# What Are LIHTC (Tax Credit) Apartments? Plain-English Guide | Income Restricted Apartments > LIHTC apartments charge below-market rent because owners get a tax credit for keeping rents low. How they work, 9% vs 4%, and how rent is set. URL: https://incomerestrictedapartments.com/guide/what-are-lihtc-tax-credit-apartments/ Last-Modified: 2026-06-19 ![Texas garden-style LIHTC apartment exterior with breezeway stairs at midday](/images/misc/texas-garden-style-lihtc-apartment-exterior-breeze.webp) ## Plain-Language Definition LIHTC stands for Low-Income Housing Tax Credit. It’s a federal program under IRS Section 42 that gives apartment property owners a tax credit each year in exchange for keeping rents below market at some or all of the units. Because the property owner gets a real tax benefit, they can charge less rent and still make the math work. That’s why LIHTC apartments exist, and why rent is capped. ## Who Owns Them LIHTC properties are privately owned, usually by a real estate developer or partnership. They’re not government-owned. That’s a key difference from public housing. The state agency in Texas that allocates the credits is TDHCA (Texas Department of Housing and Community Affairs). TDHCA runs an annual competition (the Qualified Allocation Plan, or QAP) that decides which projects get credits. ## 9% vs 4% LIHTC **9% LIHTC** is competitive and deep. Projects that win 9% credits can be built with less debt, so they can offer deeper affordability (30-60% AMI). Only a small share of applicants win in any given year. **4% LIHTC** is non-competitive and pairs with tax-exempt bond financing. It’s less deep but more available, and often produces workforce (60-80% AMI) or mixed-income units. You don’t need to know which type your specific community is; the practical rules for you as a tenant are similar. ![Tax credit to owner equals lower rent explainer diagram](/images/misc/tax-credit-to-owner-equals-lower-rent-lihtc-explai.webp) ## How Rent Is Set Rent at a LIHTC unit is capped by: - The AMI tier of the unit (30/50/60/80%) - The metro’s AMI figure that year - The unit’s bedroom count (compliance assumes a household size for that bedroom count) - The utility allowance (if you pay utilities, that’s subtracted from the max gross rent) Your personal income doesn’t change this rent. You just have to be under the tier’s income cap at move-in. ## What LIHTC Doesn’t Do - **Doesn’t move with you** (unlike a Section 8 voucher, which is portable) - **Doesn’t set rent to a share of your income** (unlike public housing) - **Doesn’t cover a set percent of your rent** (unlike a voucher) If you leave the LIHTC unit, you leave the below-market rent behind. It stays with the unit. ## Related Reading - LIHTC Apartments Hub [/lihtc-apartments/ →](/lihtc-apartments/) (the main program page) - How LIHTC Rent and AMI Limits Work [/guide/how-lihtc-rent-and-ami-limits-work/ →](/guide/how-lihtc-rent-and-ami-limits-work/) - LIHTC vs Section 8 vs Public Housing [/guide/lihtc-vs-section-8-vs-public-housing/ →](/guide/lihtc-vs-section-8-vs-public-housing/) Start the free intake [/contact/ →](/contact/) . ## Frequently Asked Questions What does LIHTC stand for? + Low-Income Housing Tax Credit. Created by Congress in 1986 (IRS Section 42), it's the largest funder of new affordable rental housing built in the U.S. in the past 30-plus years. Are LIHTC apartments run-down? + Often the opposite. LIHTC funds new construction and substantial rehabilitation. Many LIHTC communities are newer than nearby market-rate properties. Older stabilized properties vary by owner and management. How is my rent set at a LIHTC unit? + By the AMI tier of the unit, not by your personal income. A 60% AMI unit has a rent cap tied to 30% of 60% of the metro's AMI (adjusted for utilities and bedroom count). Your personal income doesn't change the rent as long as you're under the cap at move-in. ## Related Guides ### 2026 Income Limits & AMI Tables by Texas Metro and Household Size 2026 AMI income limits (30/50/60/80%) for affordable apartments by Texas metro and household size. Updated annually from HUD/TDHCA. [2026 Income Limits & AMI Tables by Texas Metro and Household Size →](/guide/2026-income-limits-ami-tables-by-metro-household-size/) ### Accessible & Disability Income Restricted Housing Need an ADA-accessible affordable unit? Accessible set-asides, reasonable accommodations, and how we match you to disability-friendly communities. [Accessible & Disability Income Restricted Housing →](/guide/accessible-disability-income-restricted-housing/) ### Family (2-3 Bedroom) Income Restricted Apartments Need a larger income restricted unit? Occupancy rules, how bedroom count affects AMI, and waitlist realities for 2-3 bedroom units. [Family (2-3 Bedroom) Income Restricted Apartments →](/guide/family-2-3-bedroom-income-restricted-apartments/) ### Housing Choice Vouchers (HCV) Explained A Housing Choice Voucher helps pay rent at accepting properties. What HCV is, how to get one from your PHA, portability, and how we help. [Housing Choice Vouchers (HCV) Explained →](/guide/housing-choice-vouchers-hcv-explained/) ![](/images/misc/texas-income-restricted-apartment-community-family.webp) Free · No Application Fees Wasted ## Want a Match, Not Just Info? Start the free 5-minute intake. Licensed Texas team, matches within 24-48 hours, application fee rebate on approval. See If I Qualify [/contact/ →](/contact/) Read More Guides [/guide/ →](/guide/)