The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac (the Enterprises) will each be allowed to invest up to $1 billion annually in the Low-Income Housing Tax Credit (LIHTC) market as equity investors, beginning in 2024. 

Since September 2021, each Enterprise has been limited to $850 million of investment annually in the LIHTC market. Increasing the Enterprises’ LIHTC investment cap ensures they continue to play a consistent role in supporting the creation and preservation of affordable housing.

The Enterprises will also adjust their LIHTC investment policies to ensure their investments only support projects that remain affordable for the entire 30-year period intended by the program.

Within the $1 billion investment cap, any investments by the Enterprises above $500 million in a given year must be in transactions FHFA has identified as having difficulty attracting investors. This increases the amount of investments under the cap that must support housing in Duty to Serve-designated rural areas, preserve affordable housing, support mixed-income housing, provide supportive housing, or meet other affordable housing objectives.

In addition, the Enterprises will only make LIHTC investments in projects that waive the qualified contract provision, ensuring the 30-year affordability period envisioned by the LIHTC program.

LIHTC is the primary federal government program available to address the shortage of affordable rental housing by creating and preserving affordable units in underserved areas throughout the country. FHFA will continue to evaluate the Enterprises’ participation in the LIHTC equity market on an ongoing basis.