Low Income Housing Tax Credit (LIHTC) Gap Finance

The Concessionary Debt LIHTC Gap Finance program 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. 

Please note: Shovel-ready projects that result in the construction of new units will be prioritized during the first year of program funding.

Affordable Housing Commitment

To be eligible, affordable housing projects seeking support from the Affordable Housing Financing Fund must be located in a jurisdiction that has completed a Proposition 123 Local Government Affordable Housing Commitment with the Colorado Department of Local Affairs − Division of Housing. Click here to learn more on DOLA’s website. View jurisdictions that have filed 2023 Commitments.

Program Details


Program Benefits • Subordinate gap financing   
• Below-market interest rates  
• Flexible repayment terms    
Eligible Borrowers • For-profits  
• Nonprofits  
• Governmental entities, including housing authorities 
• Tribal governments 
Eligible Projects Developments that have received an award of Low Income Housing Tax Credits and/or Colorado state Affordable Housing Tax Credits but have not yet converted to permanent financing  
Program Allocation 15% to 35% of Affordable Housing Financing Fund (AHFF) allocation 
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    
Program Limits Maximum gap loan size is limited to 1.05 debt service coverage when considering all must-pay debt, 90% of value or total development cost in combination with all must-pay debt, or $6,000,000, whichever is less. Loans may be limited to lower dollar amounts during the first year of program funding.    
Minimum Debt Financing $400,000 
Interest Rates and Fees • 2.5% fixed rate   
• 1% origination fee 
• Standard loan closing costs 
Loan Repayment   Amortizing and non-amortizing loan structures available based on underwriting  
Collateral Loans will be collateralized by the project assets. 
Affordability Restrictions  A Regulatory Agreement requiring affordability for the greater of the loan term or 20 years will be required.   
Priorities • High-density housing 
• Mixed-income housing 
• Environmental sustainability 
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.

How to Apply

Concessionary Debt Process and Timeline

Starting September 18th, applications will be accepted for the Concessionary Debt Multifamily Finance, LIHTC Gap Finance, and LIHTC Predevelopment Finance programs established by Proposition 123. CHFA received 38 applications representing more than $113M in funding requests (PDF). Each application was evaluated against the criteria established in their respective program guidelines and from the directives in the Governor’s Executive Order from August 21, 2023. Priority criteria included the number of units (high density), environmental sustainability, geographic diversity, readiness to proceed, and economic diversity in the mix of unit income restrictions.

Based on these criteria and the limited amount of available funds, seven of the 38 applicants, representing $14.5M in funding requests, were selected to move forward (PDF) to full underwriting.

Funded projects will be announced in January 2024.

Application Timeline:

September 18, 2023CHFA will begin accepting applications.
October 9, 2023Application submission period will end at 11:59pm MT.
January 2024CHFA will announce projects selected to receive Concessionary Debt funds.


CHFA Community Development 

Terry Barnard 
Manager, Community Development Lending 

David Foust 
Commercial Loan Officer III  

[email protected]

If you have questions, contact CHFA Community Development at [email protected].

The wood framing of a multifamily building under construction.
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