Row of houses on street corner in Raleigh

Affordable Housing 101

What is Affordable Housing?

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Affordable Housing 101 Video Series What is Affordable Housing? Homelessness Support Initiatives Affordable Rental Development Why Focus on Affordable Rental? Affordable Homeownership

Affordable Housing 101 Video Series

What is Affordable Housing?

Want a print-ready version of this information? View the City's Affordable Housing 101 Booklet!

Housing is affordable when a households spends no more than 30% of their income for housing costs like rent, mortgage, and utilities. 

Affordable housing can be:

  • Subsidized, meaning that it is funded in part by public or private non-profit dollars.
  • Unsubsidized, meaning that it is naturally occurring in the market (often called "naturally occurring affordable housing" or  "NOAH").
chart displaying where different housing forms are based on income

If you lined up every household in the Raleigh area in order from least to most income, the area median income (AMI) is the amount in the middle.

AMI is used to determine eligibility for affordable housing programs. These programs are targeted to households earning below 80% AMI, with some programs intended for lower AMI levels. 

We can think of the affordable housing landscape as a continuum that shows the range of affordable housing options available to residents:

graphic showing housing continuum

The City's affordable housing programs focus primarily on the development of affordable rental units as well as support for homelessness initiatives and first-time homebuyers with low incomes.

Homelessness Support Initiatives

The City works alongside regional partners to address the pressing concern of homelessness. The City partners closely with Wake County, which is the primary funder of emergency shelter and prevention services, and actively participates in the Wake County Continuum of Care (CoC). The CoC is the collective networks, institutions, and organizations that provide housing and services to people who are at risk of or are experiencing homelessness.

The City leverages federal funding to support homelessness initiatives. These programs are outlined below (with homelessness-related services in bold). 

ESG: Emergency Solutions Grant

CDBG: Community Development 
Block Grant

HOME: HOME Investment

  • Rapid rehousing
  • Homelessness prevention
  • Street outreach
  • Homelessness Management Information System (HMIS) support
  • Non-profit support
  • Rehabilitation programs
  • Neighborhood site improvements
  • Rehabilitation programs
  • Down payment assistance
  • Gap financing for affordable rental development 

Funding from the City's Affordable Housing Bond and  American Rescue Plan Act (ARPA) dollars have also been used to support homelessness initiatives. Some examples include:

  • $3 million to Healing Transitions to renovate the Men's Campus and add 110 emergency shelter beds.
  • $10 million to local non-profit CASA to construct King's Ridge, a 100-unit apartment community to serve households with very low incomes and those exiting homelessness.
  • The creation of a homelessness prevention and diversion pilot program.
  • Support to emergency shelter improvements, homelessness prevention, rapid rehousing, and street outreach. 

Affordable Rental Development

The construction of affordable rental housing requires capital, just like any other development. However, the rents must be affordable to families earning lower incomes. Affordable units are made accessible primarily through the Housing Choice Voucher Program and the Low-Income Housing Tax Credit (LIHTC). 

The Housing Choice Voucher Program is the primary program serving households under 30% AMI. Vouchers are administered locally by Public Housing Authorities. 

In Raleigh:

  • Approx. 3,700 vouchers are in circulation (85% of voucher holders are at or below 30% AMI).
  • There are 1,449 public housing units (75% occupied by households at or below 30% AMI).
  • There is high demand and utilization:
    • 9,100 households are currently on the voucher waitlist and 6,300 are on the public housing waitlist. 
    • The voucher utilization rate is 91% (only approx. 300 vouchers turn over annually).
  • Vouchers can only be used for rent at or below Fair Market Rent (FMR)
Fair Market Rent in Raleigh as of 2023
  Studio 1BR 2BR 3BR 4BR
FMR $1,213 $1250 $1,412 $1,733 $2,293


LIHTC development is the most widely used tool to create affordable rental units. It subsidizes the acquisition, construction, and rehabilitation of units through financing (debt and/or equity). 

It is a multi-year process. It can be challenging for funders to commit dollars to a project until all other funding sources are solidified. The development review process at the local level can be lengthy, with construction or rehabilitation of housing taking 18 months to a year depending on the project size. 

LIHTC Development Timeline
Start: Project Conception Year 1: Pre-Development Year 2: Construction Year 3+: Completion
  • Idea
  • Site Analysis
  • Financial Feasibility Analysis
  • Property Due Diligence
  • Market Analysis
  • Entitlement & Permitting 
  • Financial Underwriting
  • Construction & Permanent Financing Incentives
  • Predesign & Preconstruction 
  • Site, Infrastructure & Utility Work
  • Building Construction
  • Property Management Strategy
  • Marketing & Leasing Strategy
  • Certificate of Occupancy 
  • Opening
  • Final Lease-up


comparison of market rate and tax credit financing

Layered financing through LIHTC equity and soft debt (like low-cost loans) reduce the hard debt, thus allowing monthly charged rents to be lower. 

LIHTC is a tightly regulated program with:

  • Limits on contractor profit.
  • Specific reserve amounts.
  • Underwritten to 1.15 debt coverage ratio.
  • Independent cost certification upon completion of construction.
  • Legally binding 30-year affordability period through deed restrictions. 

The City contributes millions of dollars per year to support the development of affordable rental housing (nearly $17 million is budgeted for FY23-24). As of 2023, the current average subsidy required to create one rental unit affordable at 60% AMI is $159,000.

Developers building market-rate rental housing have more flexibility and higher profit margins than LIHTC developers:

  • Profit achieved when the project is built, occupied, and sold.
  • To create affordable units in a market-rate development, the $159k subsidy must come from somewhere

Tools that the City can use to incentivize affordable units in market-rate developments include inclusionary zoning and financial subsidy.

Why Focus on Affordable Rental?

  • The stock of affordable rental units is limited.
  • Deeper income targeting to reach lower AMI households is feasible through affordable rental development.
  • The proportion of renters burdened by the cost of housing is nearly triple the amount of cost-burdened homeowners.
photo of Washington terrace apartment complex

Project Spotlight: Washington Terrace

Washington Terrace is an aging 23-acre, 245-unit housing project for households with low incomes. It is in east Raleigh, located in the City's Neighborhood Revitalization Strategy Area. A local nonprofit, DHIC, purchased the property with the assistance of $2.1 million from the City of Raleigh and is redeveloping the entire site in four phases. The first two phases are Villages at Washington Terrace (162 units for families) and Booker Park North (72 units for the elderly).

Affordable Homeownership

The City aims to promote affordable homeownership and address the racial homeownership gap (in the Raleigh area, the homeownership rate for white households is 74% vs. 47% for Black households).

Homeownership programs include:

  • Homebuyer assistance programs to offset the cost of a down payment, closing costs, and other financing gaps.
  • Home rehabilitation programs to preserve existing housing and allow homeowners to age in place.
  • Strategic acquisition for affordable homeownership development. 
  • Public-private partnerships with affordable developers and non-profits. 
row of single story homes in east college park with porches

Project Spotlight: East College Park

The City partnered with six builders to develop 98 single-family homes in East College Park, which is located less than a mile east of downtown. This mixed-income neighborhood ensures that 60% of homes are affordable to families earning under 80% AMI. 

East College Park has been recognized as as strong model of homeownership in North Carolina, and received the 2022 Home Ownership Development Award from the North Carolina Housing Finance Agency. 



Housing and Neighborhoods
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Raleigh, NC 


Housing and Neighborhoods
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Community Development
Related Services:
Affordable Rental HousingAffordable Housing GoalsAffordable Housing BondAffordable Rental Development