limited equity housing
Limited equity housing, often formed as a limited equity housing cooperative (LEHC), is a type of affordable residential arrangement in which residents purchase shares in a cooperative corporation that owns the housing property. In exchange for the right to occupy a unit, residents buy a share at below-market cost and pay ongoing monthly fees to cover operating expenses.
Unlike market-rate housing cooperatives, LEHCs restrict how much equity a resident may receive when selling or leaving the cooperative. The resale price is capped by a formula, often tied to inflation or a small percentage of appreciation, to ensure that the unit remains affordable for future residents. These restrictions prevent owners from capturing full market appreciation, preserving long-term affordability.
LEHCs are generally operated by nonprofit cooperative corporations and are often financed through a blanket mortgage covering the entire building, rather than individual unit mortgages. The resident’s share represents their ownership interest and grants voting rights in the cooperative’s governance.
Limited equity housing emerged in the United States in the mid-twentieth century, when the federal government converted certain wartime housing into cooperative housing models for lower-income families. Because resale restrictions apply only to equity appreciation and not to a resident’s income, some households may continue living in an LEHC even if their income later increases.
[Last reviewed in November of 2025 by the Wex Definitions Team]
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