The National Housing Trust Fund is a permanent federal fund intended to provide grants to states for the purpose of supporting safe, clean and affordable housing for extremely and very low-income families. This program complements existing affordable housing programs such as the Low Income Housing Tax Credit. The U.S. Department of Housing and Urban Development (HUD) recently announced its first contributions to the National Housing Trust Fund of $174 million from the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
“This is an exciting new tool to help states across the country to produce more critically needed affordable housing,” said HUD Secretary Julian Castro. “The National Housing Trust Fund will play an important role in creating new opportunities for those who are most in need to secure a safe, decent and affordable home they can call their own.”
The program requires that a state must use 80% of each annual grant for rental housing, up to 10% for homeownership and 10% for administrative costs of the state. Eligible activities and expenses of the fund by the state include: property acquisition, site improvements and development hard costs, related soft costs, demolition, financing costs, relocation assistance, operating cost assistance for rental housing, and reasonable administrative and planning costs.
The statutes set a minimum of $3 million for each state that meets the four factors of the fund’s need-based formula:
- A shortage of standard rental units that are affordable and available to extremely low-income families.
- A shortage of standard rental units that are affordable and available to very low-income families.
- A high number of extremely low income families:
- Paying more than 50% of their income towards rent and utilities; or,
- Living in overcrowded housing; or,
- Living in a place with inadequate plumbing or kitchen facilities.
- A high number of very low income families paying more than 50% of their income for rent and utilities.
The amount of money a state receives depends on the shortage of rental housing to extremely low income families and the extent to which they are paying more than half of their income for rent and utilities.