Qualification as affordable housing

Source Credit

(a) Rental housing
(1) Qualification
Housing that is for rental shall qualify as affordable housing under this subchapter only if the housing—
(A) bears rents not greater than the lesser of (i) the existing fair market rent for comparable units in the area as established by the Secretary under section 1437f of this title, or (ii) a rent that does not exceed 30 percent of the adjusted income of a family whose income equals 65 percent of the median income for the area, as determined by the Secretary, with adjustment for number of bedrooms in the unit, except that the Secretary may establish income ceilings higher or lower than 65 percent of the median for the area on the basis of the Secretary's findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes;
(B) has not less than 20 percent of the units (i) occupied by very low-income families who pay as a contribution toward rent (excluding any Federal or State rental subsidy provided on behalf of the family) not more than 30 percent of the family's monthly adjusted income as determined by the Secretary, or (ii) occupied by very low-income families and bearing rents not greater than the gross rent for rent-restricted residential units as determined under section 42(g)(2) of title 26;
(C) is occupied only by households that qualify as low-income families;
(D) is not refused for leasing to a holder of a voucher or certificate of eligibility under section 1437f of this title because of the status of the prospective tenant as a holder of such voucher or certificate of eligibility;
(E) will remain affordable, according to binding commitments satisfactory to the Secretary, for the remaining useful life of the property, as determined by the Secretary, without regard to the term of the mortgage or to transfer of ownership, or for such other period that the Secretary determines is the longest feasible period of time consistent with sound economics and the purposes of this Act, except—
(i) upon a foreclosure by a lender (or upon other transfer in lieu of foreclosure) if such action—
(I) recognizes any contractual or legal rights of public agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income affordability in the case of foreclosure or transfer in lieu of foreclosure; and
(II) is not for the purpose of avoiding low-income affordability restrictions, as determined by the Secretary; or
(ii) where existing affordable housing is no longer financially viable due to unforeseen acts or occurrences beyond the reasonable contemplation or control of the participating jurisdiction in which the affordable housing is located or the owner of the affordable housing that significantly impact the financial or physical condition of the affordable housing, as determined by the Secretary; and
(F) if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of this title.
(2) Adjustment of qualifying rent
The Secretary may adjust the qualifying rent established for a project under subparagraph (A) of paragraph (1), only if the Secretary finds that such adjustment is necessary to support the continued financial viability of the project and only by such amount as the Secretary determines is necessary to maintain continued financial viability of the project.
(3) Increases in tenant income
Housing shall qualify as affordable housing despite a temporary noncompliance with subparagraph (B) or (C) of paragraph (1) if such noncompliance is caused by increases in the incomes of existing tenants and if actions satisfactory to the Secretary are being taken to ensure that all vacancies are filled in accordance with paragraph (1) until such noncompliance is corrected. Tenants who no longer qualify as low-income families shall pay as rent the lesser of the amount payable by the tenant under State or local law or 30 percent of the family's adjusted monthly income, as recertified annually. The preceding sentence shall not apply with respect to funds made available under this Act for units that have been allocated a low-income housing tax credit by a housing credit agency pursuant to section 42 of title 26.
(4) Mixed-income project
Housing that accounts for less than 100 percent of the dwelling units in a project shall qualify as affordable housing if such housing meets the criteria of this section.
(5) Mixed-use project
Housing in a project that is designed in part for uses other than residential use shall qualify as affordable housing if such housing meets the criteria of this section.
(6) Waiver of qualifying rent
(A) In general
For the purpose of providing affordable housing appropriate for families described in subparagraph (B), the Secretary may, upon the application of the project owner, waive the applicability of subparagraph (A) of paragraph (1) with respect to a dwelling unit if—
(i) the unit is occupied by such a family, on whose behalf tenant-based assistance is provided under section 1437f of this title;
(ii) the rent for the unit is not greater than the existing fair market rent for comparable units in the area, as established by the Secretary under section 1437f of this title; and
(iii) the Secretary determines that the waiver, together with waivers under this paragraph for other dwelling units in the project, will result in the use of amounts described in clause (iii) 1 in an effective manner that will improve the provision of affordable housing for such families.
(B) Eligible families
A family described in this subparagraph is a family that consists of at least one elderly person (who is the head of household) and one or more of such person's grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren (as defined by the Secretary), but does not include any parent of such grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren. Such term includes any such grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren who have been legally adopted by such elderly person.
(7) Qualification exception
Notwithstanding paragraph (1)(A), a rental unit shall be considered to qualify as affordable housing under this subchapter if—
(A) the unit is occupied by a tenant receiving tenant-based rental assistance under section 1437f of this title;
(B) the contribution of the tenant toward rent does not exceed the amount permitted under the assistance described in subparagraph (A); and
(C) the total rent for the unit does not exceed the amount approved by the public housing agency administering the assistance described in subparagraph (A).
(b) Homeownership
(1) Qualification
