The 21st Century ROAD to Housing Act became law on July 11, 2026, without the president's signature, capping a bipartisan effort that produced the most comprehensive federal housing legislation in three decades. The Act's central aim is to increase housing supply and improve affordability by streamlining the development process, expanding public financing tools, simplifying environmental review requirements and creating new economic development incentives. It also includes a title dedicated to strengthening community banks and their role in expanding housing access in the communities they serve.
For real estate clients, developers, institutional buyers and lenders, the Act restricts large institutional investors from acquiring additional single-family homes and duplexes, streamlines environmental review for a range of housing development activities and updates appraisal and manufactured housing rules affecting transaction timelines. Clients using Opportunity Zone designations, Community Development Block Grants (CDBG) or other incentive-based financing to support housing projects will also see new grant programs, higher investment caps and funding tied to housing production benchmarks. The sections below address each of these developments in turn.
Page Contents:
-Relief for Community Banks and Credit Unions
-Restrictions on Institutional Buyers
-Economic Incentives for Housing Development
Targeted Relief for Community Banks and Credit Unions
Title IX – Strengthening Community Banks' Role in Housing
Title 9 of the Act aims to help smaller financial institutions expand local mortgage lending to meet housing needs in their respective communities. To do so, the Act frees up capital and eases certain regulatory burdens, making it easier for affected institutions to extend more mortgage loans with less regulatory hassle.
Additional Capital
Section 901, Community Bank Deposit Access, provides a limited exception under which custodial deposits held by institutions with less than $10 billion in assets are not considered "brokered deposits," provided the custodial deposits do not equal more than 20% of the eligible institution's total liabilities.
Section 902, Keeping Deposits Local*, increases the percentage of reciprocal deposits that institutions can hold relative to their liabilities and treats those deposits as non-brokered deposits. The percentage caps are tiered based on each institution’s respective asset size, ranging from 50% for institutions with less than $1 billion in assets to 30% for institutions with less than $96.37 billion in assets.
Although not included in Title 9, Section 203, Community Investment and Prosperity Act*, increases the cap on bank public welfare investments, including those made in affordable housing and community development projects, from 15% to 20% of the institution's capital and surplus.
Reduced Regulatory Burden
Section 903, Tailored Regulatory Updates for Supervisory Testing*, raises the asset threshold for financial institutions eligible for a longer, 18-month examination cycle from $3 billion to $6 billion, meaning more community banks will qualify for less frequent full-scope exams.
Section 904, Credit Union Board Modernization, reduces the frequency of required meetings for boards of well-run credit unions from monthly to as few as six times per year.
Section 906, Advancing the Mentor-Protégé Program for Small Financial Institutions, codifies a mentor- protégé program pairing larger institutions (i.e., those with more than $50 billion in total assets) with smaller, rural and minority depository institutions.
Section 908, Promoting New Bank Formation, tasks federal regulatory agencies with creating a two-year phase-in period for de novo institutions to satisfy federal capital requirements instead of the date on which the institution becomes federally insured. It also allows certain de novo institutions to deviate from agency-approved business plan requirements during a two-year phase-in period beginning on the date the depository institution becomes insured.
Ancillary Impacts
The Act also includes other provisions that may affect certain financial institutions.
Title 6, Veterans and Housing, will impact institutions that use the Uniform Residential Loan Application ("URLA") as part of the mortgage-loan application process. Specifically, Section 601, Military Service Question*, requires an institution to include a statement on the URLA informing applicants who answer "Yes" the military-service question to that "you may qualify for a VA Home Loan. Consult your lender of eligibility." Similarly