What is the National Housing Trust Fund?

By: Katie Baughman, Policy Intern

OVERVIEW

The National Housing Trust Fund (HTF), created under the Housing and Economic Recovery Act of 2008, is a HUD program that administers funds to be used for affordable housing production and preservation. States’ HTF funding is required to be used to benefit families with incomes below 30% of the area’s median income (extremely low-income families), and 80% or more of funds is required to be used for rental housing. Rental housing units created or maintained with HTF assistance must be affordable for a minimum of 30 years. Many of the states that receive HTF funds direct them specifically toward special needs populations, including those currently experiencing homelessness, people with disabilities, and veterans.

The HTF is funded by the allocation of a small percentage of the new business revenue produced by Fannie Mae and Freddie Mac, which are government-sponsored enterprises that bring liquid capital to the US housing market. This allocated funding is then distributed to states, which each select a state Housing Finance Agency (HFA) to administer the grant. While the HTF was created in 2008, funding only began in 2016, with $174 million entering the HTF. In 2023, the HTF made available $382 million. Currently, 39 state HFAs distribute HTF funds, and as of August 2023, 4,289 total affordable rental units have been developed or preserved using the HTF.

HOW DOES THIS AFFECT RURAL AREAS?

Many rural communities have limited access to units of affordable rental housing, especially areas in the South and the Midwest. Development of new affordable rental housing is then a priority in mitigating rural homelessness, especially in areas with higher amounts of poverty. This makes the HTF and its ability to fund this development especially important to rural communities with limited rental access, and HTF funding allocated by individual states to rural communities can be incredibly beneficial.

A large portion of HTF funding is currently directed towards coastal cities. California and New York receive the two largest allocations of funding, with a majority of that funding directed toward city developments. However, some states are taking steps to address this disparity. For example, In 2022, California set aside 20% of funding specifically for rural areas, and Utah and Tennessee have begun awarding extra points to rural funding applications. High-need rural areas are then able to develop and maintain accessible, affordable rental housing.