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Resources for Affordable Housing

Federal Home Loan Bank Programs

The Federal Home Loan Bank system offers two programs, the Affordable Housing Program (AHP) and the Community Investment Program (CIP), through its financial institution members, that can assist in the financing of affordable housing. Both of these programs were authorized by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and the subsidies made available have been instrumental in the creation of thousands of units of affordable housing.

Affordable Housing Program

The Affordable Housing Program is designed to encourage member financial institutions "to undertake creative efforts and increase their participation in and support for efforts directed towards increasing the district's supply of affordable housing."

The AHP is funded by 10 percent of the Federal Home Loan Bank's annual net income or $100 million, whichever is greater.

Program Uses

Affordable Housing Program funds can subsidize--

• the construction, purchase and/or rehabilitation of owner-occupied housing for very low-, low- and moderate-income households; or
• the construction, purchase and/or rehabilitation of rental housing, at least 20 percent of the units of which will be occupied by and affordable for very low-income households for the remaining useful life of such housing or the mortgage term.

AHP funded subsidies can be used for--

• construction financing
• permanent financing
• principal reduction
• downpayment assistance
• interest rate buydown

AHP funds cannot be used for--

• funding the sponsor's operating budget
• non-housing related activities
• capitalizing reserve funds not directly related to the acquisition, rehabilitation or construction of housing
• refinancing, unless major rehabilitation is included

Project Evaluation

The Affordable Housing Program operates as a series of twelve district-wide competitions. Each Federal Home Loan Bank evaluates applications on the basis of a number of criteria and objectives, using a 100-point scoring system.

Projects are first evaluated for--

1. compliance with fair housing laws and regulations,
2. feasibility of the project,
3. creditworthiness of the member, and
4. the ability to begin using the requested assistance within 12 months.

Proposed projects must meet all four of these requirements to be considered for funding.

Other objectives considered in evaluating each project include consistency, targeting, potential for long-term affordability, effectiveness of subsidy funds, community involvement and stability and innovation.

AHP-Assisted Projects

A wide variety of projects have received AHP subsidies. About two-thirds of the total units assisted are affordable to very low-income households. The average per unit subsidy is $5,000 The housing must remain affordable 15 years for rental housing and 5 years for owner occupied units. More than 96 percent of the projects have a nonprofit or government sponsor.

Examples of AHP-funded activities include the following:

Construction of nine rental houses for low-income families in Winchester, Virginia

Funding Sources

Construction and permanent financing for 39 single family units for homeownership by families earning 50 percent of area median income in Chestertown, Maryland

Funding Sources

Construction of a 40-unit congregate-care facility for very low-income elderly and handicapped residents in Shelby, North Carolina

Funding Sources

This information was prepared and provided by the Office of Policy of the Federal Housing Finance Board and by the Federal Home Loan Bank of Atlanta.

For more information on the Affordable Housing Program, contact a Federal Home Loan Bank Community Investment Officer.

Copyright 1999 - 2000
Affordable Housing and HOME
National Association of Housing and Redevelopment Officials (NAHRO)
630 Eye Street, NW
Washington, DC 20001-3736
Telephone: (202) 289-3500
Fax: (202) 289-4949