Housing Finance Agency (HFA)

What Is a Housing Finance Agency?

A housing finance agency (HFA) is a state-chartered public agency whose job is to raise and lend money for housing that lower- and moderate-income households can afford. Every state has one, and some cities and counties have local housing finance agencies too. According to the National Council of State Housing Agencies, most state HFAs are independent entities run by a board of directors that the governor appoints.

HFAs are mainly lenders and allocators, not landlords. They decide which private and nonprofit developers receive scarce federal resources, and they offer financing on better terms than the private market would.

How HFAs Work

Most HFAs share a core toolkit:

• Tax credit allocation. Although the Low-Income Housing Tax Credit is a federal tax incentive, the Congressional Research Service notes that it is primarily administered by state HFAs. Each state receives an annual allocation based on population, and the HFA awards credits to developers under its Qualified Allocation Plan.
• Bond financing. HFAs issue tax-exempt bonds. Multifamily bonds finance rental buildings, and mortgage revenue bonds fund below-market home loans for first-time buyers.
• Mortgage insurance partnerships. Under a federal risk-sharing program, qualified HFAs originate multifamily loans that the Federal Housing Administration insures, with the agency agreeing to absorb part of any loss.
• Compliance monitoring. Federal law requires each allocating agency to monitor tax credit properties for compliance with the program’s rules, including through regular site visits.

A 2025 law, Public Law 119-21, permanently raised each state’s annual tax credit allocation by 12% starting in 2026. It also cut the share of a project’s building and land costs that must be financed with tax-exempt bonds to earn the 4% credit from 50% to 25%.

HFA vs. Public Housing Agency

The two are easy to confuse. A public housing agency owns and manages public housing and runs voucher programs for renters. An HFA finances privately owned housing. Some state agencies do both. Delaware’s agency, for example, issues bonds and allocates tax credits but also runs Housing Choice Voucher and public housing programs, mostly in Kent and Sussex counties.

Why It Matters for Workforce Housing

Federal tax credits generally serve households at or below 60% of area median income. HFA homebuyer loans can reach higher. Mortgage revenue bond loans are generally open to buyers earning up to 115% of the area’s median family income, with a lower limit for small households and higher limits in high-cost areas. That range covers many teachers, nurses, and other moderate-income workers, so a state HFA’s homebuyer programs are a reasonable place for them to start looking for help.