Glossary of Housing Words and Terms



Property that is no longer being maintained by its owners and is either vacant or not lawfully occupied. Some jurisdictions limit the term to properties that have gone through a legal proceeding confirming their failure to pay back property taxes.



A small, self- contained residential unit built on the same lot as an existing single- family home. (Because they are often used by extended family members, ADU’s are also referred to as “in-law apartments” or “granny flats.”) ADUs may be built within a primary residence (such as conversion of a detached garage). An ADU will be subordinate in size, location, and function to the primary residential unit (which is why ADUs are sometimes referred to as “secondary units” or “second units”).



A new use for a structure or landscape other than the historic use, normally entailing some modification of the structure or landscape.



A mortgage loan subject to changes in interest rates during the course of the loan term. When rates change, adjustable- rate mortgage (ARM) monthly payments increase or decrease at intervals determined by the lender. The change in monthly- payment amount, however, is usually subject to a cap. In hybrid ARMs, the interest rate is fixed for a period of time- often 3, 5, 7, or 10 years- and then converts to an adjustable rate thereafter.



A legally binding clause to a deed that specifies that the property will remain affordable by setting certain terms and conditions related to its long- term use. An affordability covenant may restrict to whom a rental unit is rented and at what level or to whom and at what price a for- sale unit will be sold. These guidelines are typically put in place to preserve the affordability of homes financed with substantial government subsidies for future residents.



Funding allocations made on a regular basis by a committee or other authorizing body. The level of appropriations made available to federal, state, or local agencies for housing and related programs may vary from year to year on the basis of other urgent budget needs and/ or political shifts. In contrast, dedicated funding sources generally guarantee that all revenue from a specified source will be available for use by a designated program or entity.



The area median income (AMI) is a statistic generated by the U.S. Department of Housing and Urban Development (HUD) for purposes of determining the eligibility of applicants for certain federal housing programs. HUD determines AMI on an annual basis for each metropolitan area and non- metropolitan county, making adjustments for household size and other factors. Different housing programs use different percentages of AMI- such as 30 percent of AMI or 80 percent of AMI- as maximum income limits for admission. Many states and localities have adopted HUD’s income limits for their own programs, or use a variation on the HUD limits- for example, 120 percent of AMI.



A general term that refers to housing that rents or sells for less than prevailing market levels. In some cases, below- market housing is used synonymously with affordable housing. In other cases, below- market housing is targeted at moderate- income families with somewhat higher incomes than those served by federal affordable housing programs. Generally, housing can be offered at below- market levels only with a public subsidy or with a public concession such as density bonuses or reduced- cost publicly owned land.



A bond is a type of loan or debt security that is issued by a public authority or credit authority for long- term investments. Bonds are repaid when they “mature,” typically 10 years or more after being issued.



Brownfield sites are abandoned, idled, or underused industrial and commercial properties where expansion or redevelopment is complicated by actual or perceived environmental contamination.



A legal cause of action available in certain states to a developer that has been denied a building permit for development of affordable homes. The “remedy” occurs when a state enforcement agency, such as a court or other special authority, overrides local decision- making and grants permission to move forward with development.



Regulations established by a recognized government agency describing design, building procedures and construction details for new homes or homes undergoing rehabilitation. Local building codes are often based on a national model code known as the International Building Code, or one of its predecessors. The International Code Commission has established a number of special building codes that apply to particular situations, such as the International Existing Building Code, which facilitates the renovation of older structures by streamlining the applicable code requirements.



A permit issued by a local government agency that allows the construction or renovation of a home.



A signal that a property can be purchased without worrying about old liens or owners coming back to assert claims to the property. This status is also referred to as an “insurable title,” since the property owner can get title insurance to protect against losses if there was an error in checking the title history; and as a “marketable title,” since having a clear title facilitates marketing and selling a property.



A form of shared equity homeownership designed to ensure that homes made affordable through public or philanthropic subsidies remain affordable over the long- term. Under the traditional community land trust model, a nonprofit community land trust is established to own the land on which homes are situated. The trust then sells the physical structures to home purchasers for an affordable price, along with a long- term lease on the land. When the home is sold, it must be sold at an affordable price to a qualifying homebuyer.



