Getting Started

Basic Concepts

Affordable housing plays a crucial role in supporting economic mobility and improving quality of life. It can provide individuals and families with better access to healthcare, education, and job opportunities, helping to reduce homelessness and promote long-term stability. Rising property values, gentrification, and restrictive zoning regulations have made it difficult to keep housing prices within reach for low- to moderate-income households. These challenges are exacerbated by political resistance, often referred to as NIMBYism (Not In My Backyard), and the high costs of land and construction, which make it expensive to build new and preserve older affordable units.

Zoning laws and policy can also influence the availability of affordable housing.

What is Affordable Housing?

Before tackling a definition of affordable housing, it is important to understand concepts of housing affordability. Although there is no universal definition of how high housing costs must be to be unaffordable, the most commonly used definition in the U.S. is that housing is affordable if housing costs represent no more than 30 percent of a household’s annual gross income.

For renters, housing costs are generally captured as the total annual costs of rent plus any utilities the tenant pays out of pocket. Including utilities in these calculations is important because it allows for more even comparisons across rent payments, since some rents include some or all of the cost of utilities while others do not.

For homeowners, housing costs are generally captured as the total annual costs of the mortgage payment, utilities, property taxes, homeowners insurance, homeowner or condo association dues, and any private mortgage insurance paid.

Income is typically measured as total gross annual income, which is the amount earned before taxes or other deductions. It's important to capture both income and housing expenses on an annual basis rather than monthly, as these figures can fluctuate seasonally or for other reasons throughout the year. For instance, some jobs may require more hours or higher pay during specific seasons, utility costs may vary with changes in the weather, and property taxes or insurance payments may only occur during certain months.

Households paying more than 30 percent of their income for housing costs are considered “housing cost-burdened.” Those paying more than 50 percent of their income for housing costs are considered “severely housing cost-burdened” or “extremely housing cost-burdened.” These terms are often used interchangeably.

If you want to focus on improving housing affordability for low-income populations, you may target specific income brackets. In housing, we typically use Area Median Income (AMI) to target affordability and understand income ranges in a given community. Understanding which income ranges lack affordable housing options helps you identify the most needed and viable development and determine affordable sale prices or rents for the populations that you want to serve.

Affordable housing programs typically use different household income thresholds that determine what tenants or homeowners are eligible:

Low income is defined as households whose income does not exceed 80 percent of the Area Median Income.
Very-low income is defined as households whose income does not exceed 50 percent of the area median income.
Extremely-low income is defined as households whose income does not exceed 30 percent of the area's median income.
Workforce housing is usually defined as households earning between 60-120 percent of the area median income. Workforce housing targets those in the public service workforce (ex: police officers, teachers, etc.) who may not qualify for traditional affordable housing programs.

It important to note that Area Median Income can vary greatly from county to county. For example, 100% of AMI in 2024 Hinds County was $83,500 and 100% of AMI in Sunflower County in 2024 is $51,800. This difference in regional median income could affect which populations you want to target. AMIs are updated annually and can be found here.

Housing does not need to have any form of public support or subsidy to be deemed affordable. The term “affordable housing” or “affordable housing project” most commonly refers to housing targeted to low- and moderate-income households (using AMIs) with rents or sales prices that meet the less than 30 percent of income threshold. Because it is very often financially infeasible to build or rehabilitate homes that meet both the target low-income population and cost-burden criteria, public subsidy is needed to fill those gaps.

Since housing needs can extend beyond income levels, target populations for affordable housing projects can include criteria other than household income. Some populations may face challenges related to accessibility, such as individuals with disabilities or older adults, who may struggle to find suitable housing. Affordable housing can also include specific services or support for veterans, families with children, individuals with a criminal history, intergenerational households, agricultural workers, and people transitioning out of homelessness.

The Lifecycle of an Affordable Housing Project

Creating affordable housing requires careful planning, complex financing, construction, design, and management. You must meet the needs of your community. Each phase of an affordable housing project is crucial to your development. Below is a lifecycle of an affordable housing project:

Visioning: identifying and understanding the need for affordable housing in your community
Planning and Pre-Development: focuses on planning establishing market needs and financial feasibility
Site Selection and Design: determining where and what you will build
Securing Funding: accessing the capital needed to build or rehabilitate homes
Construction: determining a construction approach and managing the construction process
Stewardship: how will you manage and care for your development long term

This guide will dig deeper into what these phases require for your project.

