WASHINGTON, D.C. — The Federal Housing Finance Agency (FHFA) has raised the yearly amount of low-income housing tax credits (LIHTCs) Fannie Mae and Freddie Mac can invest in affordable housing. Effective Aug. 5, the decision authorizes each GSE to invest $2 billion in affordable housing development. The previous cap was $1 billion. The move complements some of the affordable housing expansions in the One Big Beautiful Bill Act, including a 12 percent increase in states’ LIHTC allocations.
“This step by FHFA is great news for housing providers seeking to use LIHTC to build and preserve housing, as well as individuals and families searching for affordable housing opportunities,” said National Multifamily Housing Council (NMHC) President Sharon Wilson Géno. “As someone who has spent more than 30 years working in and advocating for the affordable housing community, I have seen firsthand how LIHTC can be one important tool to help us build the housing America needs.”
According to Novogradac, LIHTC gives investors a dollar-for-dollar reduction in their federal tax liability in exchange for providing financing to develop affordable rental housing. These developments must remain affordable for a 15- or 30-year period to avoid tax credit recapture. LIHTC is the federal government’s largest tool to expand the supply of affordable housing, according to the U.S. Department of the Treasury. Since its inception in 1986, the LIHTC program has financed four million apartments and served more than 9.28 million households, per NMHC.