Who this is for
You're new to affordable housing finance, or you've been adjacent to it and want to actually understand how the deal stack works. Maybe you're a junior analyst, a student in a real estate or public-policy program, a city or state staffer who reviews deals, a nonprofit board member, a journalist covering housing, or a developer pivoting in from market-rate.
You're not looking for a 200-page treatise — you want enough to be conversant, then pointers to the right resources for whichever program ends up mattering to your work. This page is the orientation. The federal program pages are the deep dives.
The core idea
Building affordable housing typically doesn't pencil with one source of money. Hard costs are high, rents are intentionally below market, and operating margins are thin. To make deals work, sponsors stack multiple capital sources — each with its own rules, eligibility, and tradeoffs.
The job of the affordable housing finance practitioner is to assemble that stack: figuring out which programs apply, in what amounts, in what order, and with what compliance obligations. The federal programs below are the most important pieces of the typical stack.
Federal tax credit equity covers a third to half of total dev cost. Conventional debt covers another third. Gap financing — HOME, HTF, FHLB AHP, state trust funds — fills what's left. Rental assistance (Section 8) and program structures (RAD) underwrite the operations.
The federal program landscape
The ten programs below account for the overwhelming majority of federal affordable housing finance activity. Click into any to read the practitioner-grade deep dive.
This orientation page is always free. The deep-dive guides linked from each program card below are part of the Brief and Pro content library.
LIHTC
Low-Income Housing Tax Credit. The federal tax credit program that finances ~90% of new affordable housing built in the U.S. Two flavors: 9% competitive (new construction, deeper subsidy) and 4% non-competitive paired with tax-exempt bonds (preservation and substantial rehab).
Open LIHTC guide →HOME
HOME Investment Partnerships. Federal block grant administered by HUD CPD. States and major cities receive HOME allocations and pass funds through to projects as soft second loans. Frequently layered into LIHTC deals.
Open HOME guide →HTF
National Housing Trust Fund. Federal trust fund dedicated to deep affordability — 100% of funds must serve extremely low-income households (at or below 30% AMI or the poverty line, whichever is greater) in all years where total national HTF funding is under $1 billion — every year to date. Administered by HUD CPD; allocated to states. Layered into LIHTC stacks to create the deepest income tiers.
Open HTF guide →HTC
Historic Tax Credit. 20% federal tax credit for substantial rehab of certified historic buildings. Commonly twinned with 4% LIHTC on adaptive reuse projects in historic structures.
Open HTC guide →RAD
Rental Assistance Demonstration. HUD program that converts public housing and certain Section 8 properties to long-term Section 8 PBV or PBRA contracts — typically wrapped with LIHTC for the recapitalization. Major source of preservation activity.
Open RAD guide →Section 8
HCV, PBV, and PBRA. The federal rental assistance umbrella. Housing Choice Vouchers follow tenants; Project-Based Vouchers and Project-Based Rental Assistance attach to specific units. Provides the operating revenue that supports many LIHTC deals.
Open Section 8 guide →NMTC
New Markets Tax Credit. Federal tax credit for investment in qualifying low-income community businesses, including mixed-use projects with affordable housing components. Made permanent at $5B annual cap under OBBBA. CDFI Fund-administered.
Open NMTC guide →Opportunity Zones
Opportunity Zones. Federal capital gains tax incentive for investment in designated census tracts. Made permanent under OBBBA with a new Rural OZ category. Stacks with LIHTC and HTC.
Open OZ guide →CDBG
Community Development Block Grant. Federal block grant administered by HUD CPD. Entitlement cities and states receive CDBG funds and use them flexibly for community development, including affordable housing.
Open CDBG guide →FHLB AHP
Federal Home Loan Bank Affordable Housing Program. Grants and subsidized advances from each of the 11 FHLB districts. Competitive annual rounds; common gap source for LIHTC stacks.
