What We Offer
Use the links below to learn about each of our financing programs for affordable rental housing and to find out if your proposed development qualifies.
Low-Income Housing Tax Credits
State Housing Tax Credits
Rental Production Program Loans
Multifamily Tax-Exempt Bonds
Low-Income Housing Tax Credits
Authorized by Congress in 1987, federal Low-Income Housing Tax Credits (Housing Credits) now finance virtually all the new affordable rental housing being built in the United States. Housing Credit rental properties are privately owned and privately managed. In exchange for the financing provided through the tax credit, owners agree to keep rents affordable for a period between 15 and 30 years for families and individuals with incomes at or below 60% of the local median income.
The North Carolina Housing Finance Agency monitors the properties during the compliance period to ensure that rents and residents’ incomes do not exceed program limits and that the properties are well-maintained.
The owners are eligible to take a tax credit equal to approximately 9% of the “Qualified Cost” of building or rehabilitating the property (excluding land and certain other expenses). The tax credit is available each year for 10 years, as long as the property continues to operate in compliance with program regulations.
Major financial institutions, such as banks, insurance companies and government-sponsored enterprises make equity investments in exchange for receiving the tax credits. Equity from the sale of tax credits reduces the amount of debt financing that the property owner incurs. For a broad overview, view Anatomy of a Low-Income Housing Tax Credit Development.
This process reduces the monthly debt service for the property, lowers the operating costs, and makes it economically feasible to operate the property at below-market rents. For an example, view Affordability of a Low-Income Housing Tax Credit Property vs. Equivalent Market Rate. Residents are responsible for their own rent payments, unless rent subsidies are available from other programs.
If a developer’s application for federal Housing Credits is approved, the development may be eligible for State Housing Credits and may be considered for a Rental Production Program loan. See Low-Income Housing Tax Credits for more information.
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State Housing Credits
The State Housing Credit was created by the North Carolina General Assembly in 1999 to be used in combination with federal Housing Credits. The additional financing makes it possible to
- build affordable apartments in low-income rural areas
- lower rents in urban areas
- produce rental housing affordable to persons with disabilities.
The program is operated by the North Carolina Housing Finance Agency in conjunction with the North Carolina Department of Revenue.
Developers who are awarded State Housing Credits may elect to receive the funds as a loan at zero interest for a percentage of the rental property’s rental cost.
In addition to evaluating applications for credits, the N.C. Housing Finance Agency monitors Housing Credit properties to ensure that
- rents are maintained at the agreed levels
- tenants’ incomes do not exceed the allowable limits
- the apartments are well-maintained.
No separate application is needed for the State Housing Credits. A development becomes eligible for state credits once the N.C. Housing Finance Agency has approved an application for federal credits. If a development does not receive federal credits, it cannot receive state credits. See State Housing Credits for more information.
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Rental Production Program Loans
The goal of the North Carolina Housing Finance Agency’s Rental Production Program (RPP) is to provide affordable rental housing opportunities for low-income families throughout the state. Through RPP loans, the Agency provides long-term financing for rental developments that serve families earning 60% or less of the area median income. The loans are funded through the N.C. Housing Trust Fund and the HOME program. The loans are awarded through an annual competitive cycle that ensures equitable distribution among the three geographic regions of the state and between metropolitan and urban areas.
No separate application exists for the RPP loan. A development becomes eligible for the RPP loan only after it has been approved for federal credits. If a development does not receive federal credits, it cannot receive an RPP loan.
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Multifamily Tax-Exempt Bonds
Tax-exempt bond financing provides long-term below-market financing for the construction or rehabilitation of affordable rental housing. Developers seeking tax-exempt bond financing must first identify a local entity, such as a local government or public housing authority, to issue the bonds.
The North Carolina Housing Finance Agency reviews applications for bond financing to ensure the properties meet program guidelines. Bond-financed properties are also eligible for a 4% federal tax credit.
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