Securing the American Dream: Advancing Homeownership in the Deep South through Expiring LIHTCs
March 16th, 2026
Through its Y-16 initiative, HOPE is showing how the Low-Income Housing Tax Credit (LIHTC) program is a pathway to homeownership. Using an innovative mortgage product and resident education, to date, HOPE has helped 32 rural households transition to homeownership. At the time of closing, the new homeowners have realized $50,000 in equity, on average. By the time the mortgage is paid off, the equity will grow to $100,000 on average, creating $3 million in wealth for these families.
There are an estimated 5,000 eligible LIHTC units eligible for such conversion in Mississippi, and more across the country. This initiative demonstrates the innovation and economic opportunity that Community Development Financial Institutions (CDFIs) like HOPE make possible in rural communities.
Project Background
In 2023, HOPE won an Affordable Housing Breakthrough Challenge from Enterprise Community Partners to pilot this initiative to help renters living in LIHTC-financed units to become homeowners by purchasing those units. Demonstrating success would have tremendous potential for scale due to the scale of the LIHTC program itself. The Low-Income Housing Tax Credit (LIHTC) is one of the most powerful and effective tools to create and rehabilitate affordable rental housing. It is a federal tax credit that has existed for 40 years, historically with bipartisan support.
Properties financed with LIHTC have a 15-year compliance period, meaning the rental units must remain affordable to families under 60% of the AMI (80% AMI in some cases) during that time. At year-16, the property either is released from the tax credit program or is re-syndicated through a new application for tax credits which restarts the affordability period.
In this effort, HOPE is working with LIHTC properties as they exit this 15-year affordability period, leveraging the unique opportunity which made a state-level policy decision to provide tenants a chance to become homeowners beginning in year-16.
Role of State Policy
The LIHTC is administered by state housing finance agencies (HFAs). Every year, states receive a certain allocation of LITHC which they are responsible for awarding to developers of qualifying rental housing. States define their priorities for the tax credit distribution by publishing a qualified allocation plan. Developers then apply for the credits in a competitive process which motivates them to submit applications that score the maximum number of points under the state’s plan.
About 15 years ago, several state housing finance agencies, including Mississippi, Louisiana, and Alabama, provided the lease/purchase option in their qualified allocation plan that incentivized ways for tenants of LIHTC properties to become homeowners. As a result, developers included this in their application for tax credits and included this promise in the financing contracts that were signed at that time, providing tenants with the option to purchase the properties at the end of the 15-year tax credit compliance period. Now, these units are now ready to convert to ownership for the current tenants.
Mississippi has the largest number of eligible developments of the five states, with roughly 5,000 units that could be eligible for conversion to homeownership. A unique element of Mississippi’s program is that for some of the developments, the purchase price was agreed upon with tenants 15 years ago at the time of the LIHTC financing.
Role of Mission-focused CDFIs, like HOPE
HOPE has deep expertise in financing rental housing supported by the LIHTC program and in providing mortgages to low-income, rural and other people underserved by traditional lenders. Y-16 leverages these capabilities, state and federal policy frameworks, existing housing stock, and collaboration with private developers.
HOPE is currently working Sabrina Billings, CEO of the non-profit developer Gateway Community Development Corporation, in Yazoo City, Mississippi to help make homeownership possible for 40 more families in the Mississippi Delta. The initiative reflects that even though supportive policies are in place, the promise of homeownership alone is not self-executing. For example, even though Gateway developed Roberts Estates, a 40-unit rental property of single-family homes in Yazoo, with the goal of moving people to homeownership in Year 16, Ms. Billings reached out to HOPE because families were not likely to qualify for a traditional mortgage. It is an example that underscores the need for collaboration between all parties – the state housing financing agency, the developer, a mission-focused lender and the tenant/homebuyer – to bring to life the promise embedded in the policy.
The HOPE Y-16 initiative, with the households for whom it already made homeownership possible and others in the pipeline to date, is illustrative of thousands of opportunities across the Deep South. It also underscores how existing strategic partnerships and CDFIs, such as HOPE, can build wealth among low-income households, preserve affordable stock, and create neighborhood stability in rural communities.
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