Open AHP guide →Programs by deal role
The primary equity sources
These are typically the largest single source in a capital stack — the anchor that the rest of the deal is structured around:
- LIHTC — 9% competitive for new construction; 4% non-competitive paired with tax-exempt bonds for preservation/rehab
- HTC — for certified historic structures, can be substantial
- NMTC — for mixed-use community development in qualified census tracts
- OZ — capital gains deferral benefit, sized to investor's gain basis
Gap loan / soft debt sources
These fill the gap between primary equity, conventional debt, and total development cost. Usually structured as deferred-payment or low-interest loans:
- HOME — flexible federal block grant, administered by states/cities
- HTF — federal, restricted to 30% AMI
- CDBG — federal, flexible community development
- FHLB AHP — competitive grants from your FHLB district
- State / local trust funds — varies by state; see state pages
Rental assistance / operating subsidy
These don't fund construction directly, but they provide the rental revenue that supports debt service and operations:
- Section 8 PBV / PBRA — project-attached vouchers and contracts
- Section 8 HCV — tenant-based vouchers that tenants bring to your property
- USDA Rural Section 521 RA — rental assistance for USDA Rural properties
Repositioning programs
These don't create new units but convert existing ones to long-term affordable contracts:
- RAD — public housing to Section 8 conversion; commonly paired with LIHTC for recapitalization
- Section 18 — demolition/disposition of obsolete public housing, often paired with tenant protection vouchers
What a typical capital stack looks like
To illustrate: a typical 100-unit new construction 9% LIHTC deal might include:
- 9% LIHTC equity (~$15–20M)
- Conventional permanent loan (~$8–12M)
- HOME or HTF soft second loan (~$2–4M)
- FHLB AHP grant (~$1M)
- State / local gap source (~$1–3M)
- Sponsor equity / deferred developer fee (~$1–2M)
A typical 200-unit preservation 4% LIHTC deal would substitute tax-exempt bonds for the primary debt and 4% LIHTC for the primary equity, often with smaller gap sources because the underlying property already has operating income.
Big developments worth knowing (OBBBA)
In July 2025, Congress passed the One Big Beautiful Bill Act (OBBBA) — the most significant affordable housing finance law in years. It made several major programs bigger or permanent. In plain terms:
- Bigger LIHTC pool. Every state now gets ~12% more low-income housing tax credit authority each year, permanently.
- 4% deals get easier. The bond financing threshold for 4% LIHTC deals dropped meaningfully, which should unlock more preservation and rehab projects.
- NMTC and OZ stay alive. Both programs are now permanent law instead of facing future expiration.
If you want the technical breakdown of these changes, the OBBBA explainer covers the specific dates, dollar amounts, and statutory references.
Mini-glossary (twelve terms to know)
- AMI
- Area Median Income — the income benchmark HUD publishes by metro area. Used to set rent and income limits for nearly every affordable housing program.
- QAP
- Qualified Allocation Plan — the state-level rulebook governing how 9% LIHTC is awarded. Each state publishes one annually.
- PAB
- Private Activity Bond — tax-exempt bonds states issue that, when paired with 4% LIHTC, finance the majority of preservation deals.
- HFA
- Housing Finance Agency — the state-level entity that allocates LIHTC, issues bonds, and runs many state housing programs.
- PBV
- Project-Based Voucher — Section 8 assistance attached to a specific unit (not a tenant). Stabilizes operating revenue for LIHTC deals.
- PBRA
- Project-Based Rental Assistance — a separate Section 8 contract type (the Section 8 New Construction / Sub Rehab / Mod Rehab programs and the Section 202/811 PRACs all use PBRA contracts).
- HCV
- Housing Choice Voucher — tenant-based Section 8 the tenant brings to your property.
- 9% credit
- The competitive LIHTC awarded through state QAP rounds; provides ~70% present value subsidy of qualified basis.
- 4% credit
- The non-competitive LIHTC available when enough of the deal's aggregate basis is financed with tax-exempt bonds — at least 50%, or (for buildings placed in service after 2025, under OBBBA) at least 25% so long as bonds issued after Dec 31, 2025 finance at least 5% of aggregate basis; provides ~30% present value subsidy.
- Soft loan
- Below-market loan with deferred payment terms (often residual cash flow only). HOME, HTF, CDBG, and state trust funds typically come in as soft loans.
- Capital stack
- The complete list of capital sources funding a deal — equity, debt, soft loans, grants, deferred fees — in priority order.
- Set-aside
- A QAP-defined pool of LIHTC reserved for a specific deal type (nonprofit, rural, preservation, etc.). Sets the competitive pool you're actually competing in.
Where to go from here
Pick the program most relevant to your work and read the dedicated guide:
- If you're working on a new construction deal: start with LIHTC
- If you're working on a preservation/rehab deal: start with LIHTC (4% section) and RAD
- If you're working on a public housing redevelopment: start with RAD and Section 8
- If you're working on a historic rehab: start with HTC and LIHTC
- If you're working on mixed-use community development: start with NMTC and CDBG
- If you're working in a designated Opportunity Zone: start with OZ
Then read the relevant state page, the glossary (general / programs / AMI), and our flagship LIHTC deal structures guide.
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This is educational reference material, not legal, tax, financial, or investment advice. Real deals require qualified counsel, tax advisors, and other professionals. See Disclaimer.