The Federal Housing Finance Agency (FHFA) announced it is doubling the caps for federal low-income housing tax credit (LIHTC) equity for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from $1 billion to $2 billion each per year.
“The LIHTC program has long been the most important tool for developing affordable multifamily housing, and we applaud all efforts to enhance and expand the program,” said Lument’s Paul Weissman, head of affordable housing production at Lument. “Doubling the cap for each GSE will help facilitate the development and preservation of much-needed affordable rental housing across the nation, especially in rural areas. We look forward to leveraging the expansion for the benefit of our clients.”
In its press release, the FHFA stated that Fannie and Freddie can together now deploy $4 billion each year in support of the affordable housing tax credits. There will still be restrictions in place so that half of the funds are reserved for difficult to serve LIHTC markets, and at least 20% of that half will be reserved for Duty to Serve Rural Communities.
The announcement follows enhancements to LIHTCs included in the One Big Beautiful Bill Act, which provided a permanent 12% increase in 9% credit authority and permanently lowered the bond financing test from 50% to 25%.
Contact a member of our affordable housing team today for more information on how this update might impact your financing strategies.
