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3w ago

FHFA Doubles Fannie and Freddie’s LIHTC Cap to $4 Billion

The requirement that half of the extra allocation serve underserved markets with 20 percent dedicated to rural communities underscores FHFA’s push into overlooked regions.

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Overview

  • The FHFA has set an annual investment limit of $4 billion for Fannie Mae and Freddie Mac in LIHTC properties, up from the previous $2 billion cap.
  • Regulators require 50 percent of the expanded funding to target underserved markets with a minimum of 20 percent allocated to rural communities under the Duty to Serve program.
  • The decision aligns with provisions in the One Big Beautiful Bill Act and recent tax law changes that expanded state LIHTC allocations and lowered private activity bond thresholds.
  • Industry groups including the National Housing Conference and Mortgage Bankers Association praised the move for its potential to boost demand for tax credits and accelerate the development of affordable rentals.
  • Analyses by Novogradac project that the combined effect of higher GSE investment caps and tax credit reforms could finance or preserve about 1.22 million affordable housing units over the next decade.