LIHTC at 40: Celebrating Four Decades of Affordable Housing

LIHTC at 40: Celebrating Four Decades of Affordable Housing

This month marks an important milestone for housing in America: the 40th anniversary of the Low-Income Housing Tax Credit (LIHTC).

Created as part of the Tax Reform Act of 1986, LIHTC introduced a new approach to one of the nation's most persistent challenges: encouraging private investment in developing and preserving rental housing that remains affordable to lower-income households.

Since its creation, LIHTC has helped finance more than 4 million affordable rental homes across the United States, establishing it as the nation's primary tool for financing the development and preservation of affordable rental housing. Behind that number are millions of individuals, families, seniors, and children who have had a place to call home.

As LIHTC celebrates 40 years, it is worth looking not only at what the program has accomplished nationally, but also at the impact it has had right here in New Mexico and the opportunities and challenges that will shape its next chapter.

A Public-Private Partnership That Has Endured

One distinguishing feature of LIHTC is how the program brings public resources and private investment together.

Rather than relying exclusively on direct federal funding for housing construction, LIHTC provides federal tax credits that help attract private investment into affordable housing developments. Credits are allocated through state housing finance agencies and are generally used to generate equity for qualifying developments.

That equity can help close the financial gap between what it costs to develop or rehabilitate a property and what the property can support while maintaining required affordability.

The result is a public-private partnership involving developers, investors, lenders, housing agencies, nonprofit organizations, property owners, property management professionals and other community partners.

Over the past four decades, that partnership has helped build new affordable housing, rehabilitate aging properties and preserve existing affordable communities throughout the country.

LIHTC housing also serves a wide range of residents and communities. Developments may provide housing for working families, seniors, veterans, people with disabilities, and households with extremely low incomes.

The program is not a solution to every housing challenge, but for 40 years it has provided an important financing tool for turning proposed affordable housing developments into actual homes.

Making an Impact Here in New Mexico

LIHTC's impact is visible throughout New Mexico.

Under the administration of Housing New Mexico, formerly known as the New Mexico Mortgage Finance Authority, federal Low-Income Housing Tax Credits have helped create or rehabilitate 19,558 affordable housing units across our state, with more than $150 million in federal tax credits administered.

More importantly, those numbers represent thousands of homes for New Mexico families, seniors, and individuals. They also include existing affordable housing that has been rehabilitated and preserved, extending the useful life of properties and helping ensure that those homes remain available for future residents.

The impact extends well beyond our largest cities. Affordable housing can be particularly difficult to finance in smaller and rural New Mexico communities, where construction costs may be high while achievable rents and property values make traditional financing difficult.

Recent developments demonstrate that the program continues to play an active role in addressing New Mexico's housing needs. Projects have used LIHTC alongside state, local, federal, and private resources to construct new communities and preserve existing housing. That illustrates an important reality of affordable housing development: rarely is a single funding source enough to make a project possible. LIHTC often serves as a critical piece that brings those resources and partners together.

Challenges and Opportunities

Celebrating LIHTC's accomplishments does not mean ignoring the challenges facing the program or affordable housing development more broadly. The housing market of 2026 is dramatically different from the one that existed when LIHTC was created in 1986.

Construction and labor costs have risen. Land can be difficult and expensive to acquire. Interest rates can change a project's financial feasibility. Insurance, utilities, maintenance, and other operating expenses have also placed additional pressure on housing providers.

At the same time, affordable housing developments can involve increasingly complicated financing structures, regulatory requirements and lengthy development and approval processes. LIHTC has not been immune from those challenges.

As housing needs continue to grow, the challenge for LIHTC's next chapter will be finding ways to make the program more efficient, encourage additional private investment, reduce unnecessary barriers to development and stretch available resources further.

LIHTC has demonstrated for 40 years that public resources and private investment can work together to create housing that otherwise may not be financially feasible.

Forty Years and Still Evolving

LIHTC enters its fifth decade as the need for additional housing remains significant.

The program itself continues to evolve. Federal changes taking effect in 2026 expanded the availability of LIHTC resources, including a permanent increase in the allocation of 9% credits and changes intended to make additional developments eligible for 4% credits.

Those changes have the potential to support additional affordable housing production in communities across the country.

For New Mexico, that creates another opportunity to build upon four decades of investment.

Housing affordability is an extraordinarily complicated challenge, and no single program, funding source, or policy can solve it. LIHTC is one piece of that much larger puzzle.

But after four decades, more than 4 million affordable rental homes have been financed nationally and 19,558 affordable housing units have been created or rehabilitated here in New Mexico, and its impact is worth recognizing.

Developers, investors, housing agencies, property management professionals, lenders, nonprofit organizations, policymakers and community partners have spent four decades taking a complicated financing program and turning it into something much more tangible: homes.

Forty years later, LIHTC's greatest legacy isn't measured simply in tax credits allocated or dollars invested. It is measured in the millions of homes created and preserved and the millions of people who have called those communities home.