If you have searched for affordable apartments, you may have seen the word "LIHTC" or the phrase "tax credit apartment." It is one of the biggest sources of affordable rentals in the country, and the basics are easy to learn. Knowing how it works can save you time and help you find a home you can afford.
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What Does LIHTC Mean?
LIHTC stands for Low-Income Housing Tax Credit. The government gives tax credits to builders who agree to rent apartments at lower prices to people with modest incomes. Builders then sell those credits to investors to help pay for construction. In return, the building must keep rents low for many years.
According to HUD, the program has helped fund millions of rental homes across the United States, and it is the largest source of new affordable rental housing in the country.
The important point for renters is this: LIHTC apartments are not public housing, and they are not the same as a Section 8 voucher. They are regular apartment buildings, often brand new and well kept, run by private owners. You apply directly to the property.
Who Can Live in a Tax Credit Apartment?
Your household income must fall under a set limit. Most tax credit buildings pick one of these two rules:
- 60% of the area median income. Your household earns no more than 60% of the typical income in your county.
- 50% of the area median income. A lower limit, used by some buildings.
Some buildings use a mix of income levels, so they may have apartments for people at 30%, 50%, 60%, or even 80% of the area median income.
The limits depend on where you live and how many people are in your home. A family of four has a higher limit than a single person. HUD posts the numbers every year on its income limits page. Look up your county and compare the number to your household's yearly income before taxes.
Good to know: Your income only has to be under the limit when you move in. Most buildings do a yearly check afterward, but you can usually keep your apartment if your income goes up a little.
Other rules can apply, too. Property managers will usually ask about:
- Everyone who will live in the home
- Income from jobs, benefits, and other sources
- Whether anyone in the home is a full-time student (full-time student households often cannot qualify, with some exceptions, such as single parents, married couples filing taxes together, or people getting certain job training or government help)
- A background and rental history check
Rules can vary by state and by building, so always ask the property what they require.
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How Much Rent Will You Pay?
Tax credit rents are capped. The rent for each apartment cannot be more than a set amount based on the income level the unit serves. In general, the cap is meant to keep housing costs near 30% of income for the group the unit is meant for.
Two things to know:
- Utilities count. If you pay your own electric or gas bill, the building lowers the rent cap by a set "utility allowance." Ask what is included in the rent and what you pay on top of it.
- The rent is not based on your exact paycheck. Unlike public housing, your rent stays the same whether you earn a little more or less, as long as you stay within the limits. That makes it easier to plan a budget.
Tax credit rent is often lower than nearby market-rate apartments, but not always the lowest option. If your income is very low, you may also want to look at rental help programs (more on that below).
Can You Use a Section 8 Voucher in a LIHTC Apartment?
Often, yes. Federal tax credit rules say owners cannot turn away a renter just because they have a Housing Choice Voucher (Section 8). Owners can still check income, background, and rental history like they do for everyone else, and they can require you to meet the building's normal rules.
Combining a voucher with a tax credit apartment can lower your share of the rent a lot. You can learn more about vouchers on HUD's rental assistance page.
What Changed Recently?
Congress passed a law in 2025 that makes the tax credit program stronger. Starting in 2026, states can award more of the main type of tax credit, and it is easier for projects financed with tax-exempt bonds to qualify. The National Council of State Housing Agencies and other housing groups expect these changes to help build more affordable apartments in the years ahead.
What does that mean for you? More tax credit buildings should open over time, but new buildings take years to finish. Waitlists in many areas are still long, so it pays to apply early and apply in more than one place.
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How to Find LIHTC Apartments Near You
You do not need to guess. These tools can help:
1. HUD's LIHTC database. HUD keeps a searchable list of tax credit properties. You can look at the LIHTC database to see where tax credit buildings are in your city or county and how many units they have.
2. HUD's affordable apartment search. The HUD Resource Locator can help you find affordable rental properties and local housing offices.
3. Your state housing finance agency. Each state has an agency that gives out the tax credits, and many keep lists of properties and contact numbers. The NCSHA housing help page links to the agency in every state.
4. Call 211. Dial 2-1-1 or visit 211.org to talk with someone who can point you to local rental programs, waitlists, and emergency help.
5. Your local housing authority. Staff often know which tax credit buildings are accepting applications.
6. Search online and call buildings directly. Try searching "affordable apartments" or "income-restricted apartments" with your city name. Then call the property office and ask if they are a tax credit community.
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Tips for Applying
- Gather papers first. Have IDs, Social Security cards, recent pay stubs, benefit letters, and bank statements ready.
- Apply to several buildings. Many have waitlists, so do not wait for just one.
- Ask to join waitlists, and stay in touch. Update your phone number, email, and address if they change. Some buildings remove people they cannot reach.
- Ask about all fees up front. Application fees, deposits, and pet fees can add up.
- Read the lease. Know the rent, what utilities you pay, and the rules on guests and move-out notices.
- Keep copies of everything you turn in.
Watch Out for Scams
Real tax credit apartments do not ask you to pay a "waitlist fee" to a stranger or send money by gift card or app. If someone offers to move you to the top of a list for cash, walk away. Always confirm contact details through the property's official office or a government site.
Know Your Rights
Housing providers must follow fair housing laws. They cannot treat you differently because of your race, color, religion, sex, national origin, family status, or disability. If you believe you were treated unfairly, you can learn how to file a complaint on HUD's fair housing page.
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The Bottom Line
Tax credit apartments are a real, lasting option for people who need lower rent. They are open to working families, seniors, and people with disabilities whose income falls under the limit. Start by checking your area's income limit, search the HUD database, call a few properties, and get on every waitlist you can.
Looking for more help with rental assistance? Visit our partner page at Section8Search.org to find Section 8 and other affordable housing options in your area.
