FHFA to raise the 2025 multifamily loan caps for Fannie, Freddie by 4%

The Federal Housing Finance Agency (FHFA) on Monday announced that it will raise the 2025 multifamily loan caps for purchases by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to $73 billion each. This represents a total of $146 billion in multifamily market support for next year, an increase of more than 4% from 2024 levels.

FHFA establishes these caps every year, and as was the case for 2024, “multifamily loans that finance workforce housing will be excluded from the 2025 limits,” the announcement explained.

FHFA Director Sandra Thompson said that the new caps highlight the agency’s efforts to make rental housing more affordable. “Additionally, the ongoing workforce housing exemption will continue to enhance the Enterprises’ ability to support properties that preserve affordable rents, including properties preserved or created through corporate-sponsored affordable housing initiatives,” Thompson said.

Workforce housing was first exempted from the caps last year. Since that point, “both Enterprises have seen encouraging growth in this critical market segment,” the FHFA said. “In addition, FHFA is continuing to require that at least 50% of the Enterprises’ multifamily businesses be mission-driven,” which continues a requirement unveiled last year.

FHFA said it will continue to monitor the multifamily mortgage market and reserves the right to raise the caps again to support market liquidity, if it’s deemed necessary. But in an effort to prevent disruption, “if FHFA determines that the actual size of the 2025 market is smaller than was initially projected, FHFA will not lower the caps,” the agency explained.

FHFA has set the caps on the GSEs’ conventional multifamily businesses since 2015. While some previous exclusions were in effect, FHFA in 2019 moved to revise the cap structure to apply to all multifamily business, removing many of the previous exclusions and tightening the criteria for loans that are eligible for exclusion.