One recurring challenge in Low-Income Housing Tax Credit compliance is determining when the information provided on a rental application is enough—and when a separate affidavit, certification, or verification is needed.
A rental application plays an important role in the qualification process. It identifies household members, sources of income, assets, student status, and other factors that may affect eligibility. However, the application should generally be viewed as the starting point for documentation, not necessarily the final compliance document.
When a fact directly affects LIHTC eligibility, household composition, income, assets, or student status, the better practice is to document it with a dedicated affidavit, certification, or verification rather than relying solely on a checked box or a brief statement in the application.
A useful way to think about LIHTC documentation is:
The application identifies the issue; the affidavit or verification documents the issue.
For example, an applicant may write "unemployed" on the application. That indicates that employment income may not exist, but it does not fully establish the circumstances needed to determine anticipated annual income.
Likewise, checking "not a student" may alert management to the applicant’s claimed status, but a dedicated student certification provides a clearer compliance record.
This distinction is especially important during an HFA audit, investor review, or other compliance examination. The tenant file should independently establish the facts underlying the eligibility determination.
The following are among the documents that should generally be considered when applicable.
An adult household member who is not employed should generally complete a non-employment affidavit or certification. Simply writing "unemployed," "not working," or "none" on an application may not adequately establish the individual’s employment status.
The certification should address current employment status and, when relevant, any recent or anticipated employment that could affect projected annual income.
Zero income is different from unemployment.
A person may be unemployed while still receiving Social Security, unemployment benefits, pension income, child support, recurring contributions, or other income.
When an adult household member reports no income from any source, a zero-income certification should be sufficiently comprehensive to address the potential sources of income necessary to establish that the household member has no countable income.
Student status is especially important in LIHTC because an otherwise income-qualified household composed entirely of full-time students may be ineligible unless a statutory exception applies.
A dedicated student certification should document whether each relevant household member is a full-time student and, when necessary, provide sufficient information to determine whether an exception applies.
A simple student/non-student question on the rental application should not ordinarily replace a complete LIHTC student certification.
Consider student financial assistance separately from student status.
When a student receives scholarships, grants, or other educational assistance, a separate certification may be required to determine whether any portion of that assistance is included in annual income under the applicable income-determination rules.
When an unborn child is counted for household-size and income-limit purposes, the pregnant household member should generally execute a certification or affidavit confirming the pregnancy and the anticipated household member.
A notation on the application alone is less desirable.
Third-party medical verification should normally not be required simply to document pregnancy. A self-certification from the household member is generally the more appropriate approach.
When child support, spousal support, or alimony may affect income, the file should clearly establish the following:
· whether support is received;
· the amount and frequency;
· whether payments are regular or sporadic; and
· when relevant, whether support has been awarded but is not actually being received.
Writing "none" or "$0" on an application may not adequately document the issue when support is a potentially relevant income source. Obtain third-party documentation when required and reasonably available.
Recurring contributions can be easily overlooked.
If someone outside the household regularly provides cash, pays rent or utilities, or covers other household expenses, management should determine whether those payments constitute income and document the assistance's nature, amount, and frequency.
When the application indicates that someone else pays significant household expenses, additional inquiry is appropriate.
Applicants who are self-employed, independent contractors, gig workers, or business owners often require additional documentation because anticipated income cannot always be determined from standard employment verification.
A self-employment affidavit or questionnaire should generally describe the business or activity, its duration of operation, anticipated income, and anticipated expenses. Obtain supporting records as appropriate.
Simply writing "self-employed" on an application is not enough to establish annual income.
Some employment does not fit neatly into a standard wage-verification process.
Additional certification may be useful for:
· seasonal employment;
· temporary or intermittent work;
· significant tip income;
· employment involving widely fluctuating hours; and
· recurring gig or casual labor.
Such an affidavit should normally supplement—not automatically replace—third-party income documentation.
When applicable, if LIHTC or HFA rules permit assets to be self-certified, management should use a dedicated asset certification or asset worksheet rather than relying solely on the rental application.
It is also important to distinguish between an asset’s reportable value and the income it produces. An asset with a reportable value of zero under applicable non-necessary personal property rules may still generate actual income, such as interest, dividends, or rental income. That actual income may still need to be counted.
When applicable income rules require consideration of assets transferred for less than fair market value during a lookback period, document the circumstances separately.
An application question may identify the transaction, but the nature and value of the transferred asset should be established when the answer affects eligibility or income.
A person identified as a live-in aide is not treated the same as an ordinary family member.
The file should therefore include documentation establishing the individual’s qualifying status as a live-in aide and, when required, documentation supporting the family member’s need for the aide.
Merely listing someone as a "live-in aide" on the rental application is not adequate documentation.
Household composition is sometimes more complicated than a list of names on an application indicates.
A separate affidavit or certification may be appropriate for situations involving:
· joint or shared custody;
· children who reside in the unit only part of the time;
· pending adoption;
· foster children;
· anticipated custody; or
· conflicting information about where a household member actually resides.
These facts can directly affect household size and eligibility and should be resolved in the tenant file.
Not every issue fits neatly on a standard form.
Sometimes the most useful document in the file is a brief, issue-specific clarification affidavit.
Examples include:
· discrepancies between the application and third-party verifications;
· unexplained deposits or account transfers;
· inconsistent employment dates;
· conflicting household-composition information;
· questions concerning ownership of or access to an account; and
· inconsistent statements concerning income or assets.
The affidavit should explain the specific inconsistency it resolves.
However, a clarification affidavit should not be used merely to avoid obtaining reliable third-party documentation when such verification is required and reasonably available.
LIHTC documentation standards are not uniform nationwide.
Housing Finance Agencies may adopt different documentation procedures, and some agencies expressly permit information contained in a comprehensive application or an eligibility questionnaire to serve as the required certification.
Accordingly, management should always review the applicable HFA compliance manual, instructions, forms, FAQs, and written policies.
Where an HFA expressly permits a less formal method of documentation, that guidance should be retained or otherwise made identifiable so that the file-review standard being followed is clear.
Statements such as "the state has always accepted this" or "we have never been cited for it" are inadequate substitutes for written agency guidance.
The objective is not to add forms merely to create more paperwork.
The objective is to ensure that every material fact supporting an LIHTC eligibility determination can be clearly established from the tenant file.
That distinction matters.
A well-documented file enables a reviewer to reconstruct the eligibility decision and understand exactly why management concluded that the household qualified.
When an important fact affects income, assets, household composition, student status, or another element of LIHTC eligibility, a dedicated affidavit or certification is often the strongest way to document that fact.
When there is uncertainty, the safer compliance approach is generally to obtain the dedicated certification unless written HFA guidance clearly authorizes an alternative method.
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