A permit granted by a municipality to authorize a development type or land use on a specific lot that would not otherwise have been permitted by the underlying zoning code. In many cases, the permit is granted only upon the fulfillment of certain conditions. For example, the developer of a multifamily project may receive permission to build at a higher density than ordinarily allowed in exchange for the inclusion of a modest share of affordable homes in the development.



In the context of housing policy, a covenant is an agreement that restricts the ways in which a home may be rented and/ or sold. In the past, so- called “restrictive covenants” were used to limit the potential buyers of homes to members of specified racial or religious groups. Today, however, affordability covenants are used to ensure that homes made affordable through public subsidies remain affordable to future renters or homebuyers.



A credit and debt profile assesses the financial literacy of an individual, business, jurisdiction, or other entity. Lenders often require a credit and debt profile of their borrowers to assess their credit worthiness and establish loan terms and interest rates for a home mortgage.



A financial ratio used to determine whether a government agency, business, household, or other entity can safely borrow over long periods of time. The ratio is calculated by dividing an entity’s outstanding debt by the amount of equity it holds. A high debt to equity ratio may indicate that an entity is financing its growth with debt. For government agencies, debt to equity ratio is important because it will determine whether it has a strong or weak bond rating.



Restrictions or limitations on the use of property, as noted in a deed. Deed restrictions are one mechanism for maintaining the long- term affordability of a home with a significant public subsidy.



Demand- side housing policies address housing affordability challenges by increasing individuals’ purchasing power. For example, the federal government provides Section 8 housing vouchers to individual households to enable them to afford the costs of private- market rental homes. Supply- side policies, by contrast, seek to directly expand the supply of affordable homes- usually through subsidies to enable developers to build or rehabilitate affordable homes.



A fee paid to a municipality by a developer or demolition contractor in order to obtain a permit to demolish a structure. Some older communities require demolition fees to stem the loss of affordable homes by (a) discouraging demolition of older homes, which tend to be more affordable than new construction; and (b) providing a revenue source that can be directed into a housing trust fund and used for affordable homes.



Permission granted by a municipality to build more or larger units than otherwise allowed by the existing zoning codes. Density bonuses are sometimes included as an “offset” to compensate developers for revenue that may be lost due to a requirement in an inclusionary zoning ordinance that a share of newly developed units be affordable to working families. In other cases, density bonuses are granted as an incentive to encourage owners to voluntarily include affordable units within new developments.



The fee a government charges for reporting a real estate purchase or sale in the public record. Document recording fees are one source of funding for housing trust funds.



The right of a person, government agency, or public utility company to use public or private land owned by another entity or individual for a specific purpose.



The economic principle that as the scale of production increases, the cost of producing each additional unit decreases, leading to a lower average cost per unit. This principle helps explain, for instance, some of the costs of advantages of manufactured homes and larger builders.



The right of a government agency to take private property for a public purpose. Fair compensation must be paid to the owner whose property is taken.



Employer assisted housing is housing assistance provided by employers for their workers or the broader community. A growing number of employers are extending employer assisted housing benefits.



Specific geographical areas selected by the Departments of Housing and Urban Development or Agriculture to receive tax and other benefits intended to improve the economic viability of the area. No new areas are currently being designated for these programs.



Specific geographical areas selected by the Departments of Housing and Urban Development or Agriculture to receive tax and other benefits intended to improve the economic viability of the area. No new areas are currently being designated for these programs.



As used in the housing context, an escrow account is a separate account into which the lender puts a portion of each monthly mortgage payment. An escrow account provides the funds needed for such recurring expenses as property taxes, homeowners insurance, mortgage insurance, etc. Requiring families to make monthly payments into an escrow account to cover these expenses is generally viewed as a desirable practice that helps families manage their housing costs by spreading the payments for these expenses throughout the year.



Discretionary fees, dedications, or off- site improvements imposed as a condition of approval of a particular development project by the municipality or county. Like impact fees, exactions are meant to mitigate off- site impacts of a development.



The process of streamlining permitting and review processes to maximize efficiencies and allow new development to proceed in a timely manner.



A non- rural residential community located outside a city, beyond the suburbs.



To promote an equitable distribution of affordable homes within a state or region, fair share requirements assign each municipality a target number of affordable units to produce. Progress towards this target may be enforced through imposition of a builder’s remedy or other expedited appeals process that facilitates development of affordable homes in communities that haven’t met their goal.



