> ## Content Index > Fetch the complete content index at: https://blog.phadevelopment.com/llms.txt > Use this file to discover other available public pages before exploring further. # 25 Things to Know to Win Your First LIHTC Application - URL: https://blog.phadevelopment.com/25-things-to-know-to-win-your-first-lihtc-application/ - Published: 2026-09-15T17:37:27.000Z - Updated: 2026-09-15T18:14:28.000Z - Author: Brian West - Tags: LIHTC, Capital Stack, Legislation & Policy 2026 is the first allocation year under the permanent Low-Income Housing Tax Credit expansion in the One Big Beautiful Bill Act (P.L. 119-21). State credit ceilings for 9% credits rose 12%, and the private activity bond test for 4% deals dropped from 50% to 25% of aggregate land and building basis for buildings placed in service after December 31, 2025 (provided at least 5% of that basis is financed with bonds issued after 2025). More credits, however, have not made competitive rounds easy. Most state housing finance agencies are still oversubscribed several times over, and a growing number run scored competitions for bond cap as well. For a housing authority, an instrumentality, or a first-time sponsor, the difference between an award and a "try again next year" letter is rarely the quality of the project. It is almost always preparation, strategy, and execution. Below are 25 things we tell every client before they commit a dollar to a first application, organized in the order you will encounter them. --- ## Part I — Before You Commit ### 1\. Decide whether you are chasing 9% or 4% credits The 9% credit is designed to deliver roughly a 70% present-value subsidy on qualified basis and is allocated competitively under the state's per-capita ceiling. The 4% credit delivers roughly 30% and comes "automatically" with enough tax-exempt private activity bond financing. The reduced 25% bond test makes 4% executions viable in more states and on more deals, but a 4% deal leaves a much larger gap to fill with soft money, deferred fee, and seller financing. Know which program you are pursuing before you design the building, because the scoring criteria, timelines, and capital stack are fundamentally different. ### 2\. Run a go/no-go feasibility test first Before ordering a single report, self-score the site against the current Qualified Allocation Plan (QAP), compare that score to the projects funded in the last round, and run a preliminary sources-and-uses. If the site cannot reach a competitive score, or the budget cannot close without assumptions no investor will accept, the right answer is to stop, restructure, or find another site. Walking away early is a success; spending six figures on a non-competitive application is not. ### 3\. Secure site control that the agency will accept Nearly every state requires evidence of site control as a threshold item — a deed, purchase contract, option, or long-term ground lease (or lease option) running through the expected closing. For PHAs, the question is more complex: public housing land is encumbered by a Declaration of Trust, and conveying or leasing it to a tax credit partnership typically requires HUD approval through RAD, a Section 18 disposition, or a mixed-finance transaction. Confirm in advance what your agency will accept as evidence while that HUD approval is pending, and build the timeline accordingly. ### 4\. Know your location metrics before you design Check whether the site sits in a Qualified Census Tract (QCT) or Difficult Development Area (DDA), which can boost eligible basis to 130% under IRC §42(d)(5)(B). For 9% deals, many states also offer a discretionary state-designated boost; that boost is not available to bond-financed buildings. Pull the current HUD Multifamily Tax Subsidy Project (MTSP) rent and income limits for the county, and review the state's opportunity or amenity mapping. These numbers drive basis, rents, and points. ### 5\. Meet the experience threshold — or partner with someone who does Most QAPs impose a development-experience threshold (completed LIHTC projects, issued 8609s, a clean compliance history) and many award points for it. A first-time sponsor or a PHA without a recent tax credit track record should joint-venture with an experienced co-developer. Negotiate the fee split, decision rights, guarantee obligations, and exit terms in writing before the application is filed — not after the award. --- ## Part II — Building the Application ### 6\. Understand the three pillars every application rests on Regardless of state, a LIHTC application answers three questions. First, **financing**: how will you pay for the project, and is the gap closed? Second, **design and program**: what are you building, for whom, with what unit mix, income targeting, and amenities? Third, **team**: have you assembled a developer, architect, general contractor, counsel, lender, syndicator or investor, management agent, and consultants capable of carrying the project from award to placed-in-service? ### 7\. Treat the application as an argument, not a form The application is your case to the agency that this project advances the state's housing goals better than