Housing Tax Credits

 The Housing Tax Credit (HTC) program was created to encourage private industry to develop and maintain affordable rental housing for lower income families and individuals. It is the largest and most successful affordable housing program. 

States receive allocation authority from the U.S. Treasury to issue tax credits to private entities for investing in affordable housing. The investor receives a dollar for dollar exchange to reduce their federal income tax liability and the affordable housing development receives a 65-70 percent equity contribution to build the development. 

Program funds may be used to finance the construction, acquisition or rehabilitation of rental development. Owners must elect to set aside at least 20 percent of the units for households at or below 50 percent of Area Median Gross Income or 40 percent of the units for households at or below 60 percent of Area Median Gross Income.  

  The HOME program is funded by the U.S. Department of Housing and Urban Development (HUD). The purpose of the program is to expand the supply of decent, safe, affordable housing and strengthen public-private housing partnerships between Federal, State and Local Governments, Public Housing Authorities, nonprofit and for-profit entities.

Program funds may be used for a variety of activities including Homeowner Rehabilitation, Homebuyer Assistance, Contract for Deed Conversion, Tenant Based Rental Assistance, Single Family Housing Development, Multifamily Development, Disaster Relief and Accessibility Accommodations for Persons with Disabilities and Multifamily Rental Housing Development.   

 FHA insures mortgage loans to facilitate the new construction or substantial rehabilitation of multifamily rental housing for low to moderate income families and the elderly. Single Room Occupancy (SRO) developments may also be insured under this section. Section 221(d)(3) and Section 221(d)(4) insures lenders against loss on mortgage defaults. Section 221(d)(3) is used by non-profit developers and Section 221(d)(4) is used by for-profit developers. 

Both programs assist private industry in the construction or rehabilitation of rental housing by making capital more readily available. The program allows for long-term mortgages (up to 40 years) that can be financed with Government National Mortgage Association (GNMA) Mortgage Backed Securities.  

   The Multifamily Bond program issues tax-exempt and taxable mortgage revenue bonds (MRBs) to fund loans to nonprofit and for-profit developers.

The proceeds of the bonds are used to finance the construction, acquisition, or rehabilitation of multifamily properties.   

 The Affordable Housing Program (AHP) was designed to help member institutions develop affordable owner occupied and rental housing for very low to moderate income families and individuals. The program provides direct grants and subsidized loans. 

The funds are intended for gap financing and the innovative use of other funds to leverage AHP subsidies is highly recommended. AHP funds are intended to assist members in financing the purchase, construction, and/or rehabilitation of single family, rental, transitional and single room housing in their community.  

 The CDBG program was created by the Housing and Community Development Act of 1974. The primary objective of the program is to develop viable communities by providing decent housing and a suitable living environment and by expanding economic opportunities. Funds are allocated through state and local authorities.