Using HOME with Low-Income Housing Tax Credits (November 1998)

This guide explores how participating jurisdictions (PJs) can use HOME funds, in conjunction with Low-Income Housing Tax Credits (LIHTCs), to produce affordable rental housing.

The LIHTC program enables low-income housing developers to raise equity from investors and thereby lower their total development debt and reduce the monthly rents needed to repay that debt. While it has been permissible to combine HOME with LIHTCs since the creation of the HOME program, technical differences between the programs as well as the limitation on the credit value of Federal funds restricted the combination of the two programs. The Housing and Community Development Act of 1992 reconciled the technical differences, while the Omnibus Budget and Reconciliation Act of 1993 (OBRA) eased restrictions on the combined uses of these subsidy funds. As a result, the number of projects using HOME together with LIHTCs has risen. Copies are available through Community Connections.