As part of the Federal Housing Finance Agency (FHFA) overseeing the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, the FHFA is required to set annually updated benchmark goals for how the GSEs’ mortgage purchases will help contribute to affordable housing for lower-income households.
On Tuesday, December 23, the FHFA set its enterprise benchmark housing goals for 2026 through 2028. The new goals are to be effective on February 23, 2026. In an FHFA press release about the goals, FHFA Director Pill Pulte said:
“For too long, Biden distorted the housing market with harmful mandates that prioritized government quotas at the expense of middle-class families. Thanks to President Trump, Fannie Mae and Freddie Mac will now focus on supporting affordable homeownership for all Americans while fulfilling their statutory duties.”
Of the single-family mortgages that Fannie and Freddie purchase, 21% (compared to 25% in the previous benchmark) must go to borrowers who are earning less than 80% of an area median income. For borrowers earning less than 50% of an area median income, the GSEs must set aside 3.5% of their purchased mortgages (down from 6%).
Fannie and Freddie’s low-income refinance goal, the amount of refinanced mortgages they must acquire for low-income borrowers, was dropped from 26% to 21%.
In a public statement on the changes, Mortgage Bankers Association (MBA) President Bob Broeksmit voiced support for this change on behalf of the association, calling it “a constructive step that better reflects today’s interest rate environment and promotes a more sustainable approach to affordable lending.”
The new goals also combine two previous goals—the low-income census tracts goal and the minority census tracts goal—into the new Low-Income Home Purchase subgoal. This sets a single-family home mortgage purchase benchmark of 16% for two types of borrowers. One, borrowers living in census tracts where the median income is 80% or less of larger area median income. Two, borrowers who make area median income (or less) in census tracts where median income is lower than area median income and where minorities make up at least 30% of the population.
Multifamily housing goals remained unchanged from the previous benchmarks. Sixty-one percent of multifamily properties financed by Fannie- or Freddie-backed mortgages must go to borrowers earning less than 80% of area median income, while 14% must go to borrowers earning less than 50% of area median income.
“The final multifamily housing goals and benchmarks strike an appropriate balance, supporting a healthy multifamily ecosystem that advances both affordable and market-rate production to expand supply and help reduce rental costs,” said Broeksmit.
The FHFA’s 2024 annual affordable housing goals set up “measurement buffers” for the GSEs’ single-family affordable housing goals—if the benchmark goal turned out to be higher than market level, the GSEs were encouraged to only meet market level. (If the gap between the GSE’s goal-meeting progress and market level was greater than defined in the buffer, then the GSE would have to create an action plan for improvement.) The new goal-setting does away with the measurement buffers so as to simplify the goal structure, and because the 2026-2028 benchmarks are set below forecast market levels.
The MBA had, in comments submitted to the FHFA, urged the retention of the measurement buffers, due to concerns that lower interest rates will spur refinancing and thus distort the refinancing goals.
“Retaining the measurement buffers would help mitigate market distortions whenever goal levels and market production are misaligned due to unforeseen economic conditions,” the MBA said. In his statement, Broeksmit noted that the MBA’s recommendation about the measurement buffers was not accepted, but said that the MBA will “continue to engage with FHFA and the GSEs to address those concerns.”
For the full entry of the new FHFA housing goals into the federal register, click here.
