How does the Fannie Mae TAH program work?

What is the Fannie Mae TAH Program?

Fannie Mae's Targeted Affordable Housing (TAH) program is designed to provide liquidity and stability to the affordable housing market in the United States. The program focuses on financing and supporting affordable rental housing for low-income families, seniors, and individuals with special needs. It targets properties that are subject to certain income and rent restrictions, such as those with Section 8 contracts, Low-Income Housing Tax Credit (LIHTC) properties in the compliance or extended use periods, or other types of regulatory agreements that ensure the property remains affordable for an extended period.

The TAH program offers a variety of financial products and solutions to support the acquisition, refinancing, and rehabilitation of affordable housing projects. These may include fixed and variable rate mortgage loans, credit enhancements, and other forms of financial assistance. By providing these services, Fannie Mae aims to encourage the development and preservation of affordable rental housing, thus helping to address the critical need for housing that is accessible to lower-income households.

The program helps stabilize and support the affordable housing sector, making it possible for owners and developers to access the capital needed to invest in properties that offer reduced rents to eligible tenants. This not only benefits the individuals and families who rely on affordable housing but also contributes to the overall health and stability of communities across the country.

How Does TAH Work?

The TAH Program provides flexible financing options to borrowers who own or are looking to invest in affordable housing projects. Here's a breakdown of how the process works:

1. Eligibility Assessment

To participate in the TAH program, a housing project must meet certain eligibility criteria related to affordability. This includes properties that have income and rent restrictions placed upon them through various means, such as Section 8 contracts, Low-Income Housing Tax Credits (LIHTC), or other local, state, or federal affordable housing programs.

2. Application Process

Interested parties submit an application to Fannie Mae or an approved lender, detailing the project and its compliance with the TAH program's requirements. This process involves providing documentation on the property's financials, the affordability restrictions in place, and plans for the property's use and management.

3. Underwriting

Fannie Mae or the approved lender evaluates the application to assess the financial viability of the project, the borrower's creditworthiness, and the project's alignment with the TAH program's goals. This step involves a detailed review of the property's income, expenses, operational plans, and the affordability constraints it operates under.

4. Financing Options

Once approved, borrowers can access a range of financing options tailored to affordable housing projects. These may include fixed or variable interest rate loans for acquisition, refinancing, or rehabilitation of properties. The terms and rates are typically more favorable than those available for market-rate housing projects, reflecting the program's goal to support affordable housing.

5. Ongoing Compliance

Borrowers must commit to maintaining the affordability restrictions of the property for a specified period. Compliance with these restrictions is monitored to ensure that the housing remains accessible to low-income tenants according to the program's guidelines.

6. Support and Incentives

The TAH program may also offer additional support and incentives, such as reduced loan origination fees, longer amortization periods, and technical assistance to ensure the long-term success and sustainability of affordable housing projects.

By providing these financing solutions and support, Fannie Mae's TAH Program helps facilitate the development, rehabilitation, and preservation of affordable rental housing, addressing a critical need in communities across the United States and providing lower-income households with access to safe, quality housing.

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