.
At AMA Consulting Group, we specialize in developing and reviewing policies that ensure smooth operations and long-term growth. Whether you’re building from scratch or improving what’s already in place, we can help.
We offer tailored support in:
- ACOP and Administrative Plan development and review
- SOP creation to streamline workflows
- Policy language that reflects the latest HUD guidance
- Staff training to ensure consistency across roles
If you need help creating or updating your policies in response to HOTMA—or want support building a stronger agency from the ground up—we’re here to help you take the next right step.