The Federal Housing Finance Agency increased Fannie Mae and Freddie Mac’s loan-purchase cap to $150B next year, with much of it slated for affordable housing.

WASHINGTON – The Federal Housing Finance Agency (FHFA) announced more money in 2023 for multifamily housing loans – a total of $150 billion with $75 billion under Fannie Mae and another $75 billion under Freddie Mac, collectively called “the Enterprises.”

The caps reflect an “anticipated contraction of the multifamily originations market in 2023,” FHFA said when announcing the amount. In 2022, Fannie and Freddie’s caps were $78 billion; in 2021, it was $70 billion.

FHFA requires that at least 50% of Fannie and Freddie’s multifamily business be mission-driven affordable housing.

“The 2023 multifamily loan caps, coupled with a new mission-driven category for workforce housing properties, will continue to ensure that the Enterprises have a strong commitment to addressing the need for affordable housing,” says FHFA Director Sandra L. Thompson. “The new workforce housing category will provide incentives for conventional borrowers to maintain rents at affordable levels for extended periods of time.”

“The loan purchase cap and new mission-driven requirements will shape how we approach the multifamily market in the year ahead,” says Kevin Palmer, head of multifamily for Freddie Mac. “As always, our goal is to be a consistent source of liquidity with a keen focus on supporting affordable multifamily housing. FHFA has again set strong mission requirements that set a clear North Star for our business.”

FHFA changed certain definitions of multifamily mission-driven affordable housing in Appendix A of the Conservatorship Scorecard. In 2023, FHFA will allow loans to finance energy or water efficiency improvements with units affordable at or below 80% of AMI (area median income) to be classified as mission-driven – an increase from 60% in 2022.

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