The Best 3 Multifamily Loans for Affordable Housing in 2025
Discover the three best multifamily financing options for affordable housing in 2025, including the HUD 223(f), Fannie Mae Standard FHA Risk Sharing Execution, and USDA 538 loans.
Most of the discussion around affordable housing in the industry is that we need more of it. We know that, but it’s worth looking outside the development space to see how much upside affordable housing can have as an investment — and how to finance them.
The fact is, affordable housing properties offer good, consistent returns — even in an economic downturn. Demand is always strong, thanks to the undersupply, and many of the purported downsides, from lower rent collections to burdensome administrative requirements, are overblown.
That’s not to say they’re for everyone.
Owning or operating an affordable housing property can be a completely different experience compared to other housing sectors. And, yes, there are things like regular housing inspections to deal with.
If you’re considering getting into the affordable housing investment space, you must know your financing options. Affordable housing multifamily loans are one clear way to make your property turn a strong, consistent profit.
This article explores the best three multifamily financing options for affordable housing in 2025.
1. HUD 223(f) Loans
This loan program is designed to help finance the acquisition or refinancing of multifamily properties. The HUD 223(f) loan is backed by the Federal Housing Administration (FHA) and offers a highly competitive, fixed interest rate and up to a 35-year repayment term. This loan isn't exclusively for affordable housing properties — in fact, they're extremely useful for virtually any market-rate asset — but affordable housing investors can take advantage of even better terms.
One key benefit of the 223(f) loan is that it can cover up to 87% of the project cost, plus loan terms are all fully amortizing.
The loan is non-recourse, which means that the borrower is not personally liable for repayment. This can be especially beneficial for affordable housing investors without the same level of financial resources as larger investors. Overall, the HUD 223(f) loan is a great option for developers looking to acquire or refinance multifamily properties, and can offer competitive interest rates and flexible repayment terms.
2. Fannie Mae Standard FHA Risk Sharing Execution Loans
This loan program is a collaboration between Fannie Mae and the FHA. It’s designed specifically for the financing of affordable housing properties. The loan offers a fixed interest rate and up to a 35-year repayment term, and it can offer loan-to-value ratios of up to 80% for acquisitions and 90% for properties yet to be constructed.
One key benefit of this loan program is that it is structured as a risk-sharing arrangement between Fannie Mae and the FHA, which can help reduce the risk for lenders. This translates into better terms for borrowers.
Furthermore, the loan program offers flexible underwriting requirements and streamlined processing, which can help make financing more accessible to affordable housing investors and developers.
3. USDA 538 Loans
This loan program is designed to help finance the construction or rehabilitation of affordable multifamily properties in rural areas. The loan is backed by the United States Department of Agriculture (USDA), and offers a fixed interest rate and up to a 40-year repayment term.
One key benefit of the USDA 538 loan is that it can offer LTVs up to 90% for any for-profit investors — or up to 97% for a nonprofit. For development, LTCs are capped lower, at 70%. This plays a large role in making affordable housing investment more financially viable in the rural areas these loans focus on.
Additionally, the loan program offers streamlined underwriting requirements and reduced fees, which can help make financing more affordable for developers. Overall, the USDA 538 loan is a great option for developers looking to finance affordable multifamily properties in rural areas, thanks to competitive terms and reduced fees.
Which Do I Choose?
As you’ve seen, not every loan works for every type of property. A USDA 538 loan can’t fund an affordable housing project in a city, for example, and a HUD 223(f) loan won’t typically do much for a development.
We can provide you with the best options for your specific needs. Just fill in the form below — it only takes a minute — and we’ll be in touch with free quotes in no time.