Key Funding Programs

Funding for affordable housing, both new construction and current housing, is very limited. It is typical for projects to utilize multiple fiunding sources. There are many funding programs that support the development and rehabilitation of affordable housing. Affordable housing programs are developed and managed through federal, state and local governments and implemented through industry participants and stakeholders. The key agencies that administer affordable housing programs include:

HUD Programs

The U.S. Department of Housing and Urban Development (HUD) offers the largest array of programs and invests the most dollars in affordable housing. After establishing rules and policy, HUD channels most of its programs downward to be administered locally. HUD’s public housing program, for example, is administered by local housing authorities who operate the nation’s low income housing portfolio. In a few programs, HUD also acts as the grant administrator. These include HOPE VI, Section 202/811 (Elderly and Disabled Housing), and a number of smaller initiatives funded through Notices of Funding Availability (NOFA). In these NOFA programs, HUD sets the funding rules, tallies the scoring, and executes grant agreements with awardees.

HUD spends more than 10% of its overall budget on utilities — an estimated $4 billion. Some of this is paid to public housing authorities in operating subsidies with the rest spent on utility allowances. Even a modest reduction of 5% in HUD’s energy usage could save $200 million a year or $1 billion over 5 years. That is real money that could be used for developing more affordable housing. HUD is implementing its Energy Action Plan Exit ENERGY STAR which contains 25 actions addressing energy consumption in both public and assisted housing, as well as a range of other actions. These actions will contain HUD’s energy bill and generate substantial savings for taxpayers.

Visit HUD’s energy web site Exit ENERGY STARfor more information. HUD also maintains a clearinghouse of energy conservation resources Exit ENERGY STAR.

USDA Programs

The U.S. Department of Agriculture (USDA) offers many programs that target funds to rural communities. These programs offer affordable rental development, rehabilitation (including energy efficiency), and home purchase options help to build farm worker housing. USDA offers a full line of incentives including loan guarantees and in some programs USDA acts as the lender of last resort. Visit USDA’s website Exit ENERGY STAR for more information.

Federal Housing Finance Board

The Federal Housing Finance Board (FHFB) establishes rules for the Affordable Housing Program. The Affordable Housing Program provides targeted grants and interest rate subsidies to developers through twelve district Federal Home Loan Banks. These district banks establish goals, application requirements, and score the applications. Member banks working with local banks submit the proposals on behalf of local developers, also called project sponsors. For more information visit FHFB’s website Exit ENERGY STAR.

State Housing Finance Agencies and Other State and Local Agencies

State Housing Finance Agencies (HFAs) receive federal budget authority for the Low Income Housing Tax Credit (LIHTC) program and tax-exempt bonds. With municipal governments, they administer the LIHTC and bond programs, often in conjunction with the HOME program and Community Development Block Grant (CDBG) program.

State HFAs establish competitive requirements via a Qualified Allocation Plan (QAP) that targets the available funds to address geographically-specific housing and economic development needs. The financial incentive of the LIHTC program provides a dollar-for-dollar reduction in federal tax liability for developers of income-restricted housing. Units supported by LIHTC are restricted to households with incomes below 60 percent of area median income.

For information on state QAP application requirements and links to state HFA websites visit the Affordable Housing Resource Center website Exit ENERGY STAR. A number of state HFAs are promoting ENERGY STAR Excel in their QAPs, either via points for the use of ENERGY STAR qualified lighting, appliances, windows, and HVAC equipment, or points for constructing new units to be ENERGY STAR qualified units.

If you are a state HFA and are interested in establishing or increasing energy efficiency elements in your QAP, please contact Brian Ng, National Affordable Housing Coordinator, at 202-343-9162 or

Other Financing Programs

There are also residential energy efficiency loan programs offered in the following states:

DOE’s Weatherization Assistance Program

U.S. DOE’s Weatherization Assistance Program Exit ENERGY STAR enables low-income families to reduce their energy bills by making their homes more energy efficient.

Federal Grant Opportunities for Energy Efficiency in Existing Homes

Federal agencies such as HUD and DOE offer grant programs PDF (169KB) whose funds can be used to support energy efficiency efforts for existing homes, including affordable housing. Organizations can apply for funding under these grant programs to develop and implement energy efficiency programs, including the development of a Home Performance with ENERGY STAR program.