Where Section 538 sits on a tax credit deal, the borrower must satisfy every programme, and the Agency will generally defer to the most stringent

rd538.income_eligibility.layered_program_rules_and_the_necessary_assistance_review · v1.0.0

A Section 538 guaranteed property may carry supplemental financing or housing subsidies with their own occupancy or management requirements, and some of those programmes -- low income housing tax credits among them -- impose more restrictive income or tenant eligibility rules than Section 538 does. The borrower is responsible for maintaining compliance with all of those requirements, and the Agency will in most cases defer to the most stringent requirements imposed by the alternative financing sources; that deference is not absolute, and where occupancy is suffering for want of qualified tenants under the most stringent rules and a default on the guaranteed loan is in prospect the Agency may require the lender to adhere to Agency occupancy standards instead. Separately, where the financing combines a guaranteed loan with Low-Income Housing Tax Credits or other Federal assistance, the project must conform to the necessary assistance policies of 7 CFR 3560.63(d).

Confidence

medium

Effective from

2012-02-23

Last reviewed

2026-08-31