Affordable Housing and Community Development
Affordable Housing Programs
The Affordable Housing Program (AHP) was created by Congress as part of the Financial Institutions Reform Recovery and Enforcement Act of 1989 and began operations in 1990. The AHP is funded entirely through FHLBank earnings and is one of the largest sources of private sector grants for housing and community development in the country. AHP funds are available only through FHLBank members and project sponsors cannot apply for AHP funding without the support of an FHLBank member. Since 1990 the FHLBanks have collectively made available over $8 billion in AHP subsidies, assisting over one million households.
On an annual basis, each FHLBank must set aside at least 10 percent of its prior year’s income to fund its AHP. By statute, AHP subsidies must be used to either fund home ownership for households with incomes at or below 80 percent of area median income (AMI), or to purchase, construct, or rehabilitate rental housing in which at least 20 percent of the units will by occupied by, and affordable to, households with incomes at or below 50 percent of AMI.
AHP funding is available through two distinct programs – an AHP competitive application program that is generally geared toward development of multifamily housing, and an AHP set-aside program that is targeted toward individual borrowers and homeowners. Collectively, the FHLBanks must meet an annual minimum allocation of $100 million toward AHP funding. In 2023, the FHLBanks were collectively required to contribute over $355 million in combined AHP subsidies.
Additionally, in 2023 the FHLBanks voluntarily committed to increase their support for affordable housing and community development to 50% above the statutory AHP levels on a go forward basis. In 2023, the FHLBanks contributed approximately $180 million in voluntary contributions to affordable housing and community development.
AHP Competitive
Each FHLBank is required by law to devote at least 65 percent of its available AHP funding to the AHP competitive program. The program supports the financing, acquisition, construction, and rehabilitation of both single and multifamily housing – both for rent and ownership. Funds are awarded on a competitive basis to applicants (typically developers, nonprofits, and other housing associates) based on defined scoring criteria. A maximum of 100 points is typically possible for each project application, with points awarded for projects that include things such as targeting specific populations, connection or inclusion of services or activities that support improved economic opportunities, donated government-owned property, and nonprofit or government sponsorship. Applications are typically accepted for a limited period once per year, and each year, the individual FHLBanks publishes an Affordable Housing Implementation Plan detailing program guidelines and application process.
In 2023, the FHLBanks awarded more than $319 million in AHP competitive funds, supporting 443 rental and owner-occupied housing projects and a total of more than 20,000 housing units.
2023 AHP Competitive Fund Awards*
| Rental Housing Projects | Owner-Occupied Housing Projects | Total Housing Projects | |
|---|---|---|---|
| Total Number of Awarded Projects | 343 | 100 | 443 |
| Subsidy Awarded ($ in Millions) | $266.2 | $52.8 | $319 |
| Number of Housing Units | 17,598 | 2,703 | 20,301 |
| Average Subsidy per Unit | $15,126 | $19,536 | $15,714 |
| Number of Very Low-Income** Housing Units | 12,206 | 1,414 | 13,620 |
* As of December 31, 2023
** Units at or below 50 percent AMI
AHP Set-Aside
Every year, each FHLBank, at its discretion, may allocate greater than 35 percent of its available annual AHP funding or $4.5 million to assist low- and moderate-income households in the purchase or rehabilitation of a home, provided at least one-third of funding is dedicated to supporting first-time homebuyers. Funding through the AHP set-aside program is available on a transaction-by-transaction, first-come, first-served basis. Members obtain AHP set-aside funding from their FHLBank and then provide the funds as grants to eligible households.
The maximum amount awarded per project and allocated unit varies annually per each FHLBank and the entire amount of a given subsidy must be passed on to the homebuyer. The FHLBanks also generally cap the total amount of funds that each member may reserve each year or at any one time. Total annual maximum allocations per member range from $100,000 to $1,000,000.
All 11 FHLBanks offered AHP set-aside funding in 2023, with total funding of approximately $124 million. In 2023, the maximum permissible set-aside grant was $29,192 and the average grant per recipient household was $9,865. The most common use of set-aside grants was to defray borrower down payments and closing costs.
2022 AHP Set-Aside Fund Awards*
| Maximum Permissible Per Borrower Grant Amount | Average Per Borrower Grant Amount | Total Set-Aside Funding |
|---|---|---|
| $29,192 | $9,865 | $124 Million |
| Total Grants for Down Payments and Closing Costs** | Total Grants for First-Time Homebuyers | Total Grants for Home Rehabilitation |
| 11,502 | 11,029 | 1,069 |
* As of December 31, 2023
** Most common use of Set-Aside funds
Affordable Housing Advisory Councils
Each FHLBank has formed an Affordable Housing Advisory Council (AHAC) that is comprised of housing leaders with strong working knowledge and experience of the particular housing affordability challenges within the respective FHLBank district. The AHAC’s advise the FHLBanks on their affordable housing and community economic development initiatives and work with each FHLBank in the development and execution of their Targeted Community Lending Plans.
Targeted Community Lending Plans
Each FHLBank is required to annually produce a Targeted Community Lending Plan (TCLP) by which it evaluates and prioritizes AHP funding to particular housing needs in its district. TCLPs typically involve market-based research of the communities within the FHLBank’s district and identification of emerging trends.
By regulation, each FHLBank’s TCLP must describe how the FHLBank will address identified credit needs and market opportunities within its district and must be developed in consultation with its AHAC and with members, housing associates, and public and private economic organizations. Additionally, the TCLP must establish quantitative performance goals and identify and assess significant affordable housing needs in the FHLBank district that will be addressed through the FHLBank’s AHP.
The TCLP must be reviewed and approved by the FHLBank’s board of directors and each FHLBank is required to publish its TCLP on its publicly available website.
Voluntary Programs
In addition to their competitive and set-aside programs, most FHLBanks operate unique and customized voluntary programs designed to help communities within their respective districts. Voluntary programs are created with input from a FHLBank’s board of directors, AHAC, and community stakeholders. These programs are flexible and meant to be responsive to local needs. They range in duration and structure – from direct grant programs to discounted advances, and all the voluntary programs target very low-, low-, or moderate-income individuals.