The White House is doubling the budget at Fannie Mae and Freddie Mac for a key affordable housing incentive.
The two agencies' new cap for investment in Low Income Housing Tax Credits is $2B each, up from $1B, in a move that was widely celebrated by affordable housing developers and advocates.
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The LIHTC cap is enforced by the Federal Housing Finance Agency, which has effectively controlled the two agencies since the Global Financial Crisis.
“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,” Sharon Wilson Géno, president of the National Multifamily Housing Council, said in a statement.
The move follows significant reforms to the LIHTC system included in President Donald Trump’s signature tax and policy package that cleared Congress in time for Trump’s signature on July 4. The president has made the LIHTC program a cornerstone of his plan to increase affordable housing.
Doubling the cap will finance the construction of an additional 1.2 million affordable housing units, the Affordable Housing Tax Credit Coalition estimates.
The FHFA announced the decision in a brief press release Tuesday night that cited the One Big Beautiful Bill Act’s embrace of the LIHTC system, which it called one of America’s most important sources of affordable housing today.
The recently passed policy package reinstates state funding for LIHTC programs that had expired in 2021. It also lowered the bond financing threshold for projects using some LIHTC bonds to 25% from 50%, meaning a developer can fund up to 75% of a project with LIHTC bonds issued before 2030.
The One Big Beautiful Bill also expands what areas qualify as difficult to develop in while increasing already existing tax credits for those parcels.
“This action builds on LIHTC expansion efforts in President Trump's One Big Beautiful Bill Act,” the National Apartment Association said in a statement. “The FHFA is taking another important step toward our shared goals of boosting supply, lowering costs and improving housing affordability in communities nationwide.”
Affordable housing developers and industry lobbyists on Capitol Hill, who have been critical of the White House for some of its cuts to housing initiatives, broadly support the LIHTC changes, which have been described as the most significant reform to the program in decades.
“On behalf of the state agencies that administer the credits, the National Council of State Housing Agencies commends FHFA Director Bill Pulte for this important, impactful action,” the agency said in a statement late Tuesday.
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