What is the Low-Income Housing Tax Credit (LIHTC)?

The Low-Income Housing Tax Credit (LIHTC) is a federal financing mechanism administered by state housing finance agencies that rewards developers and investors with annual tax credits when they build or rehabilitate apartment communities for households earning at or below specified income thresholds. In the Houston area, this program directly shapes which apartments qualify as "affordable" and what rents their operators can legally charge.

LIHTC properties must restrict occupancy to tenants whose household income does not exceed 50 or 60 percent of the area median income (AMI), depending on the credit type awarded. Once a property receives LIHTC funding, landlords agree to hold rents at or below a federally calculated maximum for a compliance period, typically 15 to 30 years. This locks in affordability for low-income renters even as market rents rise elsewhere in Greater Houston.

Developers pursue LIHTC awards because the tax credits offset their project costs, making it financially viable to serve tenants who could not otherwise afford market-rate apartments. The program requires competitive application through the Texas Department of Housing and Community Affairs, meaning not every project that applies receives credits. For apartment seekers in Houston, LIHTC properties represent a substantial portion of income-restricted rental housing stock. Many affordable housing providers in the area operate LIHTC-funded communities and can explain income eligibility requirements and rent terms at their specific properties.