HUD Housing Trust Fund (HTF)

The Housing Trust Fund (HTF) is a federal block grant program established by the Housing and Economic Recovery Act of 2008 (HERA) and implemented at 24 CFR Part 93 to produce, preserve, and rehabilitate housing for the lowest-income households in the United States. Funded through mandatory assessments on Fannie Mae and Freddie Mac — not annual congressional appropriations — HTF channels mortgage market revenues into rental housing for extremely low-income (ELI) households at or below 30% of area median income, the population most severely underserved by private housing markets and most dependent on federal assistance. States receive annual formula grants based on HUD's assessment of housing needs; they act as grantees (or designate a state entity) and distribute funds to developers through a competitive application process. HTF is the only federal housing program specifically targeted by statute to ELI households when program funds are below $1 billion. Annual HTF allocations have grown from roughly $174 million in 2016 (the first funding year) to over $600 million in recent years, but remain far below the estimated need for ELI housing nationally. Advocates and housing researchers treat HTF as the federal government's most direct instrument for addressing the roughly 7 million unit shortage of affordable housing for the lowest-income renters.

Legal Authority

• 12 U.S.C. § 4568 — Federal Housing Enterprises Financial Safety and Soundness Act (as amended by HERA 2008); establishes the National Housing Trust Fund; requires Fannie Mae and Freddie Mac to allocate a portion of new mortgage business to the HTF; directs HUD to distribute HTF grants to states for extremely low-income (ELI) rental housing production and preservation
• 24 CFR Part 93 — HUD Housing Trust Fund regulation; establishes eligible grantees (state housing finance agencies), eligible activities (production, preservation, and operation of rental housing for ELI households), income targeting requirements, affordability periods, and compliance monitoring obligations

Key Mechanics

The HTF provides formula grants to all 50 states, DC, and U.S. territories, allocated based on the shortage of affordable rental housing for extremely low-income households (at or below 30% of area median income, or the poverty line). Grants are funded by mandatory allocations from Fannie Mae and Freddie Mac — each must set aside 4.2 basis points of new unpaid principal balance on each new mortgage purchased; in practice this generates $500 million–$1 billion+ per year. FHFA suspended contributions during the conservatorship (2008–2016) and resumed them in 2016. States receive their annual allocation and must distribute funds to project sponsors (primarily affordable housing developers and nonprofits) for production or preservation of rental units. At least 80% of each grantee's HTF funds must benefit ELI households; the remaining 20% may benefit very low-income households (50% AMI). Units funded with HTF must remain affordable for a minimum 30-year period (production and substantial rehabilitation) enforced through deed restrictions and regulatory agreements. HTF cannot be used for homeownership, public housing operating costs, or administrative expenses beyond 10% of the grant. States must maintain a list of HTF-funded units and conduct annual inspections.

Current Rule (2026)

What This Rule Does

The Housing Trust Fund regulation at 24 CFR Part 93 implements Congress's directive to collect a share of Fannie Mae's and Freddie Mac's guarantee fee revenues and direct them to housing for the nation's poorest renters. The funding mechanism is automatic: each year, both GSEs set aside 0.042% of the UPB of their newly acquired mortgage business, with Fannie's share going to HTF and Freddie's share split between HTF and a parallel Capital Magnet Fund administered by Treasury's CDFI Fund. HUD allocates the resulting pool to states using a formula that weighs the number of ELI renter households paying more than 50% of their income for housing and the number of substandard units occupied by low-income renters — directing money toward states with the greatest measurable need. FHFA suspended the GSE assessments during the 2008–2014 conservatorship period; actual disbursements to states began only in 2016.

States that participate (participation is voluntary, but all states participate) submit an annual plan to HUD describing how they will use their allocation, what types of projects they will fund, and how they will ensure compliance. States may distribute HTF through their existing housing finance agency mechanisms alongside Low-Income Housing Tax Credit (LIHTC) allocations and other affordable housing resources. HTF dollars may pay for acquisition, construction, rehabilitation, and preservation of rental housing; the rental housing produced must serve ELI tenants at rents they can afford (no more than 30% of 30% AMI). For homeownership, HTF may assist first-time homebuyers (a smaller share of activity than rental).

The 30-year affordability commitment — longer than LIHTC's standard 30 years and much longer than typical bond-financed affordable housing — makes HTF-assisted units among the most durably restricted affordable housing in the federal portfolio.

