What's Hot With HOTMA: 4 Key Points to Note

HOTMA rules do not hit HUD Multifamily until January 1, 2027, per Notice H-2025-07. Public and Indian Housing already switched on July 1, 2025. USDA Rural Development switched on July 1, 2025 too. LIHTC depends on your state. If you run a layered property, you may already be on HOTMA math for one funding source and pre-HOTMA math for another, in the same file, on the same day.

Key Takeaways

• HUD Multifamily (Section 8 PBRA, 202, 811) stays pre-HOTMA through all of 2026. Full compliance lands January 1, 2027 under Notice H-2025-07.
• Public housing and Housing Choice Vouchers already moved to HOTMA on July 1, 2025, under Notice PIH 2024-38.
• USDA Rural Development adopted HOTMA July 1, 2025. The penalty grace period ended January 1, 2026, so that clock has already run out.
• Pre-HOTMA 2026 deductions are $480 per dependent and $400 for elderly or disabled households. HOTMA raises those to $500 and $550 for CY2026 adopters.
• A single layered property can run three different HOTMA timelines at once across HUD, LIHTC, and USDA funding. Check every layer separately.

What Is HOTMA and Who Does It Actually Apply To Right Now?

HOTMA stands for the Housing Opportunity Through Modernization Act. It changes how you calculate income, assets, and deductions for federally assisted housing. It does not roll out on one date for everyone.

Here is the honest answer: it depends on which program funds your property. HUD Multifamily, meaning project-based Section 8, Section 202, and Section 811, is not required to use HOTMA until January 1, 2027. That date comes from Notice H-2025-07, published December 18, 2025, which pushed the deadline back from January 1, 2026.

Public housing and Housing Choice Vouchers are a separate program office with a separate clock. They already switched over on July 1, 2025, under Notice PIH 2024-38. If your property only has PBRA, ignore anything you read about PIH's July 2025 date. It is not yours yet.

I've read too many LinkedIn posts that treat HOTMA like one single deadline. It isn't. Fortress compliance tracks each funding source on its own timeline, because that's the only way to keep a mixed-finance file straight.

What Rules Apply to a 2026 Multifamily Certification?

Short answer: the old rules. If you are certifying a Section 8 PBRA household anytime in 2026, you use Handbook 4350.3 REV-1 (Change 4) and 24 CFR 5.611, 5.628, 5.630, and 5.632. Not the HOTMA figures.

That means the pre-HOTMA deduction amounts still apply for the full 2026 calendar year on Multifamily certifications: $480 per dependent, $400 for an elderly or disabled family member, and the medical expense deduction still uses the old 3% threshold, still limited to elderly or disabled families only.

Owners can adopt HOTMA early through the TRACS rent override function, but early adoption is optional, not required. If your software vendor already flipped your Multifamily property to HOTMA math without asking, that's worth a phone call.

From what I've seen, the confusion usually starts with a training deck or blog post that mixed up the PIH date with the Multifamily date. They are not the same notice, and they are not the same year.

What Changes When HOTMA Fully Applies on January 1, 2027?

Once a Multifamily certification is effective on or after January 1, 2027, several numbers move. The dependent deduction rises from $480 to an inflation-indexed figure, $500 for CY2026 adopters. The elderly or disabled deduction rises from $400 to $550.

The medical and disability expense threshold jumps from 3% to 10% of annual income, but not all at once. Households already holding the deduction as of January 1, 2024 get a phase-in: 5%, then 7.5%, then 10%. New households go straight to 10%.

Assets change shape entirely. Instead of imputing income at a flat $5,000 asset value, HOTMA only imputes income above a net-asset ceiling, and families below an imputed-asset income threshold can self-certify instead of pulling full statements. The passbook rate itself moves off the old flat 0.06% to a higher indexed rate.

Here are the actual dollar amounts, and where they apply today: for CY2026, current HOTMA adopters (states that adopted for LIHTC, and USDA Rural Development) use a $105,574 net-asset ceiling, a $52,787 imputed-asset income threshold, and a 0.40% passbook rate. HUD Multifamily is not on HOTMA yet, so none of those CY2026 numbers are what a Multifamily file will use. When Multifamily adopts on January 1, 2027, it will use the CY2027 factors, published separately by HUD closer to that date, not the CY2026 figures above.

HUD republishes these adjustment factors every year. Treat any dollar figure in this post, or any blog post, as a starting point, and check it against the current year's HUD release before it touches a real certification.

One thing does not change: the 30% and 10% income tests, the $25 minimum rent, and the recertification notice timeline all survive HOTMA untouched. You are not relearning the whole system, just the deduction and asset math inside it.

How Does the Interim Recertification Trigger Actually Work?

This is where a lot of training material gets sloppy. The common shorthand is "10% up or down triggers an interim." That's only half right.

An income increase of 10% or more triggers a mandatory interim review, full stop. For an income decrease, a PHA is allowed to set its own trigger, and that trigger can be lower than 10%, at the PHA's discretion. It can never be set higher than 10%. So two households with the same size income drop could be treated differently depending on the agency's policy.

There's a second, unrelated 10% rule that gets mixed up with this one: the utility allowance re-analysis trigger. Under Notice H-2015-04, a cumulative utility rate change of 10% or more requires the owner to rerun the utility allowance schedule. Same number, different rule, different chapter. Keep them separate in your head and in your training materials.

If your compliance calendar or software still reads "10% up or down, flat," it's worth checking whether that's your agency's actual policy or just a leftover shortcut. Our Section 8 rent calculator walks through the underlying TTP math if you want to sanity check a file by hand.

What Happened With USDA Rural Development and HOTMA?

USDA Rural Development adopted HOTMA on July 1, 2025. That part is done, it already happened. RD gave properties a penalty grace period after go-live, and that grace period ended January 1, 2026. So as of today, RD properties are expected to be fully on HOTMA math, penalties and all. There's no countdown left here, just a settled status.

If you manage a Section 515 or Section 514/516 property alongside a HUD Section 8 layer, remember these two funders are not on the same clock. RD already made the switch. HUD Multifamily has not, not until 2027.

How Does LIHTC Fit Into the HOTMA Timeline?

LIHTC is the messiest layer, because there is no single national date. Adoption is set state by state through each state housing finance agency. Many states adopted HOTMA-aligned rules as early as January 1, 2024, but not every state moved at the same pace or on the same terms.

What I'd do here: call your state HFA directly and ask which HOTMA provisions they've adopted and when. Don't assume your state matches the neighbor state, and don't assume it matches HUD's 2027 date. It almost certainly doesn't.

What Should a Layered Property Actually Do About This?

Here's the part most operators get wrong. If your property has Section 8 PBRA, LIHTC, and USDA RD financing stacked together, you could genuinely be running three different sets of income and asset rules on the same household file, at the same time, in the same calendar year.

Picture a real case: a 2026 certification at a Section 8 plus LIHTC plus RD property. The HUD Section 8 layer still uses the pre-HOTMA $480 dependent deduction and 3% medical threshold. The RD layer, already switched on July 1, 2025, uses HOTMA's asset imputation rules and the higher deduction amounts. The LIHTC layer follows whatever your state HFA adopted, which might be full HOTMA since 2024, or might not be.

That is not a hypothetical edge case. It's the normal condition for a lot of affordable housing portfolios right now. One Fortress client told us their compliance team had been running each layer's numbers in a separate spreadsheet just to keep the math from bleeding into the wrong program.

This is exactly the kind of layered-timeline problem that eats staff hours. General automation on the certification workflow side, tracking which rule set applies to which funding source on which file, tends to save property teams somewhere in the range of 3 to 5 hours a week per employee. That number holds whether the automation is for HOTMA tracking or any other repetitive compliance task.

What Mistakes Send a File Back Right Now?

A few errors show up over and over in file audits, and most of them predate HOTMA entirely.

Rounding early is one. TRACS calculates and stores components to the penny and only rounds the final totals to the dollar. Round early and you'll get the wrong TTP.

Capping tenant payment at gross rent is another. That's an admissions eligibility screen at move-in, not a ceiling on an in-place household's payment. When an in-place household's TTP reaches gross rent, HAP drops to $0 and assistance terminates, coded "TI" on the HUD-50059, it doesn't just cap out.

Stale utility allowance schedules and expired third-party verifications (valid 90 days, orally updatable through day 120, dead after that) round out the usual suspects. None of these are HOTMA-specific. They're just the errors compliance reviewers keep finding.

Where Can I Get Help Getting the Details Right?

This post gives you the status of each program's HOTMA clock and the current numbers as of today. It is not a substitute for your agency's or HFA's written guidance, and it will not catch every quirk of your specific contract or state QAP.

If a certification is close to a threshold, or your property spans multiple funding sources, talk to your compliance officer, your HUD field office, your state HFA, or a certified occupancy specialist before you finalize a file. Software and blog posts can flag the rules. They can't sign your 50059.

For a broader look at building this into your reporting workflow, see reporting for affordable housing operators, or browse definitions in our affordable housing glossary if any of these terms are new to your team.

Frequently asked questions

When does HOTMA fully apply to HUD Section 8 Multifamily properties?

January 1, 2027. Notice H-2025-07, published December 18, 2025, moved the date back from January 1, 2026. Until then, 2026 Multifamily certifications use pre-HOTMA Handbook 4350.3 rules.

Has HOTMA already started for public housing and vouchers?

Yes. Public and Indian Housing, covering public housing and Housing Choice Vouchers, moved to HOTMA on July 1, 2025 under Notice PIH 2024-38. That's a different program office than Multifamily, with a different clock.

What are the current pre-HOTMA deduction amounts for 2026 Multifamily certifications?

$480 per dependent and $400 for an elderly or disabled family member, under 24 CFR 5.611(a). The medical expense deduction still uses the old 3% of income threshold and is limited to elderly or disabled families.

What will the deduction amounts be after HOTMA takes effect?

For CY2026 HOTMA adopters, the dependent deduction is $500 and the elderly or disabled deduction is $550. The medical and disability threshold rises from 3% to 10%, phased in at 5%, then 7.5%, then 10% for households that already held the deduction as of January 1, 2024.

Is the interim recertification trigger always 10%?

Only for income increases. A 10% or greater income increase always triggers a mandatory interim review. For income decreases, the agency can set a lower trigger than 10%, at its own discretion, but never higher.

Did USDA Rural Development adopt HOTMA yet?

Yes, on July 1, 2025. The penalty grace period that followed ended January 1, 2026, so RD properties are now expected to be fully compliant, no more grace window.

Does LIHTC follow the same HOTMA schedule as HUD?

No. LIHTC adoption is set by each state housing finance agency individually. Many states adopted HOTMA-aligned rules as early as January 1, 2024, but timing varies by state, so check with your specific state HFA.

Can one property really be on different HOTMA rules for different funding sources at the same time?

Yes, and it's common. A property with Section 8 PBRA, LIHTC, and USDA RD financing can have three different rule sets active in the same year, since each funding source runs its own adoption timeline.

Related Resources

• Affordable Housing Property Management Software
• Fortress Compliance
• Section 8 Rent Calculator
• Affordable Housing Glossary
• Reporting for Affordable Housing Operators