Housing that is for home-ownership shall qualify as affordable housing under this subchapter only if the housing—
(A) has an initial purchase price 2 that does not exceed 110 percent of the median purchase price 2 for the area, as determined by the Secretary with such adjustments for differences in structure, including whether the housing is single-family or multifamily, and for new and old housing as the Secretary determines to be appropriate;
(B) is the principal residence of an owner with a family income that does not exceed 100 percent of the median family income of the area as determined by the Secretary with adjustments for smaller and larger families—
(i) in the case of a contract to purchase existing housing, at the time of purchase;
(ii) in the case of a lease-purchase agreement for existing housing or for housing to be constructed, at the time the agreement is signed; or
(iii) in the case of a contract to purchase housing to be constructed, at the time the contract is signed;
(C) is subject to resale restrictions that are established by the participating jurisdiction and determined by the Secretary to be appropriate to—
(i) allow for subsequent purchase of the property only by persons who meet the qualifications specified under paragraph (2),3 at a price which will—
(I) provide the owner with a fair return on investment, including any improvements, and
(II) ensure that the housing will remain affordable to a reasonable range of home-buyers with a household income that does not exceed 100 percent of the median family income of the area, as determined by the Secretary with adjustments for smaller and larger families;
(ii) recapture the investment provided under this subchapter in order to assist other persons in accordance with the requirements of this subchapter, except where there are no net proceeds or where the net proceeds are insufficient to repay the full amount of the assistance; or
(iii) maintain long-term affordability through a shared equity ownership model, a community land trust, a limited equity cooperative, a community development corporation, or other mechanism approved by the Secretary, that preserves affordability for future eligible home-buyers and ensures compliance with the purposes of this subchapter, including through the use of purchase options, rights of first refusal, or other preemptive rights to purchase housing;
(D) if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of this title; and
(E) is subject to restrictions that are established by the participating jurisdiction and determined by the Secretary to be appropriate, including with respect to the useful life of the property, to—
(i) require that any subsequent purchase of the property be—
(I) only by a person who meets the qualifications specified under subparagraph (B); and
(II) at a price that is determined by a formula or method established by the participating jurisdiction that provides the owner with a reasonable return on investment, which may include a percentage of the cost of any improvements; or
(ii) recapture the investment provided under this subchapter in order to assist other persons in accordance with the requirements of this subchapter, except where there are no net proceeds or where the net proceeds are insufficient to repay the full amount of the assistance.
(2) Purchase by community land trust or cooperative housing corporation
Notwithstanding subparagraph (C)(i) of paragraph (1) and under terms determined by the Secretary, the Secretary may permit a participating jurisdiction to allow a community land trust, housing cooperative, or a community development corporation that used assistance provided under this part for the development of housing that meets the criteria under paragraph (1), to acquire the housing—
(A) in accordance with the terms of the preemptive purchase option, lease, covenant on the land, or other similar legal instrument of the community land trust or housing cooperative when the terms and rights in the preemptive purchase option, lease, covenant, or legal instrument are and remain subject to the requirements of this subchapter;
(B) when the purchase is for—
(i) the purpose of—
(I) entering into the chain of title;
(II) enabling a purchase by a person who meets the qualifications specified under paragraph (1)(B) and is on a waitlist maintained by the community land trust or housing cooperative, subject to enforcement by the participating jurisdiction of all applicable requirements of this subchapter, as determined by the Secretary;
(III) performing necessary rehabilitation and improvements; or
(IV) adding a subsidy to preserve affordability, which may be from Federal or non-Federal sources; or
(ii) another purpose determined appropriate by the Secretary; and
(C) if, within a reasonable period of time after the applicable purpose under subparagraph (B) of this paragraph is fulfilled, as determined by the Secretary, the housing is then sold to a person who meets the qualifications specified under paragraph (1)(B).
(c) Qualification exceptions for home-ownership
(1) Military members
A participating jurisdiction, in accordance with terms established by the Secretary, may suspend or waive the income qualifications described in subsection (b)(1)(B) with respect to housing that otherwise meets the criteria described in subsection (b)(1) if the owner of the housing—
(A) is a member of a regular component of the armed forces or a member of the National Guard on full-time National Guard duty, active Guard and Reserve duty, or inactive-duty training (as those terms are defined in section 101 of title 10); and
(B) has received—
(i) temporary duty orders to deploy with a military unit or military orders to deploy as an individual acting in support of a military operation, to a location that is not within a reasonable distance from the housing, as determined by the Secretary, for a period of not less than 90 days; or
(ii) orders for a permanent change of station.
(2) Heirs and beneficiaries of deceased owners
Housing that meets the criteria described in subsection (b)(1)(C) prior to the death of an owner of such housing shall continue to qualify as affordable housing under this subchapter if—
(A) the housing is the principal residence of an heir or beneficiary of the deceased owner, as defined by the Secretary; and
(B) the heir or beneficiary, in accordance with terms established by the Secretary, assumes the duties and obligations of the deceased owner with respect to funds provided under this subchapter.

