The new Common Sense Housing Investment Act aims to replace the mortgage interest deduction with a credit to help provide resources for affordable housing, including the National Housing Trust Fund and the low-income housing tax credit program.

H.R. 1213 was introduced by Rep. Keith Ellison (D-Minn.).

"The lack of affordable rental housing is one of the greatest economic challenges of our time," Ellison said in a statement. "Millions of renters are unable to find affordable rental housing. Affordable housing is about more than just rent; it's about ensuring that we maintain the ladder that makes America a land of opportunity."

The bill realigns the mortgage interest deduction to better benefit families who need it most by converting the deduction to a 15 percent flat rate tax credit on mortgages up to $500,000. The bill strengthens the tax benefits for homeowners, while giving working families better access to rental homes. 

By converting the mortgage interest deduction to a 15 percent credit, 60 million homeowners would receive the tax credit, up from 43 million, according to the Tax Policy Center.

The bill also lowers the cap on the mortgage size from $1 million to $500,000. Nationwide, fewer than 4 percent of homes sell for more than $500,000. It retains the allowance for home equity lines of credit and allows second homes within the $500,000 loan cap. These changes are phased in over five years.

Ellison said the bill would generate $196 billion over 10 years, which would be invested into expanding the housing credit, Sec. 8 rental assistance and the public housing capital fund, and providing a permanent funding source for the trust fund.

The National Low Income Housing Coalition, which has long advocated for the National Housing Trust Fund, announced its support of the bill. 

The Coalition recently launched a comprehensive campaign to change the mortgage interest deduction and invest in the trust fund. It is committing $1 million to the effort.