The federal government has supported affordable housing for decades through a range of programs: government-insured conforming loans through the Federal Housing Administration (FHA), no-down-payment loans through the Veterans Administration, and rural loans through the U.S. Department of Agriculture. These government-backed loans typically feature more favorable terms—such as lower interest rates and easier qualification—compared to conventional loans offered by banks. Conventional loans, which are sold into the secondary market as mortgage-backed securities, must meet the stricter criteria set by government-sponsored entities like Fannie Mae and Freddie Mac.

Low-income housing assistance, also known as Section 8, is available to eligible individuals and families through government-issued housing choice vouchers that pay part of the rent or part of the costs of buying a home. Other assistance includes government-owned land and foreclosures from various agencies available for qualified buyers by way of direct sales or auctions.

Income tax deductions for mortgage interest and property taxes also benefit homeowners. At the local government level, property taxes are assessed at lower rates for homesteads (primary homes) than for investment or commercial properties. Public housing agencies, also at the local level, offer a variety of housing owned by HUD for low-income rentals or purchase. Housing authorities can acquire, build, lease, renovate and sell property to qualified homebuyers and housing developers.

On a smaller level, the federal government supports energy savings through Energystar.gov tax credits and rebates for homeowners who purchase Energy Star-approved appliances and other products for the home.

As of this writing, the House of Representatives has passed the One Big Beautiful Bill ACT (OBBBA) and put it in the hands of the Senate with anticipation that it will be passed and given to the President to sign into law by July 4, 2025. If approved as is without changes by the Senate, the Bill has provisions that would make the development of affordable housing more feasible. By definition, affordable housing is subsidized by the government, as opposed to market-rate housing which can serve “missing middle” small homes, townhomes and duplexes without subsidies.

Section 111109 renews an increase in the Low-Income Housing Tax Credit allocations from 9% to 12.5% between 2025 and 2029. According to the Department of Housing and Urban Development (HUD), this will give state and local LIHTC-allocating agencies approximately $10.5 billion annually to issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households. The Bill also reinstates bonus depreciate for qualified properties acquired and placed in service between January 19, 2025 and January 1, 2030 so developers can deduct the full cost of eligible assets the year they’re placed in service. Multi-family assets with a recovery period of 20 years or less, like air conditioners and appliances, qualify for the 100% bonus depreciation.

The bill expands the Opportunity Zone (OZ) program by allowing the inclusion of all tribal lands and eligible rural areas. To qualify, these areas must meet certain criteria: they must be located outside of metropolitan regions, have low populations (2,500 residents or fewer), and lack adequate mortgage credit for low- and moderate-income families. Such areas can also be designated as Difficult Development Areas (DDAs) by HUD.

HUD states that Opportunity Zones are economically distressed communities that may qualify for preferential tax treatment—an incentive intended to attract both private and public investment. These investments can positively influence local zoning and land-use policies, helping pave the way for more affordable housing development.

The National Association of Home Builders (NAHB) has long complained that restrictive zoning and land use policies, especially in denser urban areas, are impacting members’ ability to develop and build more affordable housing. Zoning laws, historically, have been used to limit the types of building that can be built in certain areas, such as those separating residential, commercial, and industrial uses. The landmark 1926 U.S. Supreme Court case Village of Euclid v. Ambler Realty Co. validated zoning ordinances as constitutional under the police power of local governments as long as they have some relation to public health, safety, morals or general welfare, explains NAHB.

“Euclidian Zoning,” or its pejorative nickname NIMBYism (not in my backyard), is the most common type of zoning in the U.S. It only allows one kind of land use per zone, such as single-family residences which excludes duplexes, multi-family and commercial development. Other exclusionary restrictions or requirements may include building height, home size-to-lot ratios, density, car parking, and special reviews regarding whether or not low-income housing should be treated like any other multi-family project. Covert exclusions may include inefficiencies or deliberate delays in the approval process on affordable and modest market-rate housing projects.

The Affordable Housing Credit Improvement Act of 2025 (AHCIA) is a bipartisan bill that intends to increase the impact of the Housing Credit to boost multi-family housing production and help finance more than 2 million additional multifamily units over the next 10 years. Many of its provisions are already included in the OBBBA, such as lowering the private activity bond financing threshold from 50% to 25%, making it easier for state and local governments to support affordable housing projects. The AHCIA would also prohibit states from requiring special approvals to build affordable rental housing.

Additionally, the bill aims to align federal, state, and local program rules to improve access to affordable housing for veterans, students, and survivors of domestic violence and human trafficking.

Other than these initiatives, the federal government isn’t able to do much more to make housing more affordable at the local level, unless it ties grants and other economic incentives to local zoning and land use policies to force more affordable housing and moderate-priced market-rate developments.

Some states are already working to eliminate exclusionary zoning with YIMBYism (yes, in my back yard) such as California’s SB 9 and SB 10 to allow duplexes and small multifamily developments in areas previously zoned exclusively for single-family homes statewide. And in New York, there are proposals underway to provide more high-density housing near transit stations. Other states are also supporting YIMBYism, including Oregon, Virginia, Massachusetts, Utah, Colorado, and Montana.

While progress isn’t quick, some jurisdictions are dipping their toes in the water by allowing additional dwelling units (ADUs) to be built on single-family properties, but there’s more they can do. UrbanLand.uli.org suggests that communities can stimulate better land use for housing:

·         Rezone to encourage missing middle housing. 

·         Repurpose underused land. 

·         Reduce parking minimums. 

·         Revise height restrictions. 

·         Eliminate barriers to ADUs. 

·         Create opportunities for office-to-housing conversions.

·         Streamline the permitting process. 

·         Establish simple design standards. 

Changing community building standards should not only be bipartisan or left to elected city leaders and planners, but should also include the knowledge and opinions of stakeholders such as developers, builders, business owners, and others in their deliberations.