FHFA Doubles the Cap on GSEs' Housing Credit Investment to $2 Billion Each

The Federal Housing Finance Agency (FHFA) announced yesterday that it is raising the annual amount that Fannie Mae and Freddie Mac can invest in the Housing Credit to $2 billion each. We were happy to see that they plan to invest 50% in difficult-to-serve Housing Credit markets, and at least 20% of that half will be Duty to Serve Rural Communities. 

The increase doubles the $1 billion per Government Sponsored Enterprises (GSE) limit set when FHFA last adjusted the cap in 2024 and follows the recent historic expansion of the Housing Credit, which increases per capita credit (9%) and lowers the bond test threshold.  

Prior to 2024, the GSEs were operating under a cap of $850 million, which was increased in 2021 from the $500 million cap initially set when they re-entered the Housing Credit market in 2017.  

As you know, a government-sponsored enterprise (GSE) is a type of financial services corporation created by the United States Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy, to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. 

For Affordable Housing and LIHTC, this increase in capital is vital, especially in non-CRA (Community Reinvestment Act) areas of the country. Rural and difficult-to-serve areas will now have access to equity capital better than ever, and we applaud this increase by the FHFA.