Federal Loan Programs Drop Standard Credit Score Requirements for Housing Projects Near Transit

The “Unlocking Affordable Housing Act” is making a major change to how the federal government evaluates large infrastructure projects that include housing development. Specifically, it tweaks the rules for two massive federal loan programs—the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Railroad Rehabilitation and Improvement Financing (RRIF) program.

The Fine Print on Federal Loans

Normally, if a project wants to tap into TIFIA or RRIF funding (which often involves billions of dollars for things like highways, transit lines, and rail), it has to meet a high bar for financial safety, often requiring an investment-grade rating from multiple credit agencies. This bill, however, creates an exception for projects that include a residential component. Instead of that standard, automatic requirement, the Secretary of Transportation, working with the Secretary of Housing and Urban Development (HUD), will create a brand-new set of "appropriate creditworthiness standards" tailored specifically for these housing-integrated projects (SEC. 2).

Think of it this way: the government is currently using a one-size-fits-all credit score for massive transportation projects. This bill says, "Wait, if you’re building housing next to that new transit hub, we need a different, more flexible score." The goal is clearly to make it easier for developers to finance housing—potentially affordable housing—right alongside new transit infrastructure, a concept known as transit-oriented development. The Department of Transportation (DOT) has 180 days to figure out what those new standards will be and roll out the new regulations.

Who Benefits, Who Pays?

This change has two major real-world effects. First, it’s a big win for developers of mixed-use projects. If they can get federal loan money that was previously too difficult to access, we could see more housing pop up near major transportation lines, which could ease commutes and potentially increase housing supply in high-demand areas. For example, a developer planning a new light rail station that includes apartments on top might now find it much easier to secure the necessary long-term financing, since the housing component won't automatically sink their credit rating under the old rules.

Second, and this is where the skeptical eye comes in, this bill reduces a financial safeguard. When you remove the mandatory investment-grade rating, you are essentially increasing the risk profile of the loan. The TIFIA and RRIF programs are backed by taxpayer dollars. If the new standards set by the Secretaries are too lax—if they prioritize housing creation over financial stability—it means taxpayers are taking on a higher level of risk for these large, complex projects. The bill gives the Secretaries significant discretion to define what "appropriate" means, which is a lot of wiggle room when dealing with federal funds. We’ll have to watch closely when DOT releases those new standards to see exactly how they balance the need for more housing with the need to protect the stability of these critical federal loan programs.