History

(Pub. L. 101–625, title II, §215, Nov. 28, 1990, 104 Stat. 4101; Pub. L. 102–550, title II, §§208, 209, Oct. 28, 1992, 106 Stat. 3754; Pub. L. 103–233, title II, §203, Apr. 11, 1994, 108 Stat. 364; Pub. L. 105–276, title V, §599B(b), Oct. 21, 1998, 112 Stat. 2660; Pub. L. 106–569, title IX, §904, Dec. 27, 2000, 114 Stat. 3027; Pub. L. 119–101, title V, §501(g), (h), (p), (v)(8), July 11, 2026, 140 Stat. 908, 913, 917.)

Editorial Notes

Editorial Notes

References in Text
This Act, referred to in subsec. (a)(1)(E), (3), is Pub. L. 101–625, Nov. 28, 1990, 104 Stat. 4079, known as the Cranston-Gonzalez National Affordable Housing Act. For complete classification of this Act to the Code, see Short Title note set out under section 12701 of this title and Tables.

Amendments
2026—Subsec. (a)(1)(E). Pub. L. 119–101, §501(p), which directed the substitution of "except—" and cls. (i) and (ii) for "except upon a foreclosure by a lender (or upon other transfer in lieu of foreclosure) if such action (i) recognizes any contractual or legal rights of public agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income affordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of avoiding low-income affordability restrictions, as determined by the Secretary; and", was executed by making the substitution for text containing "avoiding low income" instead of "avoiding low-income", to reflect the probable intent of Congress.
Subsec. (a)(6)(B). Pub. L. 119–101, §501(v)(8), substituted "person's grandchildren" for "person's grand children".
Subsec. (a)(7). Pub. L. 119–101, §501(g), added par. (7).
Subsec. (b). Pub. L. 119–101, §501(h)(1)(C), (D), (F), designated existing provisions as par. (1), inserted heading, redesignated former pars. (1) to (4) as subpars. (A) to (D), respectively, of par. (1), realigned margins, and added par. (2).
Subsec. (b)(1). Pub. L. 119–101, §501(h)(1)(D), which directed substitution of "Housing that is for home-ownership" for "Housing that is for home-ownership" in introductory provisions, was executed by making the substitution for "Housing that is for homeownership", to reflect the probable intent of Congress.
Subsec. (b)(1)(A). Pub. L. 119–101, §501(h)(1)(E)(i)(II), which directed the insertion of "(defined as the amount borrowed by the homebuyer to purchase the home, or the estimated value after rehabilitation, which may be adjusted to account for the limits on future value imposed by the resale restriction)" after "purchase price", was not executed because the phrase "purchase price" appeared twice in subpar. (A), and amendment did not specify which phrase was intended.
Pub. L. 119–101, §501(h)(1)(E)(i)(I), substituted "110 percent" for "95 percent".
Subsec. (b)(1)(B). Pub. L. 119–101, §501(h)(1)(E)(ii), substituted "with a family income that does not exceed 100 percent of the median family income of the area as determined by the Secretary with adjustments for smaller and larger families" for "whose family qualifies as a low-income family" in introductory provisions.
Pub. L. 119–101, §501(h)(1)(A), redesignated subpars. (A) to (C) of former par. (2) as cls. (i) to (iii), respectively, of par. (1)(B) and realigned margins.
Subsec. (b)(1)(C). Pub. L. 119–101, §501(h)(1)(B), redesignated subpars. (A) and (B) of former par. (3) as cls. (i) and (ii), respectively, of par. (1)(C), redesignated cls. (i) and (ii) of former par. (3)(A) as subcls. (I) and (II), respectively, of par. (1)(C)(i), and realigned margins.
Subsec. (b)(1)(C)(i)(II). Pub. L. 119–101, §501(h)(1)(E)(iii)(I)(aa), which directed the substitution of "home-buyers with a household income that does not exceed 100 percent of the median family income of the area, as determined by the Secretary with adjustments for smaller and larger families" for "low-income home-buyers", was executed by making the substitution for "low-income homebuyers", to reflect the probable intent of Congress.
Subsec. (b)(1)(C)(iii). Pub. L. 119–101, §501(h)(1)(E)(iii)(I)(bb)–(III), added cl. (iii).
Subsec. (b)(1)(E). Pub. L. 119–101, §501(h)(1)(E)(iv), (v), added subpar. (E).
Subsec. (c). Pub. L. 119–101, §501(h)(2), added subsec. (c).
2000—Subsec. (a)(6). Pub. L. 106–569 added par. (6).
1998—Subsec. (b)(2). Pub. L. 105–276 amended par. (2) generally. Prior to amendment, par. (2) read as follows: "is the principal residence of an owner whose family qualifies as a low-income family at the time of purchase;".
1994—Subsec. (b)(3). Pub. L. 103–233, §203(a), redesignated par. (4) as (3) and struck out former par. (3) which read as follows: "is made available for initial purchase only to first-time homebuyers;".
Subsec. (b)(3)(B). Pub. L. 103–233, §203(b), substituted "subchapter" for "subsection" after "requirements of this".
Subsec. (b)(4), (5). Pub. L. 103–233, §203(a)(2), redesignated pars. (4) and (5) as (3) and (4), respectively.
1992—Subsec. (a)(1)(A). Pub. L. 102–550, §208(a)(1), substituted "number of bedrooms in the unit" for "smaller and larger families".
Subsec. (a)(1)(E). Pub. L. 102–550, §208(b), inserted before semicolon ", except upon a foreclosure by a lender (or upon other transfer in lieu of foreclosure) if such action (i) recognizes any contractual or legal rights of public agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income affordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of avoiding low income affordability restrictions, as determined by the Secretary".
Subsec. (a)(3). Pub. L. 102–550, §208(a)(2), (3), substituted "the lesser of the amount payable by the tenant under State or local law or" for "not less than" in second sentence and inserted at end "The preceding sentence shall not apply with respect to funds made available under this Act for units that have been allocated a low-income housing tax credit by a housing credit agency pursuant to section 42 of title 26."
Subsec. (b)(4). Pub. L. 102–550, §209, added par. (4) and struck out former par. (4) which read as follows: "is made available for subsequent purchase only—
"(A) to persons who meet the qualifications specified under paragraph (2), and
"(B) at a price consistent with guidelines that are established by the participating jurisdiction and determined by the Secretary to be appropriate—
"(i) to provide the owner with a fair return on investment, including any improvements, and
"(ii) to ensure that the housing will remain affordable to a reasonable range of low income homebuyers; and".