the competing proposals, and therefore deserves scarce credits and state resources. Every narrative, exhibit, and number should reinforce that case. Reviewers notice when an application reads as a collection of disconnected attachments. ### 8\. Make the agency checklist the backbone of your process Start with the state's application checklist and build your workplan around it: every item, the responsible party, the due date, its status, and every place in the application where it is referenced. Begin full assembly at least six to eight weeks before the deadline — and treat that as the floor for assembly, not for pre-development, which starts months earlier. ### 9\. Redline this year's QAP against last year's Agencies typically revise their QAP annually, and the checklist, forms, and scoring criteria change with it. Point categories get reweighted, thresholds move, and new requirements appear. Reusing last year's template or a colleague's winning application from a prior round is one of the most common ways first-time applicants lose points. Also track mid-cycle FAQs, addenda, and webinar clarifications. ### 10\. Order third-party reports early Market studies, appraisals, Phase I Environmental Site Assessments (ASTM E1527-21), capital needs assessments for rehab, and geotechnical reports all carry lead times, and agencies often impose freshness requirements on report dates. If any federal funds are involved — HOME, CDBG, Section 8 project-based assistance, or public housing capital funds — the project also triggers NEPA environmental review under 24 CFR Part 50 or 58, and choice-limiting actions are restricted until clearance. Engage these vendors early so you are not waiting on a report the week of submission. ### 11\. Bring counsel, your lender, and your investor in early Your attorney, construction and permanent lender, and syndicator or direct investor will each underwrite the deal from a different angle — organizational structure, debt service coverage, reserves, operating assumptions, and HUD approvals. Their early review surfaces issues while you still have time to fix them, and their letters of interest are frequently required or scored. ### 12\. Call the agency before you surprise it If your project involves unusual construction, a nonstandard financing structure, a cost-limit exception, or any waiver of QAP requirements, raise it with agency staff well before the deadline. Agencies dislike surprises, and waiver requests often carry their own, earlier deadlines. A pre-application conversation can turn a potential deficiency into an approved exception. --- ## Part III — Scoring Strategy ### 13\. Read the QAP as a statement of the state's priorities States signal what they want through points, set-asides, and tiebreakers. Depending on the state, that may mean preservation of existing affordable housing, deeper income targeting, rural production, supportive housing, high-opportunity locations, or partnerships with PHAs. The applications that win are the ones that draw a direct, documented line between the QAP's priorities and the project's features. ### 14\. Study the last one or two funding rounds Published award lists and scoring logs show you the score that was actually needed to win in your set-aside or region, how geographic distribution rules played out, and which features the funded deals shared. Remember that strong projects that narrowly missed last round will very likely reapply — usually improved. They are your real competition and your best benchmark. ### 15\. Complete the scoring exhibit precisely — every point needs proof Many applications lose not because the project was weak but because a box went unchecked, a scoring tab was completed incorrectly, or a claimed point lacked the supporting exhibit. Treat the self-scoring worksheet as a legal document: for every point claimed, identify the exhibit that proves it and confirm the figures match everywhere else in the application. ### 16\. Model scoring, tiebreakers, and the budget together Do not analyze points, tiebreakers, and the development budget in separate files or at separate times. Build them into one integrated model and iterate. Every point has a cost: deeper income targeting lowers rents and supportable debt; green certification adds hard costs; a smaller credit request improves efficiency metrics but widens the gap. Only by seeing all three at once can you make informed trade-offs. ### 17\. Understand why tiebreakers matter so much In competitive states, many applications reach the maximum or near-maximum score. When a dozen projects tie at the top, the tiebreakers decide who is funded. In those states, reaching the maximum score is simply the entry ticket, and the tiebreaker analysis deserves as much attention as the scoring itself. ### 18\. Tiebreaker lever one: site and building features The first category of tiebreakers typically rewards location and design — proximity to transit, grocery, schools, and healthcare; siting in high-opportunity or revitalization areas; energy efficiency and green building certification; and readiness to proceed, such as zoning approvals and permits in hand. Note