How to get $10M+ in Government Funding (LIHTC, Grants, Loans) for Affordable Housing Developments - Tzanimir Borovski
How to Unlock $10M+ in Government Funding for Affordable Housing with LIHTC, Grants, and Subsidies
Why this episode matters for affordable housing investors and developers
If you’ve ever wondered how developers actually finance affordable housing projects, this episode of the Affordable Housing & Real Estate Investing Podcast is a masterclass. Kent Fai He sits down with Tzanimir (Zan) Borovski, a young development and investment associate who has already worked on deals totaling tens of millions of dollars.
At just 24 years old, Zan breaks down one of the most complex and misunderstood aspects of affordable housing: how to piece together capital stacks using Low-Income Housing Tax Credits (LIHTC), federal and state grants, soft debt, and local subsidies. His clarity and step-by-step explanations show that even emerging developers can access government funding to create real impact.
Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments.
What is the difference between market-rate and affordable housing development financing?
Most new developers assume financing affordable housing is similar to market-rate housing. In reality, the two operate on completely different systems.
Market-rate development relies heavily on equity from limited partners and bank loans, with developers chasing IRR (internal rate of return). Projects are often built, leased up to 95% occupancy, and sold quickly to maximize investor returns.
Affordable housing development, by contrast, is primarily funded through tax credit equity, government grants, and soft debt. Instead of equity investors, developers earn a developer fee, often deferring part of it to make deals pencil. The mission isn’t just financial return—it’s long-term community impact.
Zan’s analogy is perfect: developers act like quarterbacks, not specialists. You don’t need to be an expert in construction, engineering, or finance—you need to know just enough of each to steer the team toward delivering safe, quality housing.
How do Low-Income Housing Tax Credits (LIHTC) actually work?
Introduced in 1986, LIHTC is the single most important federal tool for building affordable housing. Here’s how Zan explained it:
A developer applies for tax credits from their state housing agency.
If awarded, those credits can be sold to banks or institutional investors, often for 80–95 cents on the dollar.
Investors buy them because of mandates like the Community Reinvestment Act (CRA) and the benefit of reducing tax liabilities.
9% vs 4% LIHTC
9% tax credits: cover about 60% of development costs, but are capped and extremely competitive.
4% tax credits: cover about 40–45% of costs, have no cap, but require tax-exempt bonds as part of the financing.
This creates a powerful incentive system: developers secure long-term affordability commitments in exchange for upfront equity that makes projects feasible.
What government grants and funding sources can developers tap into?
Beyond tax credits, Zan listed a variety of federal, state, and local programs developers can combine into their capital stack. Some of the most impactful include:
CDBG (Community Development Block Grants): flexible funds that can support disaster recovery, infrastructure, and housing.
PLHA (Permanent Local Housing Allocation): dedicated to filling funding gaps in affordable housing deals.
MHP (Multifamily Housing Program): competitive grants for new construction or rehab of affordable units.
IIG (Infill Infrastructure Grant): pays for site work, utilities, and even public parks or bike lanes tied to new housing.
AHSC (Affordable Housing and Sustainable Communities): integrates housing with transportation investments, funding bike lanes, buses, and transit-oriented improvements.
Veterans Housing & Homelessness Prevention (VHHP): provides both housing and supportive services for veterans.
These aren’t just acronyms—they are tools that can make or break a project. As Zan explained, applications are 80+ hours of work each, often requiring consultants, lawyers, and environmental experts. But the payoff is millions in non-dilutive funding.
Case study: How one $36M deal came together
One of Zan’s most instructive examples was a 61-unit development in Northern California for families displaced by the Paradise fires
Tzanimir Borovski »»» How to ge…
. Here’s how the $36 million capital stack came together:
$19M in 9% LIHTC equity
$8M from CDBG Disaster Relief funds
$3M from PLHA
$5M in permanent bank debt
$1M deferred developer fee
Because rents were kept affordable (30–60% AMI), net operating income was too low to support much traditional debt. The solution was 25 housing vouchers from the housing authority, which boosted NOI enough to increase bank debt from $2M to $5M.
Without this mix of tax credits, grants, and vouchers, the deal wouldn’t have been possible.
Key Insights from this episode
Capital stacks require creativity: Affordable housing projects often combine 5–7 funding sources to make deals work.
Relationships matter: Build connections with housing authorities, banks, and syndicators early—before applying for LIHTC.
Subsidies drive feasibility: Without government support, affordable rents cannot cover debt service or construction costs.
Efficiency is critical: Affordable projects are often more expensive to build than market-rate due to added services and compliance.
Mission comes first: Developers must balance financial sustainability with the social goal of serving extremely low- and very low-income households.
Memorable Quotes from Tzanimir Borovski
“Being a developer is like being a quarterback. You’re not the best at any one trade, but you know enough about each to steer the ship in the right direction.”
“Affordable housing isn’t as lucrative as market rate, but there’s always demand and always work. You’re doing something that truly serves the community.”
“Applications can take 80+ hours. It’s grueling, but those grants can mean millions in funding.”
“Before you even apply for tax credits, start talking to banks. Don’t wait until after you’ve won an award.”
Common Questions this episode answers
How do developers use LIHTC to raise money?
They sell awarded tax credits to banks or investors, usually at 80–95 cents per dollar, turning future tax benefits into upfront equity.
What’s the difference between 9% and 4% tax credits?
9% credits fund about 60% of smaller projects but are capped. 4% credits fund 40–45% of costs, require bonds, and are often used on larger deals.
Why is affordable housing more expensive than market-rate?
Added services, compliance requirements, and longer timelines increase costs, while rents are capped at affordable levels.
Can new developers compete for tax credits?
Yes. LIHTC has set-asides for “emerging developers,” allowing new entrants to compete separately from large, established firms.
What happens if you don’t close within 6 months after winning LIHTC?
You lose the credits. That’s why securing bank and investor commitments early is essential.
Final Thoughts
This episode is a crash course in how government subsidies, tax credits, and grants come together to finance affordable housing. For investors and advocates, it proves that while deals are complex, they are achievable with the right knowledge and relationships.
Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments.
DM me @kentfaiheon IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.
