ROAD to Housing Law Will Support Multifamily Developers

The recently enacted 21st Century ROAD to Housing Act includes several NAHB-supported provisions that will give multifamily builders and developers better financing options, reduce red tape and help increase apartment production.

Section 211, known as the Housing Affordability Act, requires the Federal Housing Administration (FHA) to raise multifamily loan limits and adjust them annually for inflation.

The statutory FHA multifamily loan limits have not increased in more than 23 years, constraining the program for housing providers. Raising and indexing the limits will better align financing with construction costs, make FHA programs feasible for more projects and markets, and support new apartment development by allowing borrowers to qualify for larger loans.

The Department of Housing and Urban Development will calculate and publish annual adjustments, allowing the limits to rise automatically each year.

The law also includes the HOME Investment Partnerships Reauthorization and Reform Act, which reforms and reauthorizes the HOME Investment Partnerships Program to improve administration and support more affordable housing construction.

For multifamily builders, HOME is an important financing tool often paired with the Low-Income Housing Tax Credit (LIHTC), but outdated rules have discouraged its use. The reforms expand housing access for working families, exempt one- to four-unit projects from strict federal environmental review, and permit more flexibility to use HOME funds for basic housing infrastructure.

Full implementation of the HOME reforms may take months or years. HUD must now proceed with rulemaking and issue guidance to state and local governments about how to carry out these changes.

Another provision benefiting multifamily developers raises the Public Welfare Investment (PWI) cap from 15% to 20%. PWI governs national banks’ ability to invest in projects that support low- and moderate-income communities, including LIHTC-financed affordable housing.

Increasing the cap expands national banks’ capacity to invest in LIHTC, a key tool for affordable rental housing, helping attract more private capital and ease equity shortages that have slowed development. The Office of the Comptroller of the Currency and the Federal Reserve are expected to issue supervisory guidance reflecting the new 20% statutory cap and, within two years, must report to Congress on public welfare investments made by their regulated entities.

In the video below, Michelle Kitchen, NAHB senior director of multifamily finance, explain how the law’s multifamily provisions will benefit members.

For more information on land use, zoning, banking and other key provisions in the 21st Century ROAD to Housing Act, visit nahb.org/road.