FHFA doubles GSE funding allowance for low-income housing tax credits

Fannie Mae and Freddie Mac will be allowed to double their annual investments in Low-Income Housing Tax Credit (LIHTC) properties from $2 billion to $4 billion, the Federal Housing Finance Agency (FHFA) announced Tuesday. 

The move, which is intended to advance the affordable housing missions of the government-sponsored enterprises (GSEs), aligns with the Trump’s administration’s One Big Beautiful Bill Act, the FHFA said in a statement.

The LIHTC program provides tax credits to developers who agree to reserve a portion of their rental units for lower-income households.

The GSEs exited from this market following the 2008 financial crisis, a cautionary move that industry experts say is now counterproductive. Trade groups highlighted the importance of the program, calling it the most effective in addressing affordable housing issues. 

Fannie Mae and Freddie Mac will each invest up to $2 billion per year in LIHTC equity. Of these funds, half must be directed to underserved markets, and at least 20% of that amount must target rural communities under the Duty to Serve program.

The FHFA said the expanded commitment will be made in a “safe and sound manner.”

The National Housing Conference (NHC) called the decision “the right move at the right time,” pointing to the pressing need for affordable housing investments in Community Reinvestment Act (CRA) deserts.

“Having Fannie Mae and Freddie Mac increase their purchases will help increase demand for the credits, thereby creating even more units of affordable housing than would otherwise be the case,” David Dworkin, NHC’s president and CEO, said in a statement.  

Bob Broeksmit, the president and CEO of the Mortgage Bankers Association (MBA), added that the LIHTC program remains “the federal government’s most successful tool to support the construction and rehabilitation of housing for low- and moderate-income households.”

“FHFA’s doubling of the GSEs’ cap on LIHTC investment to $2 billion comes on the heels of program improvements included in H.R. 1 (now Public Law 119-21), both of which will help to increase rental housing supply,” Broeksmit said.