Back to Basics: Housing Trust Funds

The FWD #B13 • 1,053 Words

Editor’s note:
This is part of our special “Back to Basics” series, covering foundational topics in affordable housing. Find previous entries in this series

Trust us on this one—these funds are “house” it’s done.

Housing Trust Funds (HTFs) play a critical role in financing affordable housing for addressing local governments’ goals. In this edition of Back to Basics, we review what a housing trust fund is and how they’re used to advance housing goals across Virginia today.

What is a housing trust fund? 

A housing trust fund is a designated fund to support the creation and preservation of affordable housing. They ensure long-term impact in a housing ecosystem and provide developers the funding needed to build or preserve affordable homes and to deliver many different types of housing assistance. HTFs are established by states, local governments, and other public entities to complement the range of housing programs supported by the federal government, such as the Low-Income Housing Tax Credit.

How are they created? 

HTFs are usually initiated through state or municipal legislative actions, often through efforts spearheaded by advocacy groups, housing agencies, and policymakers. Once that public body establishes the HTF, it sets forth guidelines for the fund’s operation and governance. A regulatory framework is created to oversee the fund’s management and allocation protocols. These foundational steps ensure that HTFs are effectively positioned to address affordable housing needs.

What makes HTFs different from other sources of funding for affordable housing?

Most affordable housing resources are restricted to a particular program or use. While this can make those resources more consistent and reliable, it can be challenging for localities and providers to make the mandated programs work for their specific needs. Requesting program changes or exemptions requires navigating layers of state and federal bureaucracy. Local HTFs, on the other hand, are created from the ground up with the community’s objectives in mind, putting the management and distribution of the fund entirely under local authority. 

Local HTFs can be more versatile and adaptable than bigger programs managed by state or federal agencies, enabling them to better handle emerging and changing housing needs. They frequently play a crucial role in “filling the gap” or leveraging other funding sources for affordable housing projects that require additional funding to begin.

How common are HTFs?

According to the Housing Trust Fund Project, there are more than 800 state and local HTFs in the United States. In addition to Virginia’s state HTF, seven localities in Virginia have operational HTFs. These include the cities of Alexandria, Charlottesville, and Richmond, as well as Arlington, Fairfax, and Loudoun counties.

Snapshot: Arlington County Affordable Housing Investment Fund (AHIF)

  • Since 1988, has invested over $300 million.
  • Has helped produce or preserve more than 7,000 affordable housing units.
  • AHIF’s investments have leveraged an additional $3 of additional funding for every $1 invested.

Build your own HTF.

HTFs are uniquely tailored to the goals of the communities they serve and no two HTFs are the same. But they generally share a number of important characteristics and considerations.


HTFs are chartered an enabling ordinance or law. Establishing the fund’s specific legal structure sets a clear purpose for funds, assigns core responsibilities, and gives power to distribute funding. HTFs require proper governance and oversight to set funding levels, funding priorities, make award decisions, and perform follow up. Priorities are often set by an advisory board, which may include experts and representatives from the public and private sectors, as well as nonprofit organizations. 

Cities, counties, and other municipalities interested in establishing HTFs must decide whether the fund will be administered by an existing governmental office or nonprofit organization, or whether a new institution will be established. Trust funds are typically handled by existing public agencies with experience working with housing development partners, providing grants, and handling a competitive application process, such as the local housing or community development department.


A housing trust fund can generate income in a variety of ways. These sources are frequently related to the trust fund’s policy goals—for example, some cities, towns, and counties deposit revenue from linkage fees associated with new commercial development in the trust fund, while others contribute dedicated revenue from general funds. More information on potential funding sources for a housing trust fund can be found in this resource on dedicated revenue streams.

Generating sufficient and reliable funds to provide impactful awards is an important consideration in the funding and distribution of HTF dollars. 


While many existing housing programs may focus on a specific housing activity such as weatherization or new construction, HTFs can act more broadly to address a handful of different priorities of the community. Targets for income ranges and households served are often defined in enabling legislation, but other priorities may change over time to reflect the needs of a community. 

Depending on local priorities and subject to state regulations, essentially any housing-related activity can be funded with a housing trust fund. The types of activities that can be funded with housing trust funds include but are not limited to:

  • Capital subsidies for affordable housing developments
  • Below-market financing of affordable housing development
  • Acquisition and operation of moderate-cost rental units
  • Community land trusts (CLTs)
  • Gap financing 
  • Homeowner rehabilitation assistance
  • Rent subsidies to make Low Income Housing Tax Credit units affordable to extremely low-income households

Regional HTFs

Although most existing HTFs are single-jurisdiction funds, communities nationwide are increasingly collaborating to explore multi-jurisdictional regional HTFs to more comprehensively address problems beyond city, county, or town limits. The New River Valley Regional Trust Fund was launched this summer by the New River Valley Regional Commission, and is the first regional trust fund in Virginia. HousingForward Virginia was proud to provide technical assistance in launching the trust fund through a grant from Virginia Housing.


  • HTFs are indispensable tools for advancing affordable housing.
  • HTFs are established by states and local governments to complement the range of housing programs supported by the federal government.
  • Their structured funding and dedicated management enable impactful, long-term solutions that are flexible and community-responsive.
  • No two housing trust funds are exactly the same, but they follow a sets of common considerations and can be good bases for communities interested in creating their own.
  • Virginia’s successes and innovations exemplify how these funds can make a substantial difference in the affordable housing landscape.

By focusing on Housing Trust Funds, communities not only create immediate opportunities for affordable housing but also lay down the foundation for more sustainable and equitable futures.

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