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FHFA Announces 2023 GSE Multifamily Loan Purchase Caps

The Federal Housing Finance Agency (FHFA) has announced the 2023 multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $75 billion for each government-sponsored enterprise (GSE), for a combined total of $150 billion to support the multifamily market. The 2023 caps reflect an anticipated contraction of the multifamily originations market in 2023.

To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA will require that at least 50% of the GSE’s multifamily business be mission-driven affordable housing.

“The 2023 multifamily loan caps, coupled with a new mission-driven category for workforce housing properties, will continue to ensure that the Enterprises have a strong commitment to addressing the need for affordable housing,” said FHFA Director Sandra L. Thompson. “The new workforce housing category will provide incentives for conventional borrowers to maintain rents at affordable levels for extended periods of time.”

The FHFA has also changed certain definitions of multifamily mission-driven affordable housing in Appendix A of the Conservatorship Scorecard. In 2023, FHFA will allow loans to finance energy or water efficiency improvements with units affordable at or below 80% of the area median income (AMI) to be classified as mission-driven, up from 60% AMI in 2022. This increase will allow the GSEs to expand their effort on energy and water conservation measures at workforce housing properties.

The FHFA will continue to monitor the multifamily mortgage market and will update the multifamily caps and mission-driven requirements if adjustments are warranted. However, to prevent market disruption, if FHFA determines that the actual size of the 2023 market is smaller than was initially projected, the FHFA will not reduce the caps.

"Given current market conditions and the expected decline in the multifamily originations market, FHFA’s slight decrease in next year’s caps is appropriate and ensures a level playing field across various capital sources," said MBA President and CEO Bob Broeksmit, CMB. “MBA [Mortgage Bankers Association] commends FHFA for its continued commitment to affordable rental housing, including workforce housing, and for providing stable liquidity to the marketplace. We also appreciate FHFA's flexibility should the caps need to be increased, and its decision to streamline certain mission-driven requirements."

To further its goal of equitable housing for all, the FHFA recently announced targeted changes to Fannie Mae and Freddie Mac's guarantee fee pricing (g-fees) by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refis.

As part of the pricing changes stemming from the Agency's ongoing review of the GSE’s pricing framework announced last year, FHFA is eliminating upfront fees for:

  • First-time homebuyers at or below 100% of AMI in most of the U.S. and below 120% of AMI in high-cost areas;
  • HomeReady and Home Possible loans (Fannie Mae and Freddie Mac's flagship affordable mortgage programs);
  • HFA Advantage and HFA Preferred loans; and
  • Single-family loans supporting the Duty to Serve program.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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