Key Provisions

• § 93.1 — Overview: HTF implements 12 U.S.C. § 4568; States receive formula grants; a State or its designated entity acts as grantee responsible for administration, distribution, and compliance monitoring
• § 93.100 — Participation and submission: States notify HUD of intent to participate within 30 days of HUD's formula allocation announcement; failure to participate means forfeiture of that year's allocation
• § 93.101 — Distribution: a State may directly administer its HTF grant or designate a qualified state entity (typically the state housing finance agency) to act as grantee; the grantee awards HTF funds to project owners — developers, nonprofits, PHAs, or local governments — through a competitive process described in the grantee's allocation plan
• § 93.200 — Eligible activities: HTF funds may pay for production (new construction), preservation (acquiring expiring affordable housing), and rehabilitation of rental housing; funds may also support homeownership for first-time buyers; must serve qualifying income groups
• § 93.201 — Eligible project costs: development hard costs (construction and rehabilitation), soft costs (architecture, engineering, legal, financing), acquisition costs, relocation costs, and operating cost assistance to make units affordable to ELI tenants
• § 93.203 — HTF and public housing: HTF may fund new construction or rehabilitation of public housing only when the public housing unit count is not reduced (no net loss) and the units remain under PHA control for the affordability period
• § 93.204 — Prohibited activities: HTF may not fund operating costs or rental assistance (it is a capital program, not a subsidy program); may not pay for project reserve accounts beyond 6 months of operating expense; may not assist projects that will be demolished without replacement
• § 93.250 — Income targeting: when annual HTF allocation is below $1 billion, 100% of units must serve ELI households; when ≥$1 billion, 75% must serve ELI (≤30% AMI) and 25% may serve VLI (≤50% AMI); no HTF-assisted unit may have a rent exceeding 30% of the income limit for the applicable household size
• § 93.300 — Maximum per-unit subsidy: grantees must establish and HUD must approve per-unit subsidy limits; limits must be consistent with HUD's published per-unit cost guidelines; subsidy layering review required when HTF is combined with other federal assistance to prevent excessive public subsidy for a single unit
• § 93.301 — Property standards: new construction must meet state and local codes; rehabilitation must bring units to HUD's housing quality standards; accessibility: all ground-floor units in new construction must meet Fair Housing Act design requirements (accessible to persons with mobility disabilities); at least 5% of all units in any HTF project must be fully accessible under Uniform Federal Accessibility Standards
• §§ 93.350–93.360 — Affordability and long-term use restrictions: HTF units must remain affordable for 30 years (rental) or 10 years (homeownership); grantees must record a deed restriction, covenant, or land use restriction agreement (LURA) on the property to enforce affordability; the 30-year clock begins when the project is complete and occupied; if the property is sold or converted before the period ends, proceeds must be returned to the HTF and recycled for eligible activities

How It Affects You

If you're a low-income renter looking for affordable housing: HTF targets people at or below 30% of area median income — in most cities, this means annual incomes below roughly $20,000-$25,000 for a single person. HTF-assisted projects will have some units reserved at rents affordable to this income level (typically below $600/month for a one-bedroom in most markets). You can find HTF-assisted units through your state housing finance agency's affordable housing locator, HUD's housing search tools, or local housing authorities. HTF units often come bundled with LIHTC projects — a development may have both LIHTC and HTF units, some restricted at 60% AMI (LIHTC) and some at 30% AMI (HTF). Demand typically far exceeds supply; expect waiting lists.

If you're a housing developer or nonprofit seeking funding: HTF is a capital grant — it does not come with ongoing rental assistance, so HTF-funded units need a separate subsidy stream (Section 8 vouchers, project-based assistance) to make them financially viable for ELI tenants. The most common structure combines HTF + LIHTC + project-based Section 8 HAP contract. Apply through your state housing finance agency or designated HTF administrator; many states integrate HTF applications into their annual LIHTC Qualified Allocation Plan (QAP) process. HTF requires a 30-year affordability period, which is longer than what many lenders and investors are comfortable with — design your financing and deal structure accordingly. Per-unit subsidy caps are enforced; cost overruns that push per-unit cost above HUD's threshold may require finding additional non-HTF funding sources.

If you follow housing policy: HTF is a rare example of a federal housing program funded through market mechanisms rather than annual appropriations — the Fannie/Freddie assessment flows automatically without congressional action. This insulates HTF from annual budget fights but also means the program is constrained by GSE activity (in a low-origination year, assessments fall). The program's scale is debated: $600 million per year is roughly what the estimated 7 million unit ELI housing shortage would cost approximately $600 billion to address over time. State flexibility in how they distribute HTF also means outcomes vary significantly — some states use it to serve the deepest income levels (30% AMI and below), while others use it to fill financing gaps in projects that would otherwise serve 50-60% AMI tenants.

Statutory Authority

This rule implements:

• 12 U.S.C. § 4568 — Housing Trust Fund: establishes the HTF; directs FHFA to require Fannie Mae and Freddie Mac to set aside annual allocations; directs HUD to allocate funds to States by formula; establishes income targeting requirements (ELI priority below $1B threshold); requires 30-year affordability periods; authorizes HUD to establish program requirements by regulation

Recent Rulemakings

• 80 FR 5220 (January 30, 2015) — Initial HTF program rule establishing 24 CFR Part 93: set the formula allocation methodology, income targeting requirements, eligible activities, affordability periods, property standards, and grantee responsibilities; first actual fund allocations to States occurred in 2016 after FHFA resumed GSE assessments
• 81 FR 80805 (November 17, 2016) — Amendments clarifying property standards (expanded accessibility requirements), revising the per-unit subsidy limit methodology, and updating guidance on combining HTF with LIHTC and other federal resources

Pending Action