Assistance provided to help struggling homeowners avoid a foreclosure and possibly retain their home. Foreclosure prevention programs often include counseling and financial assistance.



A loan that is forgiven if program requirements are met for a specific period of time. The loan may be forgiven incrementally over time- for example, 20 percent per year for five years- or all at once at the end of the specified time period.



A type of bond issued by a state or a locality that is backed by the issuer’s taxing power. Because general obligation, or GO, bonds are repaid through the general revenue- or through a specific tax levied for that purpose- they are an ideal resource for subsidizing public works projects such as affordable homes that are not expected to generate sufficient revenue to fully repay the debt. A vote of the electorate is often necessary to authorize general obligation bond issues.



A process in which a low- cost and possibly deteriorating- neighborhood undergoes revitalization through reinvestment in its physical assets. It is often associated with an influx of higher- income residents, an increase in property values, and the displacement of at least some of the original lower- income residents, which can make it controversial.



Green building refers to a set of building design and construction practices that seek to reduce a building’s environmental impacts by improving energy efficiency and indoor air quality, reducing water use and consumption, choosing sustainable building materials, and situating the home in a manner that takes advantage of sunlight and other natural amenities.



Established by Congress in 1990, this federal program is designed to expand the supply of decent affordable housing for low- and very low- income families and individuals. HOME funds are provided each year by HUD to states and localities, which determine how the funds are spent. HOME funds may be used for: tenant- based rental assistance; assistance to homebuyers; property acquisition; new construction; rehabilitation; site improvements; demolition; relocation; and administrative costs.



HOPE VI is a federal program designed to revitalize distressed public housing through demolition and reconstruction. HOPE VI grants are made to public housing authorities based on a competition administered by HUD. Many HOPE VI developments include households with a mix of incomes and provide supportive services.



An organization whose work focuses in whole or in part on providing homeownership education and counseling.



A dedicated fund established by a state or locality to provide a stable source of revenue reserved solely for affordable homes. Because housing trust fund revenue is locally- generated, it is not encumbered by the restrictions associated with federal resources and thus may be used more flexibly to fulfill locally- determined housing goals.



A fee most commonly levied on developers of new homes to cover the initial costs of servicing those homes with water, sewer, and other public infrastructure. When the cost of the fee is passed on to homebuyers through higher income costs, impact fees can make new housing less affordable.



A cash payment some municipalities allow developers to pay instead of including affordable units within a particular development, as required under an inclusionary zoning policy. In- lieu fees are often deposited into a housing trust fund, where they are used to fund other affordable housing initiatives.



A requirement or incentive to reserve a specific percentage of units in new residential developments for moderate- income households. The highest income level at which a household qualifies for participation in a subsidy program. In most housing programs, income limits are expressed as a percentage of the area median income, as determined by HUD.



A policy designed to prioritize families with incomes below a specified level for a certain percentage of new available assistance. Under federal law, for example, 40 percent of new available public housing units must be provided to families with incomes below 30 percent of the area median income (AMI). The balance of units may be rented to families with incomes as high as 80 percent of AMI- the income eligibility limit. Local communities may target assistance more deeply than required by federal law.



Development that occurs on vacant or abandoned lots, in spaces between buildings, or through the redevelopment of existing lots in an urban area, rather than on previously undeveloped land outside of developed area boundaries.



The cost of providing the various systems and facilities needed to support the operation of a community (e.g., sewer and water systems, electric systems, communication lines, roads). Some municipalities charge impact fees to developers or purchasers of new homes to help pay for the costs associated with the initial servicing of these homes.



Governmental or quasi- governmental entities dedicated to assembling properties- particularly vacant, abandoned, and tax- delinquent properties- and putting them to productive use. Land bank authorities acquire or facilitate the acquisition of properties, hold and manage properties as needed, and dispose of properties in coordination with city planners and in accordance with local priorities for land use.



In this shared equity homeownership agreement, households buy a “share” in the cooperative and in return receive the right to occupy one unit and share in decision- making for the development. Share prices are set by a formula specifically designed to keep membership affordable for future purchasers.



Adopted by local governments to ensure that the additional housing needs generated through economic development and new job creation are met. In communities with linkage fee requirements, developers of non- residential buildings pay a fee, often based on project type (manufacturing, commercial, retail, etc.) and square footage, which is generally deposited in a housing trust fund and used to support affordable housing initiatives.