that IRC §42(m)(1)(B)(ii)(III) requires QAPs to give preference to QCT projects that contribute to a concerted community revitalization plan, so documented alignment with a local plan can carry real weight. ### 19\. Tiebreaker lever two: financing efficiency and local commitments The second category measures how efficiently you use the state's resources — credits requested per unit or per bedroom, the share of the budget funded by non-credit sources, and firm commitments of local soft funding. Those local commitments take time: city and county funding follows council calendars and NOFA cycles that can run months ahead of the tax credit deadline. For PHAs, relevant resources may include project-based vouchers or RAD contracts that increase supportable debt, land contributed through a ground lease, seller financing, and Faircloth-to-RAD strategies. Line these up well before the application is due. ### 20\. Don't win points you can't live with Every scoring commitment becomes a recorded obligation in your extended use agreement. The federal compliance period is 15 years, the total extended use period is at least 30, and many states require longer terms. Deeper targeting, service commitments, and amenity promises that win an allocation can create operating deficits for decades. Underwrite operations with every commitment in place before you claim the points. ### 21\. Play to the strengths a housing authority brings PHAs and their affiliates often hold advantages that private developers do not: publicly owned land, rental assistance, existing waitlists, and preservation opportunities through RAD or Section 18\. A qualified nonprofit affiliate may be able to compete in the federal nonprofit set-aside, which reserves at least 10% of each state's ceiling under IRC §42(h)(5). Many QAPs also award points for PHA partnerships, rental assistance commitments, or waitlist referral agreements. Know which of these your state rewards and document them fully. --- ## Part IV — Quality Control and Submission ### 22\. Trace the ripple effect of every change Late changes are inevitable, but each one propagates. Adjusting the AMI mix or unit mix affects the rent schedule, utility allowances, operating pro forma, supportable debt, sources and uses, market study capture rates, architectural plans, scoring worksheet, and narrative. Maintain a single linked source of truth and a change log so that one revision does not create five inconsistencies. ### 23\. Eliminate the classic foot faults The most common deficiencies are mundane: missing attachments, unsigned or undated forms, missing notarizations, outdated form versions, expired reports, unpaid fees, file naming or upload errors, and figures that don't match from one section to the next. Agencies catch these in review, and they can cost points or slow the review of your application. ### 24\. Get an independent QC review — and know the cure limit The person who assembled the application is the worst person to proofread it. Before submission, have a reviewer with fresh eyes check every number, cross-reference every exhibit, and re-score the application from the QAP. This matters even more in states that cap the number of corrections or cures an applicant may submit — exceed the limit and the application may be rejected outright, pushing the project to the next round. Aim for zero corrections. ### 25\. Respond fast after submission — and plan for the clock that starts at award If agency staff contact you during review, that usually means your application is being considered seriously. Treat every inquiry as a priority and answer quickly, completely, and consistently with the rest of the file. If you win, a new set of deadlines begins: the carryover allocation, the 10% test (incurring more than 10% of reasonably expected basis within 12 months of the allocation), and placing the project in service by the end of the second calendar year after the allocation year, culminating in the issuance of Form 8609\. Your capital stack and closing plan should already account for that schedule on the day the application is filed. --- ## The Bottom Line A first LIHTC award is won long before the submission portal opens. It comes from choosing the right credit program, confirming the project is competitive before spending heavily, reading the QAP as a map of state priorities, modeling points, tiebreakers, and budget as one system, and running a disciplined quality-control process that leaves nothing for the reviewer to question. For housing authorities, the opportunity is significant. Publicly owned land, rental assistance, and RAD and Section 18 repositioning tools can make a PHA-sponsored application highly competitive — if they are structured and documented correctly, and if the partnership, capital stack, and HUD approvals are aligned with the state's calendar. PHA Development helps housing authorities and their partners evaluate sites, structure the capital stack, identify federal, state, and local funding sources, and assemble competitive 9% and 4% LIHTC applications. [**Schedule a Consultation →**](https://phadevelopment.com/?ref=blog.phadevelopment.com#contact)