Understanding Low-Income Housing Credits and How to Determine Your Eligibility

Finding affordable housing can be a challenge for many families and individuals. The Low-Income Housing Credit (LIHC) program offers a valuable opportunity to make housing more affordable by encouraging developers to build or renovate rental properties for low-income tenants. But how does this credit work, and how can you find out if you qualify? This post breaks down the essentials of the Low-Income Housing Credit and guides you through the eligibility process.

What Is the Low-Income Housing Credit?

The Low-Income Housing Credit is a federal tax credit program designed to increase the supply of affordable rental housing. It provides incentives to private developers who build or rehabilitate housing units that meet specific income and rent restrictions. These developers receive tax credits, which help offset the costs of construction or renovation, allowing them to offer lower rents to qualifying tenants.

This program is one of the largest sources of affordable housing in the United States, having helped millions of families secure safe and affordable homes.

How the Program Benefits Tenants

Tenants in Low-Income Housing Credit properties benefit from reduced rents set based on the area's median income, ensuring affordability for low- and moderate-income households. For instance, if the median income is $50,000, the rent cap might be 30% of that, which totals $15,000 annually, or $1,250 monthly. This structure helps families access manageable housing costs.

Who Qualifies for Low-Income Housing Credit Units?

Eligibility for housing under the Low-Income Housing Credit program depends primarily on your income relative to the area's median income. Typically, households earning 60% or less of the median income qualify. However, some properties may have different income limits, such as 50% or 40%, depending on the specific project.

Other factors that may affect eligibility include:

• Household size

• Local income limits set by housing authorities

• Citizenship or legal residency status

  
  

To determine if you qualify, you can check the income limits published by your local housing agency or the U.S. Department of Housing and Urban Development (HUD). These limits are updated annually and vary by location.

How to Apply and Verify Eligibility

If you believe you qualify for housing under this program, the next step is to find properties that participate in the Low-Income Housing Credit program. You can do this by:

• Visiting your local housing authority’s website

• Searching online databases of affordable housing

• Contacting property management companies directly

  
  

When applying, you will need to provide documentation, including proof of income, household size, and identification. The property manager will verify your eligibility based on the program’s income limits and other criteria.

What to Keep in Mind

• Availability of units can be limited, so it’s important to apply early.

• Some properties may have waiting lists due to high demand.

• Income limits and eligibility rules can change yearly, so stay informed.

• The program does not provide direct rental assistance but makes housing more affordable through rent restrictions.

  
  

Final Thoughts on Low-Income Housing Credit Eligibility

The Low-Income Housing Credit program is essential for making rental housing affordable for many families. If your income meets local limits, exploring LIHC properties can help you secure affordable housing. Research income limits and available properties, and prepare your application carefully to improve your chances. For more information, contact The Center for Financial, Legal, and Tax Planning, Inc. at (618) 997-3436. Our team is ready to assist you with your financial, legal, and tax planning needs.