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HUD's 2027 QCT and DDA Designations Are Out -- Here's What Actually Changes Before You Underwrite

HUD's 2027 QCT and DDA Designations Are Out -- Here's What Actually Changes Before You Underwrite
Policy & RegulatoryNational

HUD has designated the 2027 Qualified Census Tracts (QCTs) and Difficult Development Areas (DDAs) for the Low-Income Housing Tax Credit. The notice is scheduled to formally publish in the Oct. 6, 2026 Federal Register (Docket No. FR-6565-N-02), and the underlying lists -- metro and non-metro DDAs, metro and non-metro QCTs -- are already available through Novogradac's resource center. HUD makes these designations annually; the 2027 lists are effective for credit allocations made after Dec. 31, 2026, and for buildings financed by private activity bonds if the bonds are issued and the building is placed in service after that date -- the same roughly three-month runway HUD gave the 2026 designations before they took effect last January.

What a QCT or DDA Designation Actually Does

Under IRC Section 42(d)(5)(B), a building's new construction and rehabilitation costs get a 30% increase to eligible basis when the site falls in a QCT or DDA -- more eligible basis means more credits, with no change to what the project actually costs to build. The two designations are drawn from different data: DDAs are areas where HUD's own land, construction and utility cost data run high relative to area median income (AMI); QCTs are set where at least 50% of households earn under 60% of AMI, or the poverty rate is 25% or higher. Neither list is static. HUD remakes both every year from updated Census and cost data, which is exactly why a fresh designation round is worth checking against, not assuming unchanged.

The Real Risk: Last Year's Status Isn't Guaranteed to Carry Over

Because HUD redraws these boundaries annually, a parcel that qualified as a QCT or DDA under the 2026 list has no guarantee of keeping that status on the 2027 list -- and a site that missed out last year could just as easily qualify this time. A 30% swing in eligible basis is large enough, on its own, to change whether a deal clears a lender's or an allocating agency's underwriting thresholds. For any site already in a pipeline for a 2027 competitive round, or any site where the original feasibility work leaned on a 2026-vintage QCT/DDA assumption, the real action item from this release is re-checking that specific parcel against the new 2027 boundaries directly -- not re-using last year's answer.

How EZFeasi Can Help

Confirming a specific site's real QCT or DDA status -- against HUD's own published boundaries, not a stale assumption -- is exactly what EZFeasi's Parcel Search Engine is built to screen for, and Proforma to Application applies the resulting basis boost to a real sources-and-uses table instead of a rough estimate. If you're re-underwriting a site for a 2027 round, talk to our team about confirming its status under the new designations before you finalize the numbers.

Sources

This is EZFeasi’s own analysis of the news below, not the original reporting — read the source for the full story.

Originally reported by U.S. Department of Housing and Urban Development.

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