The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will each be allowed to invest up to $1 billion annually in low-income housing tax credits (LIHTCs), beginning in 2024.

The government-sponsored 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.

“Since restarting their LIHTC investments in 2018, the enterprises have furthered their ability to create and preserve affordable housing, especially in areas that have difficulty attracting investors,” said FHFA director Sandra L. Thompson. “Today's announcement provides additional stability for investments in this critical segment of the housing market.”

The new cap is an increase from $850 million of annual investment each for Fannie Mae and Freddie Mac.

Within the new $1 billion investment cap, any investments 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, announced FHFA.