Who’s Who in Affordable Housing

There are various stakeholders who influence or participate in the development, financing, and management of affordable housing projects.

Department of Housing and Urban Development (HUD), which oversees programs such as Section 8, HOME, and Community Development Block Grants (CDBG) that support affordable housing.
For-profit and non-profit developers including Community Housing Development Corporations (CHDOs) and Community Development Corporations (CDCs) who work on building the projects.
Banks and lenders offer financing through low-interest loans and tax credit investments called Low Income Housing Tax Credits (LIHTC).
Architects and Contractors who support housing development and design.
City and urban planners play a role creating affordable, sustainable housing and integrating these projects within the community.
Government Sponsored Enterprises (GSEs) are the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Bank System (FHLBank System), which currently consists of 12 Federal Home Loan Banks (FHLBanks).

Organizational Considerations

Many different kinds of organizations can develop affordable housing. An existing organization may recognize affordable housing development as a component of their broader mission, or an organization may be formed exclusively for this purpose.

Public Sector Organizations: Public housing authorities (PHAs) are the most common public sector developers of affordable housing. PHAs are responsible for the management and operation of local public housing programs, so they generally have deep experience with utilizing federal assistance programs, property management, and federal compliance and monitoring issues.

Private, For-Profit Developers: For-profit developers are a key partner in providing affordable housing. For-profit organizations have more flexibility than nonprofits in how profits are used.

Nonprofit Organizations: Nonprofit organizations vary widely in structure, mission focus, and strengths they can leverage to become successful affordable housing developers. Nonprofits are non-governmental agencies organized for the public and social benefit where profits are gained to sustain the organization. CDCs and CHDOs are types of non-profits that may develop housing.

Community Development Corporations (CDCs): CDCs are nonprofit organizations that work to develop communities using community input and locally available resources. Although not all CDCs develop housing, this is a common activity for many. CDCs typically have a specific geographic focus that may afford them local expertise and credibility but also limits their potential development footprint outside the area they serve.

Community Housing Development Organization (CHDOs): A CHDO is a private non-profit, community-based organization that has staff with the capacity to develop affordable housing for the community it serves. To be designated, CHDOs must meet specific federal criteria for structure, capacity, experience, and legal status. The primary benefit of this designation is that CHDOs are eligible to use funds from a mandatory 15 percent set-aside of funding from HUD’s Home Investment Partnerships (HOME) program.

Stakeholders

There are many stakeholders you will encounter who want you to succeed in developing affordable housing and will help you learn the process, including funders, public officials, contractors, community members, and other organizations that develop housing or support developers. Some of these organizations that have more experience with development can even help you understand where you may need additional support and where you could realistically plan to learn by doing.

What individuals or organizations have a stake in your development?

There are many types of community stakeholders that could be relevant to engage as part of your development process.

Organizational board members
Representatives of target population(s)
Neighborhood residents
Current tenants (if rehabilitating existing housing)
Local elected officials
City/County staff
Local employers
Mississippi Home Corporation staff
Local utilities

Assessing Capacity

How To Assess Internal Capacity

You do not have to be an expert nor the only organization involved in each step of the affordable housing development process. In fact, more often than not, one organization takes the lead and partners with others to carry out certain parts of the framework.

It is relatively common for developers to work and learn together on affordable housing projects, and it is a great way to build capacity and a deeper understanding of the process. Regardless of your approach to filling capacity gaps, working with developers can ultimately give you and your team the time and space required for individual and organizational learning to take place.

Starting to Assess Internal Capacity

The goal of assessing internal capacity is to determine where developing affordable housing fits into larger organizational goals and what capacity already exists or is needed to be successful. Through identifying skills and gaps of employees, you can begin to assign roles and responsibilities and outline a plan for bringing in partners for additional support. In fact, many grant applications require organizational capacity assessments as a part of the submission package.

When assessing internal capacity, start by identifying what capacity you already have in-house:

What does our organization do well?

What does our staff enjoy doing?

What do we have the capacity to do effectively?

What should we build our capacity to do?

What do we have the resources to do?

