FHFA Loan Caps for 2026: What Multifamily Borrowers Need to Know
- The Federal Housing Finance Agency (FHFA) set its 2026 combined volume cap for Fannie Mae and Freddie Mac loan purchases at $176 billion, about a 20% increase from 2025.
- Workforce housing loans will continue to be exempt from the 2026 volume cap.
- FHFA’s mission-driven lending initiative will remain a stated priority to encourage affordable housing development.
The Federal Housing Finance Agency (FHFA) announced a $30 billion boost to Fannie Mae and Freddie Mac’s volume cap for loan purchases in 2026 to $176 billion ($88 billion for each agency). This increase in FHFA loan caps for 2026 aligns with industry expectations, given the anticipation of improving market conditions and lending activity expected in a lower interest rate environment. Next year’s cap for the Government-Sponsored Entities (GSEs) is an increase of approximately 20% from the $146 billion limit set for 2025.
FHFA Loan Caps for 2026 Expand to Keep Pace with Demand
“Stable market conditions, strong maturity volumes, and a gradual decline in interest rates are expected to lift multifamily lending activity next year,” said Mortgage Bankers Association President and CEO Bob Broeksmit, in a statement. “The announced cap levels will help ensure the GSEs remain a reliable source of financing for rental properties, including those serving lower-income households and rural communities.”
FHFA said it will continue to monitor the multifamily mortgage market and increase the caps if necessary. However, if FHFA determines that the actual size of the 2026 market is smaller than initially projected, it has pledged not to lower its cap levels.
Mission-driven lending remains a stated priority for FHFA. It has kept the requirement that 50% of Fannie Mae and Freddie Mac’s total loan business supports mission-driven, affordable housing unchanged.
Workforce Housing Lending Remains Exempt from Caps
Like in 2025, workforce housing loans will continue to be exempt from the volume cap in 2026. FHFA added a new mission-driven lending category in 2023 for workforce housing designed to encourage the preservation of affordable housing near places of employment, schools, and hospitals. This initiative incentivizes the financing of properties where a borrower commits to preserving affordability through rent or income restrictions for 10 years of the loan term. Next year, 50% of a workforce housing loan amount will be considered mission-driven if the percentage of restricted units is less than 20% of the total units in a project and 100% if the percentage of restricted units is 20% or more.
FHFA Continues to Prioritize Mission-Driven Lending
In 2026, 50% of a loan’s amount will be considered mission-driven if the percentage of restricted units is less than 50% of the total units in a project and 100% of the loan amount if the percentage of restricted units is 50% or more.
Loans for targeted affordable housing properties can be classified as mission-driven in proportionate amounts, depending on the percentage of units that are restricted by a regulatory agreement or recorded use restriction. FHFA defines mission-driven housing as properties affordable for residents at 80 percent of AMI or below, with special provisions for rural housing and manufactured housing communities. Examples of loans that could be classified as mission-driven under this policy include those subsidized by the Low-Income Housing Tax Credit (LIHTC) program and loans on properties covered by a Section 8 Housing Assistance Payment contract where the contract limits tenant incomes to 80 percent of AMI or below.
Learn More About Arbor’s Innovative Loan Programs
The lift to FHFA loan caps for 2026 demonstrates the GSE’s confidence in growth opportunities for the year ahead, and Arbor is ready to partner with you to help your investment goals align with the FHFA’s mission-driven agenda. Our team offers flexible financing options for the acquisition, refinancing, or rehabilitation of multifamily affordable housing nationwide. We have deeply rooted relationships with Fannie Mae and Freddie Mac, allowing us to serve you better. From FHA 223(f) to Fannie Mae DUS® Multifamily Affordable Housing (MAH) to Acquisition Bridge Loans, Arbor provides a wide range of financing solutions for developers and investors of affordable housing.
Contact us today to learn more.
Interested in the multifamily real estate investment market? Contact Arbor today to learn about our array of multifamily, single-family rental, and affordable housing financing options and view our other market research and multifamily articles in our research section.