-A A +A

Who receives federal housing assistance?

Posted by: Leslie Black-Plumeau on 12/18/2008

The single largest type of federal housing assistance is the home mortgage interest deduction.

In 2007, U.S. homeowners received $85 billion through this deduction1. Unfortunately, the benefits of the mortgage interest deduction are enjoyed primarily by the wealthiest Americans. Over 80% of the value of this deduction goes to homeowners in the top income quintile, according to a recent Pew Charitable Trust study on economic mobility.

In addition to the home mortgage interest deduction, the federal government spends over $40 billion each year for other housing-related tax expenditures due to capital gains, property taxes, and investor benefits (preferential treatment of bonds and the low-income housing tax credits).

The smallest pot of federal housing spending is for direct programs, provided through HUD and USDA. Of the $157 billion in federal dollars spent for housing in 2004, only about a quarter ($37 billion) was spent through direct housing programs, while the remainder was provided through tax expenditures.


As shown in the graph above, most of direct housing assistance goes to low- and moderate-income households (the dark green portions of the bars). But due to the regressivity and high price tag of the home mortgage interest deduction (the light green portions of the bars), households in the top income quintiles receive most federal housing assistance overall.

(Chart source: National Low-Income Housing Coalition, Changing Priorities: The Federal Budget and Housing Assistance, 1975-2005, and the Pew Charitable Trust, How much does the federal government spend to promote economic mobility and for whom?)

1OMB, Budget of the United States, Fiscal Year 2007. "Analytical Perspectives." Chapter 17.