What are Housing Trust Funds?

Housing trust funds are separate funds established by states or localities to provide a stable source of revenue reserved solely for affordable homes. Because they are created at the state or local level, program activities and eligibility requirements vary from place to place in response to local needs and priorities.

By definition, housing trust funds are associated with a dedicated funding source - i.e., a stable source of revenue that will continue to provide resources on an ongoing basis without the need for annual appropriations decisions; however some communities maintain local accounts that are reserved for affordable housing but are not connected to a dedicated revenue source. While these programs do not benefit from the reliable funding conferred by a dedicated source, they can play an important role in addressing local housing needs.

What problems do housing trust funds solve? Housing trust funds help solve three major problems. First, they provide a dependable source of revenue for the production, preservation, or rehabilitation of rental and owned homes, as well as related support services and infrastructure needs. Second, they come without federal restrictions and so can be tailored to efficiently meet particular local needs, some of which may be ineligible for funding through other programs or in need of additional resources. Third, they can be used to leverage other funds and help provide "gap financing" to make up the difference between what an affordable housing project costs and the federal funds available to support it. Where are these policies most applicable? Housing trust funds can be used successfully in any community; however, they are most productive when funding sources and allowable uses are tailored to reflect local conditions. Areas with an active real estate market, for example, may consider funding a housing trust fund through a modest document recording fee that generates a small amount of income with each home sale. (These small amounts can add up!) Areas with slower housing markets but a robust tourism business may consider hotel/motel taxes as a revenue source. In many communities, housing trust funds result from persistent advocacy campaigns by low-income housing advocates and practitioners who seek to target funds to the lowest income families with the most severe housing cost burdens. In other communities, such as the state of Florida, housing trust funds are advanced by a broader coalition of interest groups, including low-income advocates, realtors and homebuilders; in Florida, this has led to one of the largest trust funds in the nation with flexible income guidelines serving families with a range of incomes.

Solutions in Action

Photo credit: Greig Cranna, courtesy of MassHousing Treehouse at Easthampton Meadow, in Easthampton, Massachusetts, was financed in part by a $1 million award from the Massachusetts Affordable Housing Trust Fund. This 46-acre development provides a unique intergenerational environment for both seniors and families with children. Visit the Gallery to learn more about Treehouse at Easthampton Meadow and other developments made possible through housing trust funds.

Communities interested in developing comprehensive and effective housing strategies should consider how a housing trust fund fits into the overall array of housing programs and policies available in the community. In this connection, it is important to note that state and local housing trust funds do not come with federal restrictions that constrain the use of most of the subsidy dollars available for housing at the state and local levels. The beauty of a housing trust fund is that the jurisdiction can control exactly how the funds are spent.

Learn more about dedicated housing trust funds Go back to learn about other policies that help generate capital

The Center for Housing Policy gratefully acknowledges the input and feedback provided for this policy section by the follwing reviewers: Danielle Arigoni, U.S. Environmental Protection Agency; Mary Brooks, Center for Community Change; Isaac Salazar, Enterprise Community Partners. Please note, however, that the views and opinions expressed on HousingPolicy.org are those of the Center for Housing Policy alone.