Low Income Housing Tax Credit (LIHTC) Gap Finance

Concessionary Debt LIHTC Gap Finance provides subordinate debt financing to eligible for-profit and nonprofit entities, local governments including housing authorities, and tribal governments for the creation of affordable multifamily rental housing developed with federal Low Income Housing Tax Credits. 

Program Detail	Description
Eligible Projects	Developments that have received an award of federal Low Income Housing Tax Credits but have not yet converted to permanent financing
Program Benefits	• Subordinate gap financing    • Below-market interest rates   • Flexible repayment terms
Program Allocation	Program funding is 15% to 35% of total Affordable Housing Financing Fund (AHFF) allocation
Eligible Borrowers	• For-profits   • Nonprofits   • Governmental entities, including housing authorities  • Tribal governments
Program Limits	Maximum gap loan size is limited to 1.05 debt service coverage when considering all must-pay debt, 10% of the total project costs, or $6,000,000, whichever is less.
Minimum Debt Financing	$400,000
Loan Repayment	Amortizing and non-amortizing loan structures available based on underwriting
Area Median Incomes (AMIs) Served	• Not to exceed 60% average AMI for all restricted units   • Up to 25% of the development’s units may be unrestricted but are excluded from eligible project financing
Collateral	Loans will be collateralized by the project assets.
Interest Rates and Fees	• 2.5% fixed rate     • Standard loan closing costs
Affordability Restrictions	A Regulatory Agreement requiring affordability for the greater of the loan term or 30 years will be required.
Priorities	Statutory Priorities: High-density housing; Mixed income housing; Environmental sustainability Strategic Policy Priorities: Shovel-ready projects that result in new units; Use of modular/offsite building technology produced in Colorado; Inclusion of home-based or commercial child care facilities; Geographic diversity

This is intended only to highlight certain program requirements. Loans are subject to other requirements, including the CHFA Credit Policy and applicable operating and replacement reserve requirements. Please note that the programs are subject to change. More details can be found in the Concessionary Debt LIHTC Gap Finance Program Guidelines (PDF).

Concessionary Debt Process and Timeline

Starting Thursday, November 20, 2025, applications and supporting materials will be accepted for the Proposition 123 Concessionary Debt Multifamily Finance, LIHTC Gap Finance, and LIHTC Predevelopment Finance loan options. The application period will close on Thursday, December 18, 2025, at 5:00pm MT.

Please download and complete the application linked below and submit it to [email protected]. Also included below is the Lender/Funder Certification and Acknowledgement Form to be submitted as part of the application process (for LIHTC Gap Finance applications only). As stated in the Affordable Housing Financing Fund Fiscal Year 2026 Funding Plan, projects previously awarded federal 9 percent Housing Tax Credits will be prioritized for funding during this LIHTC Gap Finance round.

• Proposition 123 Concessionary Debt LIHTC Gap Finance Application (XLSX)
• Lender/Funder Certification and Acknowledgement Form (PDF)

Date	Description
November 20, 2025	CHFA will begin accepting applications.
December 18, 2025	Application submission period will end at 5:00pm MT.
January 2026	CHFA will announce projects selected to receive Concessionary Debt funds.