From there, you can use the single family and multifamily housing development checklist to identify gaps in capacity that a partner could fill. Start by asking yourself these questions:

Who is doing this work already in our community?

Who have we partnered with in the past?

Who are new potential partners to consider?

What Capacities Will You Need for Development?

The specific capacities needed for development are going to vary, depending on size of development, location, and prior experience, but there are some general capacities and skills that your team will need to have:

Program staff

project management
contractor management
grant management compliance

Operational support

human resources
IT staff, accounting

Board Support

real estate experience
financing and accounting
community experience
capacity assessment and alignment

In addition to these key skills for different levels of staff, there are some core competencies that are helpful for at least some staff to have experience with or knowledge about:

Core Capacities

Core Capacity #1: Knowledge and Experience

Does your organization have experience with key parts of the development process? This experience is a critical part of being able to realize your development process. Some knowledge areas that are necessary during the development process include:

Existing regulations (leasehold, land use/building, approval processes)
Decision-making norms and structures
Community and stakeholder relationships, including the ability to build them
Project management
Site selection factors
Real-estate finance, including familiarity with private-sector financing and public-sector and housing programs
Contract and real estate law
Construction processes and management
Property management, operations, and maintenance (marketing, lease-up, regulatory compliance requirements, service delivery)

Even though housing development requires a deep well of knowledge and experience, you do not need to possess all the knowledge areas listed above within your organization. It will be important to understand what knowledge and experience exists within your staff, including opportunities to build it through your proposed project, and where you will invite additional knowledge and experience through more training of your existing staff; partnerships with other organizations; contractors; and your organization’s board (when one exists).

Core Capacity #2: Funding Administration

Many public-sector agencies require developers to apply for public-sector resources (including those available from the federal government, such as CDBG, HOME programs, and LIHTC) through a competitive application process. Having experienced staff or contractors who have prepared funding or grant applications can help with securing financing upfront.

Receiving public resources often requires consistent monitoring and reporting. As part of examining your capacity for funding administration prior to starting development, consider what systems you have in place to track and use financial resources. For instance, do you have adequate internal control and procedures for financial management? Are your systems designed to easily capture key program information for reporting purposes? Are multiple systems in use that would make it time-consuming or difficult to provide consistent reporting?

Core Capacity #3: Operations

Does your organization have the operational support to undertake development? Building on administrative capacity for development, you will need to understand the impact of your project on your organization’s operations and support staff. Staffing impacts to consider are:

Human Resources to support hiring new staff or doing professional development of existing staff.
Information technology (IT) to assist with purchasing new software systems to track a complex project or assist with property management. They may also be able to provide expertise about IT components of your project, if you aim to incorporate Internet access or computer facilities onsite.
Accounting and finance to help you understand the financial impact to your organization when undertaking your proposed project and if your organization’s balance sheet can meet public- and private-sector funder requirements. These roles are in addition to the administrative capacity for funding discussed above.
Property Management to support the day-to-day operation of the property including resident case management, maintenance, and marketing for lease-up.

Core Capacity #4: Managing Funding

Being able to leverage more funding programs enables more resources for a development project. However, more grants create a complementary challenge: the ability to effectively administer them. Many organizations reported not seeking funding due to the administration burden associated with regulations, compliance, and reporting. At the same time, many organizations have pursued solutions to help reduce their administrative costs:

Dedicated program staff – While dedicated staff may not be an option for smaller groups, having staff assigned to manage specific funding sources or programs provides continuity and builds internal capacity for funding administration.
Cross-training staff – You can also add or reduce the administrative costs associated with different funding sources by cross-training existing staff on different programs and systems. This cross-training enables you to draw on staff as needed or increase your capacity for administration during busier times, such as during annual reporting timeframes or at the end of fiscal years, without having to hire additional staff.
Creation of additional entities – Some groups have formed separate nonprofit organizations or LLCs to serve as a housing developer. A separate legal entity enables you to protect liabilities in the case of an LLC and to create and sustain partnerships with other nonprofits and receive tax-free gifts in the case of a 501(c)(3). Strong institutional support either through an executive director of a nonprofit, or other leaders can assist with pursuing leverage and addressing the administrative challenges that accompany administering financing among some developers.
Use of consultants – Small staffs can be supplemented with knowledgeable consultants, especially those with experience with common sources of funding used to develop housing.
Use of technical assistance – There are national nonprofits and CDFIs dedicated to supporting housing development. In some cases, regional or government entities sponsor or cover some technical assistance, depending on the target population of the project. The Mississippi Home Corporation provides some technical assistance as related to applying for tax credits and CHDO certification.

