Federal Policy


The Homeownership Within Reach coalition supports creation and use of federal policies that expand homeownership opportunity through tax credits. These credits, leveraged by private investors to increase the supply of affordable for-sale homes in low-income communities, can be an expanded use of NMTCs for homeownership or creation of an Affordable Homeownership Tax Credit. These credits can offset the gap between the cost to develop or rehabilitate housing and an affordable price to a low-income buyer.

Expanding homeownership opportunity through federal tax credits has been in practice for many years. Through our case studies, there is significant data to support both the social impact and fiscal return metrics of this model.

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Dedicated Portion of New Markets Tax Credits

New Markets Tax Credits have been used for affordable homeownership development since the Gulf Opportunity Zone response to Hurricane Katrina. While the model using NMTCs has been successful, resulting in the development or rehabilitation of nearly 4,000 affordable for-sale homes throughout the country, the NMTC program does not guarantee allocation to homeownership projects. In fact, the majority of NMTCs are awarded to other types of projects.

Allocating a guaranteed portion of NMTCs to homeownership annually would create a dedicated stream of funding to increase homeownership supply.

As an alternative to setting aside a portion of NMTCs for homeownership, Homeownership Within Reach supports the creation of a new federal Affordable Homeownership Tax Credit.

Federal Affordable Homeownership Tax Credit

Homeownership Within Reach supports the creation of a new federal tax credit dedicated exclusively to increasing affordable homeownership opportunities and access.

A dedicated credit would streamline the application process, separating a homeownership project review from NMTC application review. Most importantly, a dedicated credit would guarantee annual allocation to homeownership projects, ensuring expanded low-income homeownership opportunity.

Creating a new tax credit would require enabling legislation, the approval of a new federal budget allocation, and the establishment of program administration. Though the requirements for a new credit are not insignificant, the administrative costs are limited by simply giving independence to the structure that has been established within the NMTC model. To minimize potential administrative cost increases, the credit could be modeled after NMTCs and implemented and monitored by the CDFI Fund which manages NMTCs.


Fiscal impact is a core consideration in affordable homeownership tax credit policy.

Because there is an existing model that leverages New Market Tax Credits, there is case study evidence to support dedicating a portion of NMTCs to homeownership or to creating a separate tax credit dedicated to expanding the development/rehab of affordable for-sale housing inventory.

Fiscal impact considerations include both the administrative costs of the tax credit program (application, allocation, compliance) and the tax revenue impact. Administrative efficiency is gained by using the criteria and standards already established for NMTC applicants and projects. These criteria and compliance standards would apply to funds set aside within the NMTC program or to a separate new tax credit.



The latest (FY 2019) round of NMTC funding totaled $3,548,485,000. Dedicating just 10 percent of that budget allocation annually would set aside $350 million for affordable homeownership development. At that funding level, thousands of new or rehabbed affordable for-sale homes could be developed each year. (NOTE: the number of homes created depends on many factors, including the varying cost of land and construction in different geographical markets.)

Marketing to Applicants

A competitive pool of applicants (certified CDEs) and investors already exists. Many of these applicants have already leveraged existing tax credits to lead or participate in affordable homeownership projects.


Compliance with program guidelines is enforced in order for recipients to realize the tax credit benefit.

Over a 7-year compliance period with a tax credit equivalent to 40% of the total allocation, years 1 through 3 of an affordable homeownership credit or NMTC allocation would offer 0% credit and years 4 through 7 would offer 10% each. This program design encourages long-term commitment and execution of the priorities specified for an approved project. A model of deferred realization of the tax credit does not discourage participation from CDEs or investors.

Extension and Renewal

The federal affordable homeownership tax credit allocation, whether as a facet of the existing NMTC program or as a new tax credit, is proposed for an initial term of 15 years, with a budget allocation of $350 million.