"Virginia Housing runs the federal 9% competitive credit under one regulatory chapter, the federal 4% credit paired with tax-exempt bonds through rolling rounds, and its own Housing Opportunity Tax Credit through a completely separate chapter that reaches both — and its own 2026 manual already quietly adopted the new federal 25% bond-financing floor a year before any QAP text mentioned it. Which track does this deal actually compete in, does Virginia's state credit ride along either way, and is the 9%/4% hybrid pathway I keep hearing about still real?"
Two federal credit tracks, two different regulatory chapters, one name change to keep straight
The entity administering Virginia's program renamed itself in 2020: it now presents publicly as "Virginia Housing," though its own current QAP still opens with "This plan of the Virginia Housing Development Authority (the \"Authority\") for the allocation of low-income housing tax credits" — the corporate and statutory name, Virginia Housing Development Authority, was never changed, only the public-facing brand. Both names refer to the same body; this guide uses "Virginia Housing" for the agency and "the Authority" only when quoting regulatory text directly.
The currently governing document is the QAP "amended effective December 17, 2025," published as "the 2026 QAP" and codified at 13VAC10-180 — the plan text itself carries a continuous amendment history running back to May 16, 1995. A materially rewritten successor — recodified at a new chapter number, 13VAC10-181, and titled "THE QUALIFIED ALLOCATION PLAN OF THE VIRGINIA HOUSING DEVELOPMENT AUTHORITY... (AS PUBLISHED WITHIN 13 VAC 10-181)" — was circulated as a "FINAL DRAFT" in June 2026, states its own effective date as January 1, 2027, and was scheduled for Board of Commissioners adoption consideration on September 16, 2026, after an August 31, 2026 public hearing. This research could not confirm from public sources whether that September 16 adoption vote actually occurred; what is certain is that the 2026 QAP (13VAC10-180) governs every application filed before January 1, 2027, and this guide's citations to QAP text are to that currently effective 2026 document unless a section explicitly flags a 2027 change.
The 9% competitive credit and the 4% credit paired with tax-exempt private activity bonds are both administered under 13VAC10-180, but they behave completely differently in practice. The 9% credit is genuinely competitive, ranked once a year against every other Application filed by the March deadline and scored under the QAP's own point categories; the QAP states plainly that the chapter "shall not apply to credits with respect to any development or building to be financed by certain tax-exempt bonds in an amount so as not to require under the IRC an allocation of credits hereunder" (13VAC10-180-30) — meaning a bond-financed 4% deal that clears the federal test simply isn't part of the competitive 9% pool at all, and instead applies on a rolling basis, subject only to Virginia Housing's own underwriting determination of "the minimum amount of credits necessary to make the Development financially feasible" (2026 Housing Tax Credit Manual, Section 6.2).
The federal bond test: Virginia Housing moved to the new 25 percent floor a year ahead of the QAP text
Like Colorado's QAP, Virginia's own regulatory text never states a percentage for the tax-exempt bond financing test that determines whether a 4% deal can draw credit against 100% of qualified basis without a separate volume-cap allocation — 13VAC10-180 simply references credits that don't "require under the IRC an allocation of credits hereunder." But Virginia Housing's own annually published Housing Tax Credit Manual does state a number, and that number changed between the two most recent editions this research directly compared.
| Manual edition | Exact language |
|---|---|
| Federal Housing Credit Manual, 1/1/2025 | "Bond financing must be more than 50% of the development's aggregate basis plus land while the maximum allowable credits are calculated on 100% of the qualified basis of the low-income units." |
| Housing Tax Credit Manual, 1/1/2026 | "Bond financing must exceed 25% of the Development's aggregate basis plus land. The maximum allowable Credits are calculated on 100% of the qualified basis of the low-income units and will be limited to the minimum amount of Credits necessary to make the Development financially feasible." |
Both quotations are verbatim from Virginia Housing's own published manuals for those two program years, Section 6.2 of each, titled "Reservation Application for 4% Credits Combined with Tax-Exempt Bonds."
That is a direct, dated, and fully sourced example of a state housing finance agency moving from the old federal floor to the new one: the One Big Beautiful Bill Act (Pub. L. 119-21, § 70422(b)(1), enacted 2025) amended 26 U.S.C. § 42(h)(4)(B) to allow a 25% alternative to the longstanding 50% aggregate-basis test, available where at least 5% of aggregate basis is financed with bonds issued after December 31, 2025. Virginia Housing's 2026 manual adopts the new 25% figure outright — with no administrative overlay tighter than the federal floor, unlike Colorado, which capped 2026 PAB financing at the higher of 30% or permanent supportable debt even though the federal floor had already dropped to 25%.
