Historically, we have observed that the FHFA sets the caps to target the agencies’ collective share of the multifamily product market at about 40%. The 2025 agency lending caps imply a total market size of $365 billion in multifamily financing next year. That’s up more than 20% from the $297 billion in multifamily financing the Mortgage Bankers Association forecasted for 2024. 

The signals are as good or better for affordable housing finance. The FHFA maintained its requirement that 50% of the agencies’ lending focus on mission-driven, affordable housing in addition to exempting workforce housing loans from caps. 

While we haven’t seen the FHFA’s affordable housing goals for the GSEs in 2025, we don’t expect numbers to decline—a view buttressed by the agencies’ Duty to Serve and Equitable Housing Finance Plans. Fannie and Freddie support mission-driven (naturally occurring affordable housing) and Affordable (rent- and/or income-restricted by regulation) housing with pricing incentives resulting in lower mortgage rates. This increase in the caps should allow them to continue to do so.

The evolution of FHFA’s agency multifamily caps

The FHFA will mark the 10th annual fall presentation of its multifamily loan purchase caps in 2025. The volume caps were introduced to provide a framework for a healthy market, where agency financing incentivizes affordability but doesn’t crowd out private capital. 

Each year, the FHFA adjusts caps so Fannie Mae and Freddie Mac’s market share is significant but not dominant. The intent is to provide liquidity and transparent financing costs for responsibly underwritten rental housing, most of which is affordable to residents whose income is within the range of area median income (AMI).

Here’s a look back at how the caps have evolved: 

2014 to Q3 2019: Uncapped lending for priority categories (affordable, green)

• 2018 and 2019: $35 billion per GSE per year
• 2016 and 2017: $36.5 billion per GSE per year
• 2014 and 2015: $30 billion per GSE per year

2020: Fix the loopholes 

• Raised volume caps to $100 billion per GSE for five quarters (Q4 2019 to Q4 2020) while eliminating exemptions for green and affordable loans
• 37.5% mission-driven requirement

2021: Pandemic response 

• $70 billion per GSE, mission-driven requirement raised to 50%
• Introduced requirement that 20% of GSE business be affordable to households at or below 60% of AMI

2022: Higher caps, deeper affordability

• $78 billion per GSE with a 50% mission-driven requirement
• 25% of GSE business required to be affordable to households at or below 60% of AMI

2023: Streamlining mission-driven requirements

• $75 billion per GSE with a 50% mission-driven requirement
• Removed requirement that 25% of GSE business must be affordable to households earning less than 60% of AMI 
• Added workforce housing to the mission-driven category for properties with market-aligned rent restrictions

2024: Workforce housing exemption introduced

• $70 billion per GSE with 50% mission-driven requirement
• Cap exemptions for loans with rent or income restrictions written into the loan documents

2025: Higher caps, continued workforce preservation exemption 

• $73 billion per GSE with 50% mission-driven requirement
• Cap exemptions for loans with rent or income restrictions written into the loan documents

The bottom line: The FHFA’s caps are our first indication of the size of rental housing market in the year to come. Things look bright for Fannie Mae’s and Freddie Mac’s support for rental housing in 2025.