State and local governments sell tax-exempt Housing Bonds, commonly known as Mortgage Revenue Bonds (MRBs) and Multifamily Housing Bonds, and use the proceeds to finance low-cost mortgages for lower-income first-time home buyers or the production of apartments at rents affordable to lower-income families. MRBs have made first-time homeownership possible for more than 3.7 million lower-income families, historically 100,000 every year. Multifamily Housing Bonds have provided financing to produce 1.5 million apartments affordable to lower-income families.
MRBs and Multifamily Housing Bonds are private activity bonds (PABs), meaning they finance public-purpose initiatives that have private ownership. Each year, states receive a finite amount of PAB authority to use for a host of different financing needs. This includes MRBs and multifamily housing bonds, as well as improvements to certain public-use infrastructure like airports, docks, community facilities, and water and sewer systems; support for manufacturing plants; and student loans.
MRB mortgages are limited to first-time home buyers who earn no more than the area median income (AMI); larger families can earn up to 115 percent of AMI. In 2024, 71 percent of state HFA MRB-funded mortgages went to households earning at or below AMI, including 46 percent of loans that went to home buyers at or below 80 percent of AMI. The price of a home purchased with an MRB mortgage is limited to 90 percent of the average area purchase price. MRB loans also can be used to help working families finance critical home repairs or energy efficiency upgrades.
HFAs also use their MRB authority to issue Mortgage Credit Certificates (MCCs), which provide a nonrefundable federal income tax credit for part of the mortgage interest qualified home buyers pay each year. State HFAs have used MCCs to provide critical tax relief to more than 406,000 families.
Multifamily housing bond developments must set aside at least 40 percent of their apartments for families with incomes of 60 percent of AMI or less, or 20 percent for families with incomes of 50 percent of AMI or less. In 2024 alone, HFAs financed the development of more than 76,000 affordable apartments through bonds.
Maintaining and strengthening the Housing Bond program is one of NCSHA’s Legislative Priorities.
The First-Time Homebuyer Affordability Act
On August 10, 2026, Representatives Darin LaHood (R-IL), Jimmy Panetta (D-CA), Blake Moore (R-UT), and Tom Suozzi (D-NY) introduced the First-Time Homebuyer Affordability Act (H.R. 10075). This legislation would expand access to low-cost mortgage capital for lower-income families by removing Mortgage Revenue Bonds from the private activity bond cap. With so many competing priorities for PAB cap, many states are unable to allocate adequate PAB authority for MRBs, forcing them to use taxable debt to supplement — or even instead of — MRBs to finance mortgages for modest-income Americans. These mortgages typically have far higher interest rates than what could be achieved with an MRB.
Exempting MRBs from the cap will help thousands of homeowners purchase a home through lower-cost mortgages, saving them thousands of dollars a year.
For more information on the First-Time Homebuyer Affordability Act, see NCSHA’s one-pager.
The Affordable Housing Bond Enhancement Act
On April 29, 2025, Senators Catherine Cortez Masto (D-NV) and Bill Cassidy (R-LA) introduced the Affordable Housing Bond Enhancement Act (S.1511). The bill would implement several simple but impactful changes to MRBs and MCCs that will expand the supply of affordable homes and improve access to homeownership for low- and moderate-income home buyers.
Some of the changes in the bill include:
- Increasing the MRB home improvement loan limit
- Allowing MRBs to be used for refinancing loans
- Providing HFAs additional flexibility in how they utilize housing bond authority
- Simplifying how a borrower’s MCC benefit is calculated
- Reducing the time period for the MRB and MCC recapture tax from nine years to five
- Extending the amount of time HFAs can use converted MCC authority from two years to four
- Allowing HFAs to reconvert MCC authority back into MRBs two years after the conversion, rather than one
For more information on the Affordable Housing Bond Enhancement Act, see NCSHA’s section-by-section analysis, which describes each of the provisions in more detail, and one-page summary of the bill.
Contacts:
- To find local housing assistance, contact your state’s housing finance agency.
- To learn more about NCSHA’s advocacy work in this area or a related educational event, complete the general inquiry form.
- Members of the media, contact Lisa Bowman, Director of Marketing and Communications, at lbowman@ncsha.org.