Two things the 2026 manual's one-sentence restatement does not spell out, and that a deal should confirm independently before relying on the 25% figure: first, the federal statute's own conditions — the bonds must be issued after December 31, 2025, and at least 5% of aggregate basis must be financed with those post-2025 bonds — are not restated anywhere in Virginia Housing's manual text found in this research; a deal financed with bonds issued before that date does not qualify for the lower floor merely because Virginia Housing's manual states "25%" without a date qualifier. Second, industry reporting on the OBBBA transition indicates that a deal awarded bond volume cap in 2025 or earlier but not yet closed can still reach the 25% test if its bonds are actually issued after December 31, 2025 — a timing detail that matters for any deal carrying a 2025-vintage inducement resolution into a 2026 closing.
The Housing Opportunity Tax Credit: a real state credit, living in its own chapter, running a year and a half behind its own statute
Virginia does have its own state low-income housing tax credit — the Virginia housing opportunity tax credit ("HOTC"), created by the General Assembly in 2021 (2021 Sp. Sess. I, c. 495) and codified at §§ 58.1-439.29 and 58.1-439.30 of the Code of Virginia, Article 13.4 of Chapter 3, Title 58.1. It is not folded into the QAP at all; Virginia Housing administers it under an entirely separate regulatory chapter, 13VAC10-200, "Rules and Regulations for the Allocation of Virginia Housing Opportunity Tax Credits." The credit amount for a qualified project may be "up to the amount of the federal low-income housing tax credit allocated or allowed" or a lesser percentage of it "as determined by the authority, based upon the availability of HOTC as compared to the federal LIHTC" (13VAC10-200-30 D) — claimed ratably, one-tenth per year over a 10-year credit period, non-refundable, with a five-year carryforward for any credit a taxpayer can't use in a given year (Va. Code § 58.1-439.30 C).
That gap between the statute and the regulation is real and worth flagging on its own: the Code of Virginia section, most recently amended in the 2026 General Assembly session (citation line reads "2021, Sp. Sess. I, c. 495; 2022, Sp. Sess. I, cc. 2, 3; 2023, Sp. Sess. I, c. 1; 2025, c. 725; 2026, c. 7"), already authorizes $64 million per year for 2026 through 2030 and a $575 million lifetime cap. But the implementing Virginia Administrative Code section this research pulled directly, 13VAC10-200-30, still states the older figures verbatim — "For calendar years 2022 through 2025, up to $60 million of HOTC... The aggregate HOTC program for calendar years 2021 through 2025... shall equal up to $255 million" — with repeated references to a "no later than December 31, 2025" cutoff that the statute itself has since superseded. Virginia Housing's practice for 2026 awards should follow the current statute, not the stale regulatory text; a developer relying on 13VAC10-200 as currently published without cross-checking Va. Code § 58.1-439.30 directly would understate both the annual pool and the program's runway by five years.
HOTC eligibility explicitly reaches both federal credit types: "To qualify for the HOTC, the applicant must have applied for federal 9.0% LIHTC or federal 4.0% LIHTC, and have been (i) allocated LIHTC or (ii) allowed LIHTC" (13VAC10-200-30 B) — and an applicant who applied for 9% may even "elect to amend its application from 9.0% LIHTC to 4.0% LIHTC in connection with assignment of points and rankings for HOTC." But the mechanics differ sharply by federal credit type. A 9% deal's HOTC ranking simply reuses "points assigned pursuant to 13VAC10-180" — the same competitive score that determines its federal award. A 4% deal has no such score to reuse, since it isn't competitively ranked for federal purposes at all; Virginia Housing instead runs 4% HOTC through its own separate application rounds (the 2026 schedule's "HOTC-4% Round 2," LNI March 31 / Application May 15) and may rank those applications under an entirely discretionary methodology, prioritizing (per 13VAC10-200-40 E.2) any combination of: unfunded 9% At-Large or Local Housing Authority pool developments, developments with equity gaps not yet placed in service, preservation of existing affordable housing, deeper income/rent targeting, high-opportunity-area location, or enhanced tenant services — with ties broken by lot.
