- A new Senate bill, the Housing Affordability Act, proposes a significant increase in FHA multifamily loan limits, potentially raising caps by more than 4x current levels.
- Introduced by Senators Ruben Gallego (D-AZ) and Dave McCormick (R-PA), the bill seeks to address rising construction costs and limited affordable housing supply.
- If passed, new limits would take effect on July 1, 2025, indexed to construction cost inflation using federal data.
- Real estate and housing industry groups, including the National Association of Home Builders and the National Multifamily Housing Council, have endorsed the proposal.
An Overdue Update
The Housing Affordability Act targets outdated loan caps under Title II of the National Housing Act, last revised nearly two decades ago, per Globe St. The bill proposes to realign FHA multifamily loan limits with today’s construction realities, responding to a market where even modest developments often exceed current thresholds.
How The Limits Would Change
Current per-unit loan caps range from about $38,000 for studios to $70,200 for four-bedroom units—numbers many developers consider unrealistic given today’s costs. Under the proposed bill, those limits would jump to:
- Studios: $167,310 (up from $38,025)
- 1-Bedroom: $185,328 (up from $42,120)
- 2-Bedroom: $221,364 (up from $50,310)
- 3-Bedroom: $272,844 (up from $62,010)
- 4+ Bedrooms: $308,880 (up from $70,200)
Higher limits would apply to elevator-type buildings, with the largest units eligible for up to $375,443 per unit.
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Industry Response
Mortgage Bankers Association CEO Bob Broeksmit called the proposal “long-overdue,” and said it could significantly boost rental housing production. Endorsements from six major housing and real estate organizations underscore widespread industry support.
What’s Next
While the bill has backing in the Senate, its path forward remains uncertain. There is currently no House companion bill, and lawmakers are juggling competing priorities, including federal budget negotiations and economic policy debates.
Why It Matters
As affordable housing demand outpaces supply, developers face growing financial constraints. This bill could offer a critical tool for unlocking new multifamily projects—especially in high-cost markets where FHA loan caps have limited their impact.
If passed, the legislation could reshape the role of FHA financing in multifamily housing and help meet growing nationwide demand.
