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. 

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 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	• 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    • 1% origination fee  • 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 Colorado manufactured modular/offsite building technology if reasonably cost-competitive with traditional construction methods; 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 Financing Program Guidelines (PDF).

Concessionary Debt Process and Timeline

Starting Monday, May 5, 2025, applications will be accepted for the Concessionary Debt LIHTC Gap Financing program. The application period will close on Friday, May 23, 2025, at 5:00pm MT. Applications and supporting materials may be submitted to [email protected].

Applicants must submit an updated LIHTC application and the LIHTC Gap Addendum spreadsheet. Please download and complete the LIHTC Gap Addendum spreadsheet below.

• Concessionary Debt LIHTC Gap Addendum Spreadsheet

Applicants must also include the following with the LIHTC Gap application package:

1. Project narrative containing:
   1. Description of project
   2. Description of the reason gap funds are needed
   3. Two sources and uses tables − one that shows the project capital stack at the time of the LIHTC award and a second that clearly illustrates the factors that changed and caused the gap; the updated LIHTC application must include the amount previously reported to CHFA column and the current amount column filled in on the Development Budget tab.
2. All projects must provide evidence from the tax credit syndicator or investor and other funders that approve of the addition of the LIHTC Gap funds to the project.
3. Evidence in the project proforma that sufficient interest has been budgeted into the construction schedule to pay the LIHTC Gap interest.

May 5, 2025	CHFA will begin accepting applications.
May 23, 2025	Application submission period will end at 5:00pm MT.
June 2025	CHFA will announce projects selected to receive Concessionary Debt funds