42 USC 12745 - Qualification as affordable housing

View all text of Part A [§ 12741 - § 12757]

§ 12745. Qualification as affordable housing

(a) Rental housing

(1) QualificationHousing 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;

(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

(3) Increases in tenant income

(4) Mixed-income project

(5) Mixed-use project

(6) Waiver of qualifying rent

(A) In generalFor 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

1 So in original.

in an effective manner that will improve the provision of affordable housing for such families.

(B) Eligible families

(7) Qualification exceptionNotwithstanding 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) QualificationHousing that is for home-ownership shall qualify as affordable housing under this subchapter only if the housing—

(A) has an initial purchase price 2

2 See 2026 Amendment note below.

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

3 So in original. Probably should be “subparagraph (B),”.

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

(2) Purchase by community land trust or cooperative housing corporationNotwithstanding 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).

(1) Military membersA 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 ownersHousing 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.

(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.)