Housing Affordability Act Quadruples Multifamily Loan Caps: New Construction Cost Index Kicks in 2025

The newly proposed Housing Affordability Act is taking a sledgehammer to the limits on federally insured loans for apartment buildings and other multifamily projects. Essentially, this bill recognizes that the cost of building anything has skyrocketed and the old maximum loan amounts—some dating back years—just don't cut it anymore. It’s making two big moves: immediately raising the loan caps by huge margins, and changing how those caps are calculated going forward.

The Instant Cap Boost: Why Your Rent Might Go Down (Eventually)

Right now, federal programs offer mortgage insurance for developers building apartment complexes. But if the project costs too much, the developer can't get the maximum insurance, which makes financing harder and more expensive. This bill fixes that by swapping out the old, low dollar limits with figures that are often three to four times higher. For example, a limit in Section 207(c)(3)(A) that was previously set at $38,025 is now set at $167,310. This applies across the board to several sections of the National Housing Act, including those covering rental housing (Section 207), cooperative housing (Section 213), and urban renewal projects (Section 220).

What does this mean for you? If you live in a high-cost area, developers have been struggling to build new, reasonably priced apartments because the financing caps were too low to cover construction costs. By raising these caps, the bill makes it easier and cheaper for developers to finance large, new projects. The hope is that this increased supply of new apartments will eventually ease the pressure on rent prices in competitive markets. Think of it as opening the financing floodgates to meet housing demand that has been pent up for years due to outdated regulations.

Tying Future Limits to the Real World

One of the smartest parts of this bill is how it handles future adjustments, starting July 1, 2025. Instead of having Congress or the Department of Housing and Urban Development guess at inflation, the bill mandates that the annual adjustment will be based on a specific, objective measure: the Price Deflator Index of Multifamily Residential Units Under Construction, published by the Bureau of the Census (SEC. 2). This means the loan limits will automatically go up or down based on the actual cost of construction materials and labor, ensuring the caps stay relevant to the real-world costs of building. No more waiting years for Congress to catch up with inflation.

This new formula provides predictability for developers, but it also means the risk exposure for the federal government’s insurance programs will automatically increase as construction costs rise. For taxpayers, this is the fine print: while increasing housing supply is a public good, higher loan limits mean the federal government is insuring much larger mortgages. If a large project defaults, the cost to the insurance fund is significantly higher than before. Additionally, while the bill aims to boost housing supply, local residents should be aware that this could accelerate development, potentially straining existing infrastructure like roads, schools, and utilities in areas targeted for new, large apartment complexes.