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What LIHTC is
The Low-Income Housing Tax Credit, created in 1986, is the largest federal program producing and preserving affordable rental housing. State housing finance agencies award tax credits to developers, who sell them to investors to raise equity. In exchange, the owner must keep a set share of units rent- and income-restricted for at least 30 years (a 15-year compliance period plus an extended use period), and many states require longer.
For renters, this means a large supply of newer apartments with below-market rents—but with rules that differ from Section 8 and public housing.
Income limits
When an owner applies for credits, it chooses a minimum set-aside, such as:
| Election | Requirement |
|---|---|
| 20-50 | At least 20% of units for households at or below 50% of AMI |
| 40-60 | At least 40% of units for households at or below 60% of AMI |
| Income averaging | At least 40% of units restricted with designated limits from 20% to 80% of AMI, averaging no more than 60% |
In practice, many LIHTC properties restrict all of their units, commonly at 60% of AMI. HUD publishes the applicable Multifamily Tax Subsidy Project (MTSP) income limits by area and household size each year. Your income is verified at move-in, including assets.
How rent is set
LIHTC rent limits are not tied to your personal income. The maximum gross rent (rent plus a utility allowance for tenant-paid utilities) for a unit is 30% of the income limit for an imputed household size of 1.5 people per bedroom (1 person for a studio).
Example (hypothetical): In an area where the 60% AMI limit is $54,000 for three people and $48,000 for two people, the imputed size for a two-bedroom is three people. Maximum gross rent = 30% × $54,000 ÷ 12 = $1,350. If the utility allowance is $120, the maximum rent the owner can charge is $1,230.
Because of this design:
- A household earning 30% of AMI in a 60% AMI unit could pay more than half its income in rent.
- Your rent usually doesn’t fall when your income falls.
- Owners may charge less than the maximum; in weaker markets many do.
- A Housing Choice Voucher or project-based assistance in the unit can bring your share down to about 30% of adjusted income.
Who can apply
- Income: at or below the unit’s limit when you move in
- Students: households made up entirely of full-time students can’t qualify unless they meet an exception (TANF recipient, job training program participant, single parent with children who aren’t dependents of others, married filing jointly, or a former foster youth)
- Screening: owners may screen for rental history, credit, and criminal history under written criteria consistent with fair-housing law and state rules
- Vouchers: owners cannot refuse because you hold a Housing Choice Voucher
Minimum income requirements
Many LIHTC properties require that your income be a multiple of the rent (often 2x to 2.5x). That can exclude very low-income applicants. Ask:
- What the minimum income is for each unit size
- Whether the requirement is applied only to your share of the rent if you have a voucher or other rental assistance
- Whether your state or city restricts minimum-income requirements
How to find LIHTC apartments
- Your state housing finance agency usually publishes a list or searchable map of tax credit properties.
- HUD’s LIHTC database lists properties placed in service since 1987 with addresses and unit counts.
- Search listing sites for “income restricted” or “affordable” and ask whether the unit is LIHTC.
- Call the management company and ask about waiting lists by bedroom size and AMI level.
Tax credit properties often have shorter waits than subsidized housing because rents aren’t as deep, but popular new buildings may use lotteries or long waiting lists.
Questions to ask before you apply
- Which AMI level applies to this unit (for example, 50% or 60%)?
- What is the rent, and which utilities are included?
- What is the minimum income requirement?
- Does the property have units with project-based rental assistance?
- What are the application fee and screening criteria?
- How is the waiting list ordered?
Living in a LIHTC unit
- Recertification: traditionally annual. Properties where every unit is low-income may be allowed to skip annual income verification after the first year, but many still require an annual student-status and household certification.
- Rising income: you can stay if your income rises. If it goes above 140% of the current income limit, the owner must rent the next available comparable unit to a qualifying low-income household (the “next available unit” rule), but you keep your home.
- Rent increases: rent can rise when HUD publishes new income limits or the utility allowance changes, up to the new maximum; check your lease and state rules for notice requirements.
- Good-cause protection: low-income tenants cannot be evicted or have their tenancy terminated except for good cause during the extended use period.
- VAWA protections apply to survivors of domestic violence, dating violence, sexual assault, and stalking.
- Complaints: if you think the owner is overcharging rent or violating program rules, contact the state housing finance agency’s compliance division.
What happens when affordability ends
After the 15-year compliance period, some owners can request a “qualified contract” that may end affordability restrictions earlier than 30 years, followed by a three-year period during which existing low-income tenants are protected from eviction without good cause and from rent increases above LIHTC limits. Many states limit this option. If you receive notice that your building is leaving the program, contact your state housing finance agency and legal aid.
Frequently asked questions
Is a tax credit apartment the same as Section 8?
No. LIHTC restricts the rent and the tenant’s income, but rent is usually a flat restricted amount rather than a share of your income. Some LIHTC buildings also have project-based Section 8 or accept tenants with Housing Choice Vouchers, which can bring your rent down to about 30% of income.
What is the income limit for LIHTC?
Each property elects limits: typically 50% or 60% of area median income, adjusted for household size. Properties using “income averaging” may have some units up to 80% of AMI if the average across restricted units is 60% or less. HUD publishes these as Multifamily Tax Subsidy Project (MTSP) income limits.
Can a LIHTC property refuse my Section 8 voucher?
No. Federal law prohibits LIHTC owners from refusing to lease to an applicant because the applicant holds a Housing Choice Voucher. They can still apply their other screening criteria consistently.
Is there a minimum income for tax credit apartments?
Federal law doesn’t set one, but many properties require income of about two to two-and-a-half times the rent. Some states restrict minimum-income rules, and for voucher holders the requirement should be based on your share of the rent rather than the full rent. Ask for the screening criteria in writing.
Can full-time students live in LIHTC housing?
A household made up entirely of full-time students generally can’t qualify unless an exception applies: a member receives TANF, is in a job training program, is a single parent with children (and neither is a dependent of someone else), is married filing jointly, or was formerly in foster care.
Can I be evicted without a reason from a tax credit apartment?
Generally no. The IRS has ruled that LIHTC extended-use agreements must prohibit evicting or terminating the tenancy of low-income tenants other than for good cause. Many states also enforce this through their compliance programs.
Sources and verification
Use these sources to check program rules. Funding, openings, and local procedures must be confirmed with the agency handling your application.
- Low-Income Housing Tax Credit databaseHUD USER
- Low-Income Housing Tax CreditsHUD USER
- 26 U.S. Code § 42 — Low-income housing creditLegal Information Institute, Cornell Law School
- Multifamily Tax Subsidy Project (MTSP) income limitsHUD USER
- Revenue Ruling 2004-82 (good cause eviction and voucher holders)Internal Revenue Service
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