A state or local government agency issues housing authority bonds, or housing bonds, to assist fund the development or repair of affordable rental homes. The profits from such bonds may also be utilized to assist low-income persons in purchasing homes under specific schemes. Investors in housing authority bonds get interested that is tax-free at the federal level and may also be tax-free at the state and municipal levels.
Housing authority bonds, like other municipal bonds, have a long history of being considered extremely safe investments. The bonds are backed by the federal government in this case, which sees them as a way to encourage the development of low-cost homes.