Two U.S. Senators introduced a bill on April 30 that, if passed, would raise the Federal Housing Administration’s limits on multifamily mortgage principals for the first time in 22 years.
SB 1527, also known as the Housing Affordability Act, aims to increase the supply of affordable housing by providing more funds to its developers, according to a news release from its co-authors — Sens. Ruben Gallego, D-Ariz., and Dave McCormick, R-Penn.
The FHA’s multifamily loan limits, intended to prevent HUD funds from going to high-end projects, have not been raised since 2003. As a result, the dollar volume of HUD-issued multifamily firm commitments has dropped, and almost all communities are treated as “high-cost areas” due to the costs of their construction, according to Gallego and McCormick.
“To tackle the affordable housing crisis, we need to make building homes easier and cheaper. But outdated regulations are holding us back,” Gallego said in the news release. “By updating a nearly two-decade-old loan limit, the Housing Affordability Act will expand access to affordable loans for building multifamily housing and ultimately bring down housing costs.”
The proposed limits, calculated by units, are up to four times the previous limit. For instance, if passed, the bill would raise per-unit mortgage loan limits for rental housing in buildings without elevators from $38,025 to $167,310 for a studio apartment, $42,120 to $185,328 for a one-bedroom unit and $50,310 to $221,364 for a two-bedroom unit, among other changes.
The act would also update the inflationary adjustment index from the Consumer Price Index to the Price Deflator Index of Multifamily Residential Units Under Construction, published by the U.S. Census Bureau. The bill has been referred to the Senate Committee on Banking, Housing, and Urban Affairs, according to congressional records.
“By making a long-overdue increase to the FHA’s multifamily loan limits, we can incentivize the construction of more apartment buildings and, ultimately, increase access to housing for American families,” McCormick said in the news release.
The bill is endorsed by over a dozen housing associations, including the National Multifamily Housing Council, the National Apartment Association and the Mortgage Bankers Association.
“The Housing Affordability Act would make a long-overdue update to FHA’s multifamily insurance programs to capture the true cost of apartment construction and immediately leverage private capital for new affordable homes,” said Bill Killmer, senior vice president of legislative and political affairs at the MBA, in the release.
