Give LIHTC Program FAQ Sheet to Site Visitors and Applicants

Tax credit site managers often find themselves spending much time and expense processing applications for ineligible households. Hearing about a good deal, casual visitors may submit applications not realizing that they’ll be considered over-income or student households. One way to increase the chances that those filling out applications at your site qualify for the tax credit program is to educate visitors and anyone expressing interest in housing at your site what it takes to be eligible for a LIHTC unit before they apply.

Educating interested parties will help save you time and money that you’d have to spend on more expensive and time-consuming screening techniques, such as criminal background checks, credit history checks, or prior landlord reference checks. And unqualified parties won’t have to go through an application process just to find out that they don’t qualify for the tax credit program.

You can offer an information sheet on applying and qualifying for LIHTC units to every applicant who expresses interest in your site. We’ve come up with a Model Notice: FAQs on Applying and Qualifying for LIHTC Units, which you can pass along to these individuals. If applicants request information over the telephone, you can email them a PDF of the document, along with your application, and let them know you’re available to answer any additional questions before they submit anything.

What FAQ Covers

The FAQ is addressed to households not living in or familiar with LIHTC sites but who might be interested in these types of affordable units. It points out that LIHTC housing is privately owned and developed but has federally imposed eligibility and affordability criteria. Our FAQ includes 11 questions that cover the criteria for qualifying for LIHTC housing; the amount of rent a household might be expected to pay; and utility allowances for households that pay their own utilities. The FAQs also address a number of questions, including the use of Housing Choice Vouchers; eligibility for people with criminal histories; eligibility for full-time students; credit checks; eligibility for survivors of domestic violence; and eligibility for households with members without lawful immigration status.

Income eligibility. The FAQ points out that an applicant’s income must be less than the maximum income limit, but the limit varies depending on what apartment you apply for and where it’s located. It goes over terms such as Area Median Income and when these figures typically change. It also notes that to calculate and verify your income, LIHTC sites will ask for the total annual income before taxes for all members of the household who’ll live in the unit, including employment income, income from assets, government benefits, and all other sources. And this amount must be less than the qualifying tax credit income level for that household size.

Rent setting. The FAQ includes the warning that households might and probably will need to spend more than 30 percent of their income to rent LIHTC units. It notes that rent isn’t based on the household’s income but rather a formula to set maximum rents based on unit size. Therefore, unlike other programs, like Housing Choice Vouchers, the household’s rent won’t automatically change if their income goes up or down. This also means that their rent can go up slightly each year even if their income doesn’t.

Full-time students. The FAQ also covers whether an applicant can qualify for LIHTC housing if she’s a full-time student. It specifies that the applicant can be a student and live in an LIHTC apartment as a member of a household, as long as at least one person in the household isn’t a full-time student. And it covers exceptions that would permit a full-time student household to live at the site.