Fannie Mae and Freddie Mac are set to double their potential role in the country’s top affordable housing incentive.
The White House doubled each agency’s investment cap in the Low Income Housing Tax Credit program to $2 billion, up from $1 billion, according to Bisnow. The boost — cheered by affordable housing developers and advocates — comes after President Donald Trump’s recently passed One Big Beautiful Bill Act significantly expanded LIHTC benefits.
The LIHTC system, considered one of the most important tools for building and preserving affordable housing, is overseen by the FHFA, which has controlled Fannie and Freddie since the 2008 financial crisis. By raising the cap, the administration aims to accelerate production, with the Affordable Housing Tax Credit Coalition estimating an additional 1.2 million units could be built.
Trump’s legislative package reinstated state LIHTC funding that lapsed in 2021, broadened the areas qualifying as “difficult to develop” and hiked credits for those sites. It also slashed the bond financing threshold for certain projects from 50 percent to 25 percent, letting developers cover up to three-quarters of a project’s costs with LIHTC-backed bonds issued through 2029.
“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,” National Multifamily Housing Council president Sharon Wilson Géno said in a statement.
The National Apartment Association called the move “another important step” toward boosting supply, lowering costs and improving affordability nationwide.
The expansion marks a rare point of agreement between the White House and industry lobbyists who have criticized cuts to other housing programs. The National Council of State Housing Agencies lauded FHFA Director Bill Pulte for taking “important, impactful action.”
For developers, the increased caps could mean easier access to equity for projects that otherwise wouldn’t pencil out, especially in high-cost and hard-to-finance markets. But with interest rates still elevated and construction costs stubborn, the LIHTC changes won’t eliminate the headwinds facing builders.