A regulation that mandates linkage fee requirements.



The federal low- income housing tax credit is the principal source of federal funding for the construction and rehabilitation of affordable rental homes. The tax credits are a dollar- for- dollar credit against federal tax liability. States allocate the tax credits to developers according to the criteria set out in the states’ qualified allocation plans. Developers then work with syndicators to sell the credits to investors- generally for- profit corporations and investment funds- generating the equity necessary to complete their projects. Some states also have similar tax credit programs.



A housing type that is wholly or substantially built in a factory and then delivered to the building site for final assembly and installation.



A HUD program that was implemented to address concern about the rising costs of rent subsidies in HUD’s Section 8 multifamily housing program.



A type of development that includes families at various income levels. Mixed- income developments are intended to promote de-concentration of poverty and give lower- income households access to improved amenities.



A type of development that combines various uses, such as office, commercial, institutional, and residential, in a single building or on a single site in an integrated development project with significant functional interrelationships and a coherent physical design.



Building codes developed by building and code enforcement industry associations. Many local governments choose to adopt a model code to avoid the time and expense associated with creating and maintaining their own building codes, while retaining the flexibility to add any amendments needed to ensure the code suits local conditions. In addition, model codes promote uniformity and consistency in code requirements and enforcement, allowing builders to more easily anticipate the level of work, time frame, and costs associated with a proposed project before submitting their plans for review.



Modular homes are houses that are built in sections that have been manufactured in a factory setting. These sections, or modules, are delivered and assembled at the intended site of use. Unlike manufactured homes, modular homes are subject to the same building codes as stick- built homes, and may be financed using the same mortgage products. Modular homes are often indistinguishable from neighboring homes that have been built entirely on- site; however producers are able to reduce their costs through use of a standardized production technique and other economies of scale in the production process.



A tax break for homeowners. Homeowners with deductions that are large enough to warrant itemizing can deduct the amount of interest on their mortgage when they file their taxes. The mortgage interest deduction is the largest subsidy for housing in the United States.



A type of property that is designed for more than one family, such as a condominium or apartment building.



An acronym for Not in My Back Yard, which refers to opposition by nearby residents to development that they perceive to be undesirable. NIMBY sometimes leads to the derailment of plans to build affordable homes.



A law adopted by a local government pertaining to an issue within its legal power.



An overlay district is a specific geographic area upon which additional land use requirements are applied, on top of the underlying zoning code, in order to promote a specified goal. Overlay districts may be used to allow greater flexibility in development types without undergoing a large- scale rezoning.



The process of looking over development plans prior to submitting an application for a building permit to ensure new development meets safety, environmental, and other standards. Early plan review can help to expedite the issuance of building and other development permits by identifying any problems with an application early in the development process.



A land development project involving a mixture of land uses and densities that is approved as a unit, rather than on a lot- by- lot basis. Among other things, the planned unit development process can be a vehicle for adopting cluster zoning that preserves open space without reducing the supply of housing through increased density on the portion of the development reserved for housing.



This term has several meanings in the housing context. It can refer to historic preservation, in which efforts are made to preserve and retain historic structures in a community, or to the preservation of rental housing, in which efforts are made to stem the loss of affordable rental homes. Rental housing preservation can focus on physical maintenance and repairs, the maintenance of a development’s affordability, or both.



The federal public housing program was established to provide decent and safe rental housing for eligible low- income families, the elderly, and persons with disabilities. Public housing comes in all sizes and types, from scattered single family houses to high- rise apartments. There are approximately 1.2 million households living in public housing units, managed by some 3,300 housing agencies.



Developed or undeveloped land owned by a government entity. Examples include school buildings, public hospitals, parking lots, surplus properties, tax- foreclosed properties, and other gifted land.



A document issued by a state housing finance agency explaining the standards and priorities by which applicants will receive federal low- income housing tax credits.



State and/ or local taxes that are assessed on real property when ownership of the property is transferred between parties. Real estate transfer tax revenue is sometimes used to fund state or local housing trust funds.