Partnerships

An internal capacity assessment will highlight gaps you may need to fill by partnering with other organizations or consultants. In addition to determining what types of organizations you need to work with, you will want to ensure your chosen partners can meet the specific needs of your project and possess any necessary up-to-date certifications or licenses.

Beyond expertise and core skills, though, you should also consider what characteristics would make a good partner to your organization throughout the development process and in the long term. You may already have relationships with trusted partners, which adds to the strength of your project team. In other cases, you will need to seek out new partners. Your organization is in the best position to define what makes a good partner. However, if you are looking for a place to start your reflection on this question, this partnership assessment tool is designed for this purpose.

Joint Venture Partnerships

A joint venture is created when two or more companies/organizations formally partner to share resources for specific real estate and community development transactions. These partnerships are most commonly associated with LIHTC funding. Within this partnership, developers can acquire greater access to development sites, financing sources, staff capacity, and community support. Every real estate deal is different, and each partner offers its own strengths, weaknesses, and objectives. For example, if an organization has the financial strength to undertake development but does not want to take on the risk associated with providing guarantees, they might seek a joint venture with another organization willing to play these roles. This is common with organizations whose primary function is not housing development, such as social service agencies, that may need to spend a lot of time working through development questions with their board of directors and other administrators. Even if an organization can develop on its own, it may still seek a partner for other reasons, such as increasing the number of projects it can pursue simultaneously, adding financial strength, accessing predevelopment funding, combining differing strengths, or expanding into new markets.

When considering whether a joint venture is a good option for your development, consider:

Who to partner with. Partners for joint ventures should have aligned missions and values, and an acceptable financial condition.
The type of roles and relationships that would best serve your organization’s needs.
How to handle risk. All parties relevant to the partnership need to understand the financial and reputational consequences associated with development. Regardless of whether your organization is providing guarantees, issues such as cost over-runs and project delays may impact your relationship with government and financial partners and, ultimately, your ability to participate in future deals.
How the developer fee and cash flow will be shared. For example, a party that brings land often receives a share of the developer fee, even if that party does not otherwise contribute financially to the deal. A developer fee split should take into account issues like the timing of the fees. Will your portion of the fee come at the completion of the building, or from future cash flow?

For more information on joint ventures, including useful worksheets for negotiating a successful and mutually beneficial partnership, see Enterprise Community Partners’ Joint Venture Guidebook

Key Project Team and Their Potential Roles

The following roles comprise a project team:

Developer – This role initiates the proposed project and convenes the other partners needed to complete it. Throughout the process, the developer manages all aspects of a project. They are responsible for providing project team members with the resources and information they need to complete their parts of the project; coordinating across project partners or external entities as needed; and creating accountability for the project’s vision and budget.
Development Partner – In some cases, a development partner may play a direct role in the development process with you, bringing some unique capacity to the process. In other cases, their role may be less involved and contribute a resource but are not directly involved in the development process. Whatever their role may be, it is important to establish expectations early. Development partners do not have to be traditional development agencies. In fact, many types of organizations can be development partners, such as other developers, public housing authorities, local anchor institutions, school districts, employers, and community advocates.
Property manager – The property manager serves as the primary steward of the project once it is complete. Some organizations offer in-house property management services, while other contract with third-party property management companies for this role. A property manager needs a wide-ranging skillset, including the ability to coordinate marketing and lease-up, build positive relationships with tenants, and manage maintenance expenses. For properties using public resources that carry compliance requirements, a property manager should have knowledge of these requirements. Compliance-related property management tasks include tenant eligibility and screening practices, income verification and recertification procedures, and reporting requirements.
General contractor – A general contractor carries out the physical construction of the project. They are responsible for the equipment, materials, and labor to complete your project according to your plan’s specifications. They can also serve as an advisor on key aspects of your project, including design and material choices and their impact on total development cost. In most cases, a developer will solicit bids for general contracting services to identify this member of the project them. As you assess general contractors, you should look for those with experience managing a project of similar scope to the extent possible.
Service Provider – A service provider develops and delivers services to residents living in your completed development. Not all developments include service providers; this role is applicable for projects that incorporate onsite or offsite services, such as healthcare, educational programs, and financial counseling. At applicable projects, this role could be filled by existing service providers serving your community, where the development is providing them space, or by new services offered as part of the development. If you want to provide onsite services or want to be able to reach a specific group, engaging a service provider early in the development process can inform questions about the space (amount, layout and design, feature) needed to deliver services in your project.

