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

The application period is currently closed. Applications were accepted for the Multifamily Finance, LIHTC Gap Finance, and LIHTC Predevelopment Finance loan options from May 27, 2026, through June 10, 2026. This was the second of two application rounds held in Fiscal Year 2025-2026. During this round, a total of 17 applications were received, representing more than $38 million in funding requests (PDF). Applications were carefully evaluated by CHFA and OEDIT against priorities established by the statute and additional strategic policy priorities outlined in the Affordable Housing Financing Fund Fiscal Year 2026 Funding Plan (PDF). Eleven projects representing $25 million have been selected to move forward to full underwriting (PDF).

Please sign up for the Proposition 123 Affordable Housing Financing Fund eNews for future updates on the Concessionary Debt program. Questions about the Concessionary Debt program may be submitted to concessionarydebt@chfainfo.com.