To inject new financial resources into an older property to ensure its long- term viability. Many multifamily developments need to be recapitalized after a certain number of years to cover the costs of deferred maintenance and upgrades to bring them into conformity with current living standards. Affordable multifamily homes also need to be recapitalized periodically, but because of legal or practical limitations on permissible rents, it is difficult to support new debt for this purpose. One option for recapitalizing affordable multifamily homes is to combine tax- exempt bonds with 4 percent tax credits.



A discriminatory and illegal practice in which financial institutions deny mortgages and other types of financing to residents of predominantly poor or minority neighborhoods, without regard to individual creditworthiness.



A regressive tax consumes a greater proportion of the income of lower- income individuals than of higher- income individuals. An example is the sales tax, which taxes all covered spending at the same rate, regardless of income, and therefore takes up a larger share of a lower- income consumer’s overall income.



Special building codes designed to make it easier to renovate older homes, while ensuring that modern safety concerns are addressed.



The process of renovating and restoring older and deteriorating properties.



The reserves of state or local housing finance agencies are funds saved through income generated in the course of their operations. Among other sources, reserves are built through fees that HFA’s charge on outstanding bonds and the spreads between the cost of funds to the HFA and the rates charged to borrowers.



A provision in a land sale agreement mandating that the land will revert back to public ownership if not used in accordance with the terms of the agreement.



The process and action of reclassifying a parcel, parcels, or geographic area from one zone classification to a new zone classification. Some localities have expanded the supply of housing by rezoning land from industrial use to residential use.



A HUD program that finances supportive housing for the elderly through interest- free capital advances to private, nonprofit organizations. The advance does not have to be repaid as long as the housing continues to serve very low- income elderly residents for 40 years.



A two- pronged federal program that helps low- income households afford privately- owned rental units. Subsidies granted through the Section 8 Housing Choice Voucher Program are tenant- based, meaning that they may be used to rent any unit that meets program requirements. Subsidies granted through Section 8 project- based assistance are project- based, meaning the same units remain affordable, even as tenants change. In both cases, families pay about 30 percent of their income for housing, including utilities, and the government covers the balance of costs through a subsidy.



The largest federal rental housing assistance program, the Section 8 Housing Choice Voucher program helps eligible low- income families afford the costs of rental homes they locate on the private market. Under the program, an income- qualified household typically contributes about 30 percent of its income for housing, including utilities, and the government covers the balance of costs through a subsidy. Although it is commonly referred to as “Section 8,” it is now officially called the Housing Choice Voucher Program.



A federal rent subsidy program in which rent assistance is attached to specific privately- owned units. Families that live in units with Section 8 project- based assistance typically contribute about 30 percent of household income towards the monthly rent, and the administering public housing agency pays the remainder of the contracted rent directly to the landlord. When the family moves, the subsidy remains with the unit, keeping it affordable for the next family.



The minimum distance that a wall face or window is required to be from a property boundary or another window to a habitable room. It is measured as the horizontal distance between the proposed wall or window and boundary or other window.



A form of financial assistance for homeownership in which the homebuyer must repay the original loan amount plus some percentage of the home price appreciation in lieu of interest. This approach helps to reduce the need for new subsidy monies to help future homebuyers as housing costs increase. Shared appreciation loans are often structured as a silent second mortgage that does not need to be repaid until the home is sold.



An approach to homeownership that balances ongoing housing affordability and individual asset accumulation. Under shared equity, a public or philanthropic entity provides funding to help a family purchase a home. In return, the entity shares in any home price appreciation that occurs while the family lives there, preserving the buying power of the subsidy in the face of rising home prices, and allowing an initial investment in homeownership to help one generation of homeowners after another. In some forms of shared equity, such as community land trusts, the public’s share of appreciation stays in the home, enabling it to be sold for an affordable price. In other forms, such as shared appreciation mortgages, the public’s share of the appreciation is used to give a larger loan to the next homebuyer to make a home of their choice affordable.



An important technique for making homeownership affordable while recycling public dollars, a silent second mortgage is a secondary home loan issued by a home- buying program to supplement a family’s primary mortgage that does not need to be repaid until the home is sold (or in other cases, refinanced). Because no payments are due on the loan until the home is resold or refinanced, it has the same effect as a grant on housing affordability for a purchaser. But because the loan is repaid upon resale, the funds can be recycled to help the next homebuyer. When used as a part of a shared equity strategy, silent second mortgages are known as shared appreciation loans.



