Housing Incentive Investment Act

Housing Incentive Investment Act - Amends the National Housing Act to authorize the Government National Mortgage Association (GNMA) to make monthly housing investment interest differential payments to lenders.

Prohibits GNMA from approving a mortgage for assistance unless: (1) the mortgage covers a one-to-four family dwelling; (2) the home mortgage is not in excess of $35,000; (3) the purchaser's interest payments are at least two but not more than six percent below the market rate of interest for home mortgages; (4) the lender's interest rate will be adjusted every six months by GNMA to reflect the yield on VA-FHA mortgages; and (5) the purchaser agrees to repay the aggregate amount of differential payments with interest.

Requires that upon sale or other disposition of the dwelling or upon termination of the use of the dwelling by the purchaser as his principal residence prior to retirement of the first mortgage, the cost of the extra assistance by GNMA be repaid by the borrower from the appreciation on his home.

Authorizes GNMA to establish a lender's interest rate which may not exceed the average yield on VA-FHA mortgages during the six calendar months preceding the date of execution of the mortgage. Allows GNMA to adjust the lender's interest rate upward or downward every six months except that no single adjustment may exceed one quarter of one percent nor may an aggregate upward adjustment exceed two and one-half percent. Provides that if the lender's rate falls below the borrower's rate that the borrower shall be credited with the difference.

Establishes in the Treasury a Housing Incentive Investment Fund to carry out the provisions of this Act.

Authorizes GNMA to issue to the Secretary of the Treasury notes or other obligations in an aggregate amount not to exceed $1,000,000,000. Authorizes the Secretary of the Treasury to purchase and sell such notes and obligations.

Sets the termination of this program for five years after the date of enactment.