The Federal Housing Finance Agency today announced that it will increase the amount that Fannie Mae and Freddie Mac can invest in Low-Income Housing Tax Credit properties from $1 billion to $2 billion each, a total of $4 billion per year.
The LIHTC program awards developers federal tax credits to offset construction costs if they reserve a fraction of their rental units as rent-restricted for lower-income households. The “One Big Beautiful Bill” tax reconciliation package signed into law in July permanently increases the LIHTC state housing credit ceiling and generally lowers the bond-financing threshold to 25% for projects financed by bonds starting in 2026. Fannie and Freddie are raising their investment caps to reflect that fact, according to FHFA.
The agency said that half of Fannie and Freddie investments will be reserved for difficult-to-serve LIHTC markets. At least 20% of that half will be for the Duty to Serve Program in rural areas, which provides funding to families with incomes no greater than 100% of an area’s median income.
