Fannie Mae and Freddie Mac will be able to invest up to $2 billion each in low-income housing tax credits (LIHTCs), announced federal officials.
The increase doubles the annual amount that each government-sponsored enterprise (GSE) has been able to deploy into LIHTCs. Half of the amount must be reserved for difficult-to-serve LIHTC markets and at least 20% of that half will be in Duty to Serve rural communities.
“The Federal Housing Finance Agency’s (FHFA’s) decision to allow Fannie Mae and Freddie Mac to increase their investments in the LIHTC is welcome news, especially in light of the recent historic expansion of the housing credit as part of One Big Beautiful Bill,” said Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition. “The housing credit is now expected to finance 1.2 million more affordable homes than otherwise possible, which will require significantly more private-sector investment. We appreciate director [Bill] Pulte and FHFA recognizing the role of the GSEs in addressing our nation’s affordable housing shortage through the housing credit.”
The recent legislation signed by President Donald Trump on July 4 included a permanent 12% LIHTC allocation increase beginning in 2026. It also permanently reduced the bond financing threshold test from 50% to 25%, lowering a barrier to affordable housing production and allowing states to make more efficient use of their bond cap resources.
The National Council of State Housing Agencies (NCSHA), National Apartment Association (NAA), National Multifamily Housing Council, National Housing Conference (NHC), and Mortgage Bankers Association commended FHFA’s move to raise the investment levels for the GSEs.
“The Federal Housing Finance Agency’s announcement today authorizing them to increase the amounts they invest will help make more of those homes more affordable,” said NCSHA.
NHC president and CEO David M. Dworkin said Pulte’s decision “is the right move at the right time.”
“As we increase the allocation of housing tax credits in the One Big Beautiful Bill, it’s important that we also ensure that the market will absorb the additional credits without diminishing their value,” he said. “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.”
Dworkin added that the additional investment in difficult-to-serve LIHTC markets and Duty to Serve rural communities will make a significant contribution to serving so-called Community Reinvestment Act (CRA) deserts, where the CRA is less effective and affordable housing investments are needed.
“The FHFA is taking another important step toward our shared goals of boosting supply, lowering costs and improving housing affordability in communities nationwide,” added NAA. “Long supported by NAA, LIHTC has served as a successful private-public partnership that ultimately leads to more affordable housing and spurs local economic development.”