National Housing Trust Fund.

What HTF does

The National Housing Trust Fund (HTF) is a federal block grant program administered by HUD's Office of Community Planning and Development. Authorized by Section 1131 of the Housing and Economic Recovery Act of 2008 (12 U.S.C. § 4568), and implemented under 24 CFR Part 93, HTF is unique among major federal housing programs in two ways:

1. It is not funded by congressional appropriations. HTF receives a statutory percentage of new business at Fannie Mae and Freddie Mac, channeled through the Federal Housing Finance Agency (FHFA). This insulates the program from annual budget battles but means funding levels track GSE volumes (and thus mortgage market conditions).
2. It is the only federal program specifically targeted to Extremely Low Income (ELI) households — those earning ≤30% AMI or below the federal poverty line, whichever is higher.

For LIHTC practitioners, HTF is the program that makes deeply affordable units in mixed-income LIHTC deals financially feasible. The 30% AMI rents alone almost never support development; HTF capital subsidies (plus often operating subsidies layered through other programs) close that gap.

Program history

HTF was authorized in 2008 but did not actually begin distributing funds until 2016. The delay was a function of the Great Recession and conservatorship of Fannie Mae and Freddie Mac: the GSEs were forbidden from making the statutory contributions while in active financial distress. FHFA suspended the funding requirement in 2008 and reinstated it in 2014 (effective 2016) once the GSEs had returned to profitability.

Since 2016, annual HTF distributions have ranged from approximately $174M (FY2016, the inaugural year) to over $740M (FY2022). FY2025 distributions, based on 2024 GSE business volumes, were approximately $625M. Going forward, the volume is highly dependent on mortgage market activity at Fannie and Freddie.

The most significant program development in recent years was the increase in the statutory minimum-state allocation. Each state is now guaranteed a minimum of $3 million annually regardless of formula outcome, ensuring small-population states can run viable programs.

How it works

Funding mechanism

Fannie Mae and Freddie Mac contribute a fraction of new business volume (currently 4.2 basis points or 0.042%) to the Housing Trust Fund and the Capital Magnet Fund combined. Of that combined assessment, 65% goes to HTF and 35% to CMF. The contribution is made monthly to FHFA, which transfers to HUD annually.

Formula allocation

HUD distributes HTF funds to states (only states, not local jurisdictions) by a statutory formula that considers:

• Shortage of rental units affordable to ELI renters
• Shortage of rental units affordable to Very Low Income (VLI) renters
• Cost burdens among ELI renter households
• Cost burdens among VLI renter households

Each state receives an allocation; the statutory minimum is $3 million annually. States typically allocate via the same agency that administers LIHTC (the state Housing Finance Agency) through competitive NOFA or QAP-integrated rounds.

Eligible uses

At least 80% of each state's HTF allocation must be used for rental housing. Up to 10% may be used for homeownership programs; up to 10% may be used for administrative costs and homeowner counseling.

Eligible activities for rental:

• Acquisition
• New construction
• Rehabilitation
• Operating cost assistance (limited)

Income targeting (the key feature)

100% of HTF rental units must serve households at or below 30% AMI or the federal poverty line, whichever is higher. There is no escape valve to higher AMIs as exists in HOME or LIHTC. This single rule is what distinguishes HTF from every other major federal housing program.

Rent restrictions

HTF rents are capped at the lesser of:

• 30% of 30% AMI (or the poverty line, whichever is higher), or
• 30% of the actual household income

These rents alone almost never cover operating costs plus debt service. HTF deals typically require either deep operating subsidies (Section 8 PBV/PBRA), grant equity (no required loan repayment), or both.

Affordability period

HTF rental units must remain affordable for a minimum of 30 years. State HFAs frequently impose longer periods. Affordability runs with the land via deed restriction or restrictive covenant.

One-for-one replacement and tenant protections

HTF includes strong displacement protections. Existing low-income tenants cannot be displaced by HTF-funded acquisitions or rehabilitations without relocation assistance under the Uniform Relocation Act. HTF projects involving demolition of existing affordable housing must include one-for-one replacement of demolished units.

State administration

Each state designates a single agency to administer HTF. In most states this is the Housing Finance Agency that administers LIHTC. State HTF programs are integrated into state QAPs in many cases, allowing developers to apply for LIHTC + HTF in a single round.

State allocation plans must address:

• Priority populations within the ELI cohort (e.g., persons with disabilities, persons experiencing homelessness, supportive housing populations)
• Geographic distribution within the state
• Set-asides for nonprofit developers (statutory minimum of 25%)
• Methods for ensuring deep affordability is durable beyond the 30-year period

Stacking HTF with LIHTC

HTF + LIHTC is the standard combination for deeply affordable units. Typical structure:

• HTF as grant-equivalent capital (deferred-payment soft loan or grant) covering the deep-affordability gap
• 9% or 4% LIHTC equity covering the bulk of capital costs
• Hard debt as senior, often FHA-insured or state HFA-issued bonds
• Operating subsidy through Section 8 PBV, Section 811 PRA, or state operating programs
• HTF-restricted units mapped to the deepest-affordability tier of an income-averaged LIHTC building (typically 30% AMI designations)

The two programs' compliance regimes overlap with HTF's 30-year affordability outlasting LIHTC's 15-year compliance period but overlapping the LIHTC extended use period in many states.

Recent program developments

OBBBA impact

The One Big Beautiful Bill Act (P.L. 119-21, July 4, 2025) did not directly amend HTF. The GSE assessment that funds HTF continues unchanged. OBBBA's LIHTC enhancements (permanent 12% increase, 25% PAB threshold) indirectly benefit HTF-LIHTC stacked deals by increasing tax credit equity available to those projects.

Annual allocation trends

FY2025 HTF allocations were approximately $625M based on 2024 GSE volumes. FY2026 projections, based on 2025 GSE business, depend on the mortgage market. Forecasts suggest allocations could be flat to slightly down absent a major refinancing cycle.

How to apply (developer's perspective)

1. Confirm your state HFA's HTF program structure (most integrate with LIHTC QAP)
2. Identify the operating subsidy layer (Section 8 PBV, 811 PRA, state program) you will pair with HTF
3. Structure deal economics around 30% AMI rents — assume no rent revenue contribution from the HTF-restricted units toward debt service or developer fee
4. Apply through state HFA's HTF round (often coordinated with LIHTC and HOME)
5. Execute restrictive covenant for 30-year affordability period
6. Comply with state HFA monitoring and HUD reporting through the affordability period

Pairing with other programs

• LIHTC (4% or 9%): Most common pairing; HTF fills the 30% AMI gap that LIHTC alone cannot reach
• HOME: HOME for 50-60% AMI units; HTF for 30% AMI units in mixed-AMI buildings
• Section 8 PBV / PBRA: Essential operating subsidy layer; HTF capital + Section 8 operating is the standard deep-affordability structure
• Section 811 PRA: Operating subsidy for HTF units serving non-elderly persons with disabilities
• State affordable housing trust funds: Many states layer state trust fund grants with federal HTF for additional gap financing

Practitioner resources

• HUD CPD HTF program homepage
• 24 CFR Part 93 — HTF implementing regulations
• Your state HFA's HTF Allocation Plan
• HUD's annual HTF formula allocation tables (published shortly after FHFA transfer)
• FHFA Housing Trust Fund quarterly assessment reports
• Industry resources: NLIHC (National Low Income Housing Coalition) HTF resources, NCSHA, Enterprise Community Partners