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HUD & FHA Glossary
1 min read

What is Low-to-Moderate Income Housing?

Low-to-moderate income housing is housing designed for individuals and families whose incomes are low to moderate in comparison to prevailing incomes where they live. In general, offering low-to-moderate income housing is a requirement for a property owner’s participation in the HUD Section 8 program.

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Low-to-Moderate Income Housing and the HUD 221(d)(4) Loan Program

Low-to-moderate income housing is housing designed for individuals and families whose incomes are low to moderate in comparison to prevailing incomes where they live. In general, offering low-to-moderate income housing is a requirement for a property owner’s participation in the HUD Section 8 program. Like properties financed with certain other kinds of HUD multifamily loans, such as the HUD 223(f) loan, properties financed with HUD 221(d)(4) loans are eligible for the Section 8 program, in which they offer low-to-moderate income and low-income housing at a steep discount in exchange for a government subsidy.

To learn more about HUD multifamily construction loans like the HUD 221(d)(4) loan, fill out the form below and a HUD lending expert will get in touch. 

Related Questions

What is the definition of low-to-moderate income housing?

Low-to-moderate income housing is housing designed for people whose incomes are low to moderate when compared to prevailing incomes in their area. HUD attempts to promote the supply of low-to-moderate income housing via the Section 8 and LIHTC programs, both of which are available to properties financed with HUD 221(d)(4) and HUD 223(f) loans. Low-to-moderate income housing is subsidized housing intended for people whose incomes are low to moderate when compared to prevailing incomes. To determine what the rent limits are based on the low-to-moderate income level in your area, visit the HUD User Portal’s Income Limits Dataset and look up the county in which your property is located.

What are the benefits of low-to-moderate income housing?

Low-to-moderate income housing provides many benefits to those who qualify. It can provide access to safe and affordable housing, which can help to reduce poverty and improve quality of life. Low-to-moderate income housing can also help to reduce homelessness and provide access to better educational opportunities. Additionally, it can help to create jobs and stimulate economic growth in the local community.

The HUD 223(f) loan program provides financing for the acquisition, refinance, or construction of multifamily properties with low-to-moderate income housing-based income restrictions. This loan program offers a variety of benefits, including low interest rates, long-term fixed-rate financing, and flexible underwriting. Additionally, HUD 223(f) loans are fully assumable, meaning that the loan can be transferred to another borrower without the need for a new loan application.

For more information on the benefits of low-to-moderate income housing, please visit the HUD 223(f) FAQs page.

What are the eligibility requirements for low-to-moderate income housing?

The eligibility requirements for low-to-moderate income housing vary depending on the program. For the HUD Section 8 program, eligibility is based on the household's income and size. The HUD User Portal’s Income Limits Dataset can be used to determine the rent limits based on the low-to-moderate income level in your area. For the Low-Income Housing Tax Credit (LIHTC) program, eligibility is based on the household's income and the area median income. Both of these programs are available to properties financed with HUD 221(d)(4) and HUD 223(f) loans. HUD 223(a)(7) loans are also fully equipped to refinance HUD 221(d)(4) and HUD 223(f) properties with low-to-moderate income housing-based income restrictions. For more information, please visit the Low-to-Moderate Income Housing page on our website.

How can I apply for low-to-moderate income housing?

You can apply for low-to-moderate income housing through the Section 8 and LIHTC programs, both of which are available to properties financed with HUD 221(d)(4) and HUD 223(f) loans. HUD 223(a)(7) loans are also available to refinance HUD 221(d)(4) and HUD 223(f) properties with low-to-moderate income housing-based income restrictions. To determine what the rent limits are based on the low-to-moderate income level in your area, visit the HUD User Portal’s Income Limits Dataset and look up the county in which your property is located.

What are the different types of low-to-moderate income housing?

Low-to-moderate income housing is subsidized housing intended for people whose incomes are low to moderate when compared to prevailing incomes. There are two main types of low-to-moderate income housing: Section 8 housing and Low-Income Housing Tax Credits (LIHTC).

Section 8 housing is a program administered by the U.S. Department of Housing and Urban Development (HUD) that provides rental assistance to low-income households. The program is funded by the federal government and administered by local public housing agencies (PHAs). To qualify for Section 8 housing, households must meet certain income and family size requirements. The amount of rent a household pays is based on their income and the rent limits set by the local PHA.

Low-Income Housing Tax Credits (LIHTC) are a federal tax credit program administered by the Internal Revenue Service (IRS). The program provides tax credits to developers of low-income housing projects. The credits are used to offset the cost of developing and operating the projects. The amount of the credit is based on the number of units in the project and the amount of rent charged to tenants.

Both Section 8 housing and LIHTC are available to properties financed with HUD 221(d)(4) and HUD 223(f) loans. HUD 223(a)(7) loans are also fully equipped to refinance HUD 221(d)(4) and HUD 223(f) properties with low-to-moderate income housing-based income restrictions.

What are the advantages of low-to-moderate income housing for small businesses?

Low-to-moderate income housing offers several advantages for small businesses. First, it can provide access to lower-cost financing options insured by HUD, which can offer borrowers significantly higher leverage and lower-interest loans. Additionally, both investors and developers can often utilize an array of tax credit options, including the well-known (though extremely competitive) Low-Income Housing Tax Credit program. Finally, HUD attempts to promote the supply of low-to-moderate income housing via the Section 8 and LIHTC programs, both of which are available to properties financed with HUD 221(d)(4) and HUD 223(f) loans. HUD 223(a)(7) loans are also fully equipped to refinance HUD 221(d)(4) and HUD 223(f) properties with low-to-moderate income housing-based income restrictions.

Sources:

  • The Investment Upside to Affordable Housing
  • What is Low-to-Moderate Income Housing?
In this article:
  1. Low-to-Moderate Income Housing and the HUD 221(d)(4) Loan Program
  2. Related Questions
  3. Get Financing
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