The "combination development": a real, scored hybrid — that Virginia Housing's own 2027 summary says is going away, in text that hasn't gone away yet
Virginia's QAP does carry a genuine 9%/4% hybrid structure, scored directly in the same numbered list as every other development-characteristics point item: "Any applicant for a development that, pursuant to a common plan of development, is part of a larger development located on the same or contiguous sites, financed in part by tax-exempt bonds." The QAP's own conditions are specific and procedural, not just financial — "Combination developments seeking both 9.0% and 4.0% credits must clearly be presented as two separately financed deals, including separate equity pricing that would support each respective deal in the event the other were no longer present," the bond-financed units "may not be interspersed throughout the development," a co-located building footprint needs "separate entrances," and every applicant seeking these points "must arrange a meeting with authority staff... prior to the deadline for submission of the application... Any applicant failing to meet with authority staff in advance of applying will not be allowed to compete in the current competitive round as a combination development."
| Combined development size | Bond-financed share required | Points |
|---|---|---|
| More than 100 but fewer than 150 total units | 30% or more of those units bond-financed | 10 points |
| At least 150 total units | 30% or more of those units bond-financed | 15 points |
QAP scoring list, development characteristics category, subdivision g.
Virginia Housing's own "2027 Qualified Allocation Plan (QAP) Summary of Proposed Changes" lists, under "Eliminated Requirements and Incentives," that "All points associated with the following incentives will be eliminated" — and the list names "9%/4% hybrid structures" directly. Taken at face value, that means the combination-development pathway described above stops being scoreable starting with the QAP that takes effect January 1, 2027.
But the "FINAL DRAFT" 2027 QAP text this research obtained directly from Virginia Housing's own website — the document that would actually implement that summary — still contains the identical combination-development paragraph, word for word, in its own development-characteristics scoring list, unchanged from the 2026 QAP's subdivision g and still carrying the same 10-point and 15-point thresholds. The same draft document also contains at least one other visible drafting artifact in the surrounding text (a stray cross-reference marker reading "e6." where a lettered subdivision should be, and an orphaned bracketed note reading "[Link-to-previous setting changed from on in original to off in modified.]" — evidently an unremoved track-changes or field-code fragment from the drafting software). Whether the combination-development points were meant to be deleted from this specific paragraph and the deletion was simply missed in the version circulated in June 2026, or whether the Summary of Changes overstates what the redline actually does, could not be resolved from the documents available to this research. Any sponsor evaluating a combination development for a 2027 award should confirm directly with Virginia Housing's Tax Credit Allocation staff which document controls, rather than relying on either the summary or the draft QAP text alone.
Where this goes wrong
- Assuming Virginia Housing's 2026 manual figure of "exceed 25%" for bond financing applies to any bond-financed deal regardless of when the bonds were issued — the underlying federal statute (26 U.S.C. § 42(h)(4)(B), as amended by Pub. L. 119-21, § 70422(b)(1)) only extends the 25% alternative to bonds issued after December 31, 2025, with at least 5% of aggregate basis financed by those post-2025 bonds; Virginia Housing's manual restates the headline number without restating that condition.
- Treating the QAP itself (13VAC10-180) as the source of the bond-financing percentage — the QAP text never states one; the 25% (or, before 2026, 50%) figure comes only from Virginia Housing's separately published Housing Tax Credit Manual, which can and did change year to year.
- Relying on 13VAC10-200-30's published dollar figures for HOTC without cross-checking the current Code of Virginia — the regulation as currently in force still states the pre-2025 numbers ($60 million/year through 2025, $255 million aggregate, a December 31, 2025 cutoff), while Va. Code § 58.1-439.30 as amended in 2025 and 2026 authorizes $64 million/year through 2030 and a $575 million lifetime cap.
- Assuming a 4% deal automatically competes for HOTC the same way a 9% deal does — 9% HOTC scoring reuses the QAP's own competitive point ranking, but 4% HOTC runs through separate application rounds (e.g., "HOTC-4% Round 2") under a discretionary prioritization methodology the executive director sets under 13VAC10-200-40, not the QAP's point categories.
- Building a combination-development pro forma around the current 10-point or 15-point scoring bump without confirming whether it survives into the 2027 QAP — Virginia Housing's own Summary of Proposed Changes states hybrid points are being eliminated, but the "final draft" 2027 QAP text obtained for this research still contains the identical scoring paragraph verbatim; treat this as an open, unreconciled discrepancy rather than a settled answer either way.
- Referring to the agency as "VHDA" in anything that matters for a current-year application without confirming which name a specific form or citation expects — the public brand is "Virginia Housing" since 2020, but the QAP, the Code of Virginia, and the Virginia Administrative Code all continue to use "Virginia Housing Development Authority" as the legal name.
- Assuming the September 16, 2026 Board of Commissioners date automatically means the 2027 QAP is adopted and effective — this research could not confirm from public sources that the vote occurred or what it decided; the 2026 QAP (13VAC10-180) remains the only confirmed currently effective document, governing every application filed before January 1, 2027.
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