The Federal Housing Finance Agency (FHFA) recently released its final rule setting housing goals for Fannie Mae and Freddie Mac (the Government-Sponsored Enterprises, or GSEs) from 2025 through 2027. Prior to the release of the final rule, FHFA had approved the GSEs’ latest Duty to Serve (DTS) Underserved Markets Plans, which focus on expanding affordable housing—especially in rural areas, manufactured housing, and preserving existing affordable homes. 

FHFA has required the three-year DTS Underserved Markets Plans since 2022, codifying them in a regulation that was published in 2024. The GSEs 2025-2027 DTS Plans expand liquidity to serve nearly 690,000 renter households and over 90,000 homeowner households. For the first time, the plans include strategies to help communities across the entire rural market, in addition to the highest-need rural populations defined by regulation.

These policy updates will affect LIHTC development due to GSE investments in LIHTC sites and their loan purchase activities that help finance affordable housing. The final rule sets targets for both single-family and multifamily housing, ensuring that Fannie Mae and Freddie Mac stay engaged in supporting low- and very low-income households. One notable update is the introduction of measurement buffers. These buffers are essentially built-in flexibility that allows for market fluctuations while still holding the GSEs accountable.

For multifamily housing, the final rule keeps the low-income housing goal at 61 percent of financed units but raises the very low-income housing goal from 12 percent to 14 percent. This increase reflects the GSEs’ ability to meet and even exceed prior expectations. Meanwhile, the target for small multifamily low-income housing has been reduced slightly from 2.5 percent to 2 percent, acknowledging the growing role of private-sector financing in this space.

In the GSEs’ 2025-2027 Duty to Serve Plans, both Fannie Mae and Freddie Mac have reaffirmed their commitment to the LIHTC market, recognizing its crucial role in keeping affordable housing investment flowing. Fannie Mae plans to support the market by purchasing loans secured by LIHTC properties, increasing liquidity for affordable housing projects. The company expects its loan purchases to support around 26,000 units in 2025, climbing to 31,460 in 2026 before settling at 27,000 in 2027. Additionally, it remains committed to LIHTC equity investments in rural areas, aiming to finance 20 to 30 properties in 2025, 28-45 in 2026, and 32-55 in 2027. 

Freddie Mac is also ramping up its LIHTC efforts, planning a 2.5 percent annual increase in its loan purchases for LIHTC-financed properties. It’s targeting 22 LIHTC equity investments in 2025, 23 in 2026, and 24 in 2027. Rural housing remains a priority, with six investments per year specifically for high-needs rural areas. Additionally, Freddie Mac aims to purchase 22,500 loans for high-needs rural housing over three years, increasing liquidity in these underserved markets. To strengthen these efforts, the company will continue partnering with Community Development Financial Institutions (CDFIs) and local developers focused on rural LIHTC projects.