Freddie Mac is playing an increasingly important role in the low-income housing tax credit (LIHTC) market this year.
The government-sponsored enterprise can invest up to $2 billion in LIHTCs this year, double its cap from 2024. The increase adds important investor capacity to the LIHTC market at a time when affordable housing developments are facing significant headwinds.
The Federal Housing Finance Agency also doubled Fannie Mae’s LIHTC investment cap to $2 billion this year.
“We saw strong demand for LIHTC equity investments throughout 2026 and were glad to have additional capacity to support affordable housing creation and preservation,” says Peter Lillestolen, vice president, production and sales, targeted affordable housing, at Freddie Mac. “Our focus has been on making disciplined investments that advance our mission while meeting our underwriting and risk management standards. The expanded cap gives us greater ability to support the affordable housing market and work alongside our syndicator, developer, lender, and housing agency partners.”
Affordable Housing Finance recently asked Lillestolen about Freddie Mac’s recent housing tax credit activities and what’s coming next.
Your LIHTC cap is double the previous limit. How have you approached that increase in investment capacity?
Freddie Mac has been active in the LIHTC market since reentering in 2018, and we have built a strong platform, experienced team, and longstanding relationships with syndicators, developers, lenders, and housing agencies nationwide. The higher cap allowed us to expand the work we were already doing successfully. We focused on improving execution, increasing efficiency, and working closely with our industry partners to identify opportunities that create or preserve affordable housing in communities across the country.
What type of developments are you targeting this year? Geographic areas?
Our focus remained consistent throughout 2026: supporting developments that create new affordable housing or preserve existing affordable housing. We invested nationwide and supported both new construction and preservation transactions. As a national investor and lender, we worked with partners in markets around the country, including locations where affordable housing remains in short supply. Under our Duty to Serve Plan, Freddie Mac has a mandate to support rural affordable housing through LIHTC equity investments, particularly in high-needs rural regions.
Please tell me about a recent LIHTC development that you invested in and why it’s a good example of Freddie Mac’s approach.
One good example is Joyfield at Lakeview Center, a planned 233-unit 4% LIHTC apartment community in Antioch, California, that will deliver new affordable housing in less than two years. Through a public-private partnership, these income- and rent-restricted units will meet the standards of market-rate apartments without needing state or local subsidies. This project [by Standard Communities] utilized Freddie Mac tax-exempt and taxable financing as well as Freddie Mac LIHTC equity, an example of how we work with partners up and down the capital stack to make complicated transactions pencil.
On the other side of the country, Freddie Mac recently partnered with Hudson Housing Capital to provide $32.3 million in LIHTC equity for Indigo at McLean Station in Virginia. The investment supports Phase B of the development, which will create 225 affordable homes and transform a former office site into housing affordable to lower-income residents.
What have been the opportunities and challenges of finding LIHTC deals to invest in this year?
The biggest opportunity continues to be the strong demand for affordable housing across the country and the ability of the LIHTC program to bring together public and private capital to help meet that need. At the same time, many developments continue to face complex financing structures and elevated development costs, which have led to delays in expected timing on deals. Those realities make collaboration especially important, and one of Freddie Mac's strengths is the ability to support the market through both debt and equity solutions.
How do Freddie Mac's debt and equity businesses complement one another in supporting affordable housing?
One of Freddie Mac's strengths is our ability to support affordable housing through both debt and equity solutions. While each serves a different purpose, together they help create a more complete capital solution for affordable housing developments.
Our LIHTC equity investments help provide the equity capital needed to develop and preserve affordable housing, while our debt offerings provide financing solutions that support properties throughout their lifecycle. By working across both platforms, we can collaborate with developers, syndicators, lenders, housing agencies, and other partners to help move affordable housing projects from planning to completion.
As we look to 2027, we are excited to continue building on that collaboration as we work with our partners to support the LIHTC market and help create and preserve affordable housing across the country.
What are your expectations for Freddie Mac’s housing credit program in 2027?
In the year ahead, LIHTC will continue to play a critical role in creating and preserving affordable housing across the country. Looking to 2027, we are excited about the opportunity to build on the momentum we saw in 2026 and continue supporting the market through both our debt and equity businesses.
Our focus will remain on working with our partners to help expand housing supply, preserve affordability, and support communities with a wide range of housing needs. Freddie Mac's mission is to provide liquidity, stability, and affordability across market cycles, and our LIHTC program is essential to meeting that mission.