Statutory Notes and Related Subsidiaries

Effective Date of 1998 Amendment
Amendment by Pub. L. 105–276 made on, and applicable beginning upon, Oct. 21, 1998, see section 599B(c) of Pub. L. 105–276, set out as a note under section 12744 of this title.

Effective Date of 1994 Amendment
Amendment by Pub. L. 103–233 applicable with respect to any amounts made available to carry out this subchapter after Apr. 11, 1994, and any amounts made available to carry out this subchapter before that date that remain uncommitted on that date, with Secretary to issue any regulations necessary to carry out such amendment not later than end of 45-day period beginning on that date, see section 209 of Pub. L. 103–233, set out as a note under section 5301 of this title.

Effective Date of 1992 Amendment
Amendment by Pub. L. 102–550 applicable to unexpended funds allocated under subchapter II of this chapter in fiscal year 1992, except as otherwise specifically provided, see section 223 of Pub. L. 102–550, set out as a note under section 12704 of this title.

HOME Investment Partnerships Program
Pub. L. 114–113, div. L, title II, Dec. 18, 2015, 129 Stat. 2878, provided in part: "That with respect to funds made available under this heading [home investment partnerships program, see 129 Stat. 2878] pursuant to such Act [probably means title II of Pub. L. 101–625] and funds provided in prior and subsequent appropriations acts that were or are used by community land trusts for the development of affordable homeownership housing pursuant to section 215(b) of such Act [42 U.S.C. 12745(b)], such community land trusts, notwithstanding section 215(b)(3)(A) [now 215(b)(1)(C)(i)] of such Act [42 U.S.C. 12745(b)(1)(C)(i)], may hold and exercise purchase options, rights of first refusal or other preemptive rights to purchase the housing to preserve affordability, including but not limited to the right to purchase the housing in lieu of foreclosure".