Consultant or contracted services

Some project needs can be filled by contracting for professional services for specific tasks. Common professional services include:

Architect – An architect will assist with schematic drawings and building plans, which will be important to determine if your site can accommodate the number, configuration, and features of homes envisioned.
Engineers – Engineers can help you understand the physical and environmental challenges associated with your site. They can also support planning for infrastructure upgrades on the site.
Market or real-estate analyst – A market or real-estate analyst will conduct a market study, which informs demand for your development. If you are applying for housing tax credits, you must submit a Market Study that has been completed by an analyst. The market study must be current (no more than one year old). The Market Study must support the number of units identified in the application and provide consideration as to the total number of units the market can absorb.
Attorney – At various points in the development process, you will need legal review of agreements and contracts. Depending on your project needs and location, a lawyer can advise on local land use regulations; assist with navigating different local, state, and federal regulatory processes; and support pursuing a leasehold.
Environmental analyst – An environmental analyst will complete any needed environmental reviews. They should have familiarity with environment review requirements and processes. An environmental analyst may also be able to help you identify ways to streamline your environmental reviews.
Housing finance adviser – A housing finance adviser can help identify and apply for housing financing, as well as help you structure your development deal. This adviser should have familiarity and experience with LIHTC; rural housing development programs; and various private-sector financing products.
Green Building Consultant – A green building consultant can work closely with the project team to support the design, modeling, and implementation of energy efficiency strategies or retrofits to support lower energy bills and reduced maintenance. Additionally, they can help you achieve green building certification, such as Enterprise Green Communities, National Green Building Standard, or Insurance Institute for Business and Home Safety's FORTIFIED Multifamily Standards.

Working with Consultants

Successful development projects often draw their success from a wide variety of strong community partners. However, if you are new to partnering on development projects, the task of building successful partnerships may seem daunting. You should approach partnership development as an opportunity to set mutual expectations and goals for how to provide more and better housing for your community. They are also an opportunity to share risks, costs, and rewards.

It is important to outline these expectations at the earliest stages possible, before entering into a partnership agreement and beginning the project. Each team should be heavily involved in the drafting of partnership agreements to ensure a shared understanding of what the partnership entails. You should also ensure that you have regular check-ins and consistent channels of open communication with all partners.

Documenting processes, expectations, timelines, and other important information helps create continuity throughout the development process. Affordable Housing developments can take many years and administrative turnover is common. To avoid delays, make sure multiple members of your team understand the processes and relationships.

Identifying Architects

Architecture services (including landscape architects) will be necessary to help you design your development and translate your needs, the conditions of the site, and the local building and land use regulations into a plan that your general contractor can use to make your development a reality. An architect can also be involved throughout construction to help address issues that arise and ensure that there is alignment between design and construction.

Be sure to consider your timeline and budget when selecting an architect partner. Ideally, architects should be engaged early on in the project, but their rate is often high, so be sure all parties understand what costs will be paid in pre-development and what costs will be deferred until the project is fully capitalized.

It may be helpful to have your architect participate in conversations with the community related to the design concept. If that is not possible, be sure they are aware of the conversations you have had with the surrounding community and what feedback has come out of the community engagement process.

Here are some items you may want to discuss/keep in mind when selecting an architect:

Expected budget and timeline for construction
The design team’s ability to incorporate less expensive materials or other design components to save on costs
Specific design items to keep in mind to best serve a specific population (i.e. accessibility, secure entry)
What uses you expect for interior spaces and how you want those to relate to one another. For example, if you are planning to have on-site services in addition to affordable housing, how can the architect help design for the types of spaces will these services require.
Does the architect have experience developing affordable housing? Ask if there are similar developments that you may visit and partners that may provide references.