In an effort to expand the nation’s affordable housing supply, Fannie Mae and Freddie Mac can now invest twice as much to Low Income Housing Tax Credit (LIHTC) properties per year. The caps are being doubled from $1 billion to $2 billion for each agency, a total of $4 billion per year, the Federal Housing Finance Agency (FHFA) announced Tuesday.

The agency is also significantly enhancing Low Income Housing Tax Credits, one of the country’s most important sources of affordable housing supply the FHFA stated.

Today’s increase means that Fannie and Freddie can together now deploy $4 billion each year in support of the affordable housing tax credits — half of which will be reserved for difficult to serve LIHTC markets and at least 20% of that half will be used to support rural communities, the agency commented.

Both the National Housing Conference (NHC) and the Mortgage Bankers Association (MBA) issued statements commending the move.

David M. Dworkin, president and CEO of the NHC, called it the right move at the right time. “Having Fannie Mae and Freddie Mac increase their purchases will help increase demand for the credits, thereby creating even more units of affordable housing than would otherwise be the case,” he said.

MBA President and CEO Bob Broeksmit called the LIHTC program “the federal government’s most successful tool to support the construction and rehabilitation of housing for low- and moderate-income households.”

Broeksmit said FHFA’s doubling of the cap on LIHTC investment comes on the heels of program improvements included in H.R. 1 (now Public Law 119-21), both of which will help to increase rental housing supply.