What is the "Area Median Income" and how does it affect "affordability"?

The Area Median Income (AMI), explained

When we talk about affordability in housing, a key question is affordable to whom?  Are we talking about very low income individuals or the middle class?  Most of the programs that determine what types of buildings and structures qualify as "affordable" housing use the Area Median Income to identify maximum rents and costs.  While this article is focused on Washington, D.C. it provides a quick primer of methods that are used in Oregon as well.  As we considering topics such as affordability requirements for MUPTE and the potential for Inclusionary Zoning requirements in Eugene, understanding how we calculate affordability is key.

We typically distinguish between three types of households. Households earning less than 80 percent of the AMI are considered low-income households by HUD. Very low-income households earn less than 50 percent of the AMI and extremely low-income households earn less than 30 percent of the AMI.
— Brian McCabe, Greater Greater Washington