In the United States, 80/20 housing is multifamily housing program that meets federal guidelines for tax-exempt financing.[1] As the United States continued to experience shortages in affordable housing,[2] the 1986 Tax Reform Act, responsible for the creation of the Low Income Housing Tax Credit (LIHTC), was the first step towards a solution, encouraging the construction of rentals for lower-income households.[3] Specifically, the 80/20 housing structure is effective in high-rent areas for which 80 percent of the buildings apartments are rented at typical market rate, while 20 percent are specific to low- and moderate-income Americans. [4] As far as who qualifies, State Housing Finance Agencies (HFAs) define low income as income below 80 percent of regional median income.[5]
This helps to insinuate diversified income projects while also allowing granting developers funds at lower interest rates.[5] It is a national priority to provide low- and moderate-income families affordable housing, and through the 80/20 program developers can maximize public benefits, while still remaining fluid to changes in the market and financing structure.[6][5]
According to these guidelines, 20 percent of units must be rented to low-income households.[7]