How does LIHTC work?

The Low-Income Housing Tax Credit (LIHTC) program makes federal tax credits available for the financing of affordable rental properties.

LIHTCs account for nearly 90 % of all affordable rental housing created in the United States today. Over the past two decades, the Low-Income Housing Tax Credit program has financed over 2.7 million affordable housing units nationally, including over 42,000 new homes in Minnesota since its inception in 1987.


Corporations and banks are important contributors to affordable housing development through their investments in LIHTCs. These transactions are typically organized as limited partnerships or limited liability companies, and investments are made through those entities.

Despite the effectiveness of this program, many companies may be unfamiliar with the mechanics of investing in LIHTCs. Investors can earn a return on their capital, and bank investors can receive positive consideration toward their rating under the Community Reinvestment Act (CRA).

LIHTC funds managed by the Minnesota Equity Fund (MEF) will help investors minimize the risk by investing in a variety of LIHTC projects. MEF and its joint venture partner, Cinnaire, will provide multiple services including underwriting, asset management, and annual compliance.


  • Tax credits worth $125 million are awarded each year in Minnesota
  • LIHTC awards split approximately 60% to Metro and 40% to Greater Minnesota
  • Statewide tax credit housing development volume: 25 – 30 deals per year
  • Typical equity raised: $1.5M – 10M per development
  • Development size: Average 40 to 70 units


  • Provides competitive internal rate of return (IRR) and diversification of risk
  • Is a double bottom line investment opportunity
  • Offers a range of investment options and opportunities, including investment size and geographic location


  • Many national syndicators have been inactive in Minnesota in recent years, particularly in Greater Minnesota
  • National syndicators demonstrate growing desire to serve larger metropolitan areas only
    Fannie Mae and Freddie Mac, historically the largest investors in non-metro developments, are now out of the LIHTC market
  • CRA oriented banks have established (or are establishing) proprietary funds with discrete geographies and requirements for developers
  • Limited investor competition results in increased demand for scarce public and charitable subsidies
  • The IRR for investors offers a competitive return and provides exceptional economic benefits

Equipped to advise you

Whether you're ready to investigate financing options, or are in the early planning stages, Greater Minnesota Housing Fund can provide the technical assistance needed to get your idea off the ground. Learn more.



What is LIHTC and what are the benefits?

Not sure if LIHTC is a good possible financing or investment opportunity for you? You can learn more basic information about it here. Feel free to reach out to us to learn more.

General Contact

Minnesota Equity Fund
c/o Greater Minnesota Housing Fund
332 Minnesota Street
Suite 1650-West
Saint Paul, MN 55101

Download MEF Brochure

For more background about the Minnesota Equity Fund, please download the MEF Brochure (PDF).



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About Minnesota Equity Fund

Minnesota Equity Fund (MEF) is a subsidiary of  
Greater Minnesota Housing Fund (GMHF). MEF and  
Cinnaire are joint venture partners collaborating  
to achieve our common mission to create more high  
quality affordable housing.  

Learn More

Our Joint Venture Team

Greater Minnesota Housing Fund

GMHF is AERIS rated and a member of the  
Federal Home Loan Bank of Des Moines.  

Staff Contact

John Errigo
Director of Investing & Fund Manager

General Contact

Minnesota Equity Fund
c/o Greater Minnesota Housing Fund
332 Minnesota Street
Suite 1650-West
Saint Paul, MN 55101