Federal Housing Finance Agency Announces Doubled Investment in LIHTC Properties in Rural Communities

By Kayla Blackwell, NLIHC Housing Policy Analyst 

On August 5, the Federal Housing Finance Agency (FHFA) announced it is doubling the amount that Fannie Mae and Freddie Mac can invest in Low-Income Housing Tax Credit (LIHTC) properties, raising the LIHTC investment at Fannie and Freddie to $4 billion total. FHFA is requiring that 50% of these new funds be invested in “difficult to serve” housing markets, and that 20% of that 50% be invested in rural markets. NLIHC has endorsed LIHTC reforms to designate rural and Tribal areas as “difficult to develop” and supports further LIHTC reforms to make the program more accessible to extremely low-income households.  

FHFA has overseen and regulated Fannie and Freddie as government-sponsored enterprises (GSEs) since 2008. Fannie Mae and Freddie Mac do not provide mortgage loans directly to individual borrowers. Rather, they facilitate the secondary mortgage market by buying loans from banks, savings institutions, and other mortgage originators. Lenders then use the sale proceeds to engage in further mortgage lending. For the most part, the GSEs purchase single-family, 30-year fixed rate conventional mortgages that are not insured by the federal government. They also play a major role in financing the multifamily housing market. As GSEs, Fannie Mae and Freddie Mac are required to achieve social goals as well as assure safety and soundness in the housing finance system.   

The “Housing and Economic Recovery Act of 2008” (HERA) required the GSEs to support the secondary mortgage market in three underserved areas: rural housing, manufactured housing, and affordable housing preservation. Rural areas continue to face barriers in attracting LIHTC developers, however, and incentives like a rural LIHTC set-aside at the GSEs will help rural areas attract new LIHTC projects. Prior to 2008, the GSEs were significant players in the LIHTC investment market, but they were required to pull out of the market when they were put into conservatorship following the 2008 housing crisis. FHFA permitted Fannie Mae and Freddie Mac to reenter the LIHTC investment market in 2017, and this is the fourth time FHFA has increased their investment cap.   

The “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, permanently expanded LIHTC, which is the primary way in which affordable housing construction is financed in the United States. While an important program, LIHTC units are rarely affordable enough for households with the lowest incomes. While the LIHTC provisions are estimated to result in the construction of an additional 1.22 million affordable homes over the next decade, the additional financial strain put on low-income households because of the other provisions of OBBBA means that housing will continue to be out of reach for those with the most urgent affordable housing needs.   

Read the announcement from FHFA here.  

Read more about FHFA and the GSEs in NLIHC’s 2025 Advocate’s Guide: Fannie Mae, Freddie Mac, and Housing Finance Reform.