Broadly speaking, smart growth refers to a set of development principles that link environmental, social, and economic objectives together to create vibrant, safe, and healthy places to live. Smart growth development generally seeks to take advantage of existing infrastructure to preserve farmland and open space; encourages multi- modal transportation options by concentrating development around public transit corridors; integrates housing and other land uses together; and provides a range of choices in the development of the built environment to promote affordability.



A cost to the developer of a property that is indirect (i.e. not related to land or materials). Examples include architect and legal fees, insurance payments, and property taxes. Lengthy review and permitting processes can significantly increase development time, leading to substantial increases in a project’s soft costs that reduce housing affordability.



The process in which the spread of development across the landscape far outpaces population growth. The landscape created by sprawl has four dimensions: 1) a population that is widely dispersed in low- density development; 2) rigidly separated homes, shops and workplaces; 3) a network of roads marked by huge blocks and poor access; 4) a lack of well- defined, thriving activity centers, such as downtowns and town centers. Most of the other features usually associated with sprawl- the lack of transportation choices, relative uniformity of housing options, or the difficulty of walking- are a result of these conditions. Families’ search for affordable housing is one factor contributing to sprawl.



Subprime mortgages are made to borrowers with poor credit histories who do not qualify for prime interest rates. To compensate for the increased credit risk, subprime lenders charge a higher rate of interest.



Supply side housing policies seek to increase the supply of affordable homes. Government agencies may either add to the housing stock directly, such as by building public housing, or may provide incentives for private developers to produce more homes- for example, through the low- income housing tax credit. Efforts to reduce regulatory barriers to the development or rehabilitation of housing also operate on the supply- side of the equation; such as efforts to promote housing affordability by freeing the market to better respond to increases in housing demand.



The reduction or elimination of property taxes, granted to owners of specific properties for a designated period of time in order to stimulate a specified public benefit.



After a developer has received an award for low- income housing tax credits, the developer will work with a syndicator to find investors to buy the credits. Those funds are then used to subsidize the costs of affordable rental homes. By matching buyers and sellers of low- income housing tax credits, syndicators play an essential role in generating equity for affordable rental homes.



A financing source for housing and other public improvements is designated underdeveloped areas. Communities can borrow against the incremental tax revenue expected to be received after completion of the improvements to provide initial funding of the investments.



A property for which property taxes and/ or municipal bills are severely past due.



Bonds issued by state or local governments to fund private activities to have a public benefit. The federal government provides each state with a certain amount of authority- known as a cap bond- to issue tax- exempt private activity bonds for specified purposes, including homeownership, rental housing health care, education, and manufacturing. States decide how much of their bond cap to allocate to each qualifying use. Private activity bonds are important sources of financing for affordable homes. When used to finance homeownership, they are known as mortgage revenue bonds. When used to finance qualifying rental developments, they automatically qualify a development for 4 percent low- income housing tax credits.



The creation of mixed- use development centered around a public transit hub to maximize the number of people who can utilize public transportation to meet their daily travel needs.



The tests or standards used by a lender when deciding whether to approve a loan. These may include a minimum credit score, maximum debt- to- income ratio, and other measures of a borrower’s credit worthiness and the risk involved in extending a loan.



A property that has no occupants. Often these properties are also in severe disrepair.



Exceptions to zoning laws granted by municipalities in accordance with the provisions of state zoning enabling laws.



The number of miles that residential vehicles are driven each day. When housing is located far from employment centers and public transit, vehicle miles traveled generally increase, along with environmental pollutants.



A market in which the number of sellers is greater than the number of buyers. In the housing context, weak- market cities may have falling or depressed home values, and in some cases, property abandonment.



Housing for the occupations needed in every community, including teachers, nurses, police officers, fire fighters, and other critical workers.



Local codes regulating the use and development of property. Zoning ordinances typically divide a community into land use districts or “zones,” represented on zoning maps, and specify the allowable uses within each of those zones. For example, some communities divide land into industrial zones, commercial zones, and one or more residential zones. Some zones also may permit a mix of uses. Zoning codes establish development standards for each zone, such as minimum lot sizes, maximum heights of structures, building setbacks, and yard sizes. Overly rigid zoning codes that don’t allow for multifamily homes or higher density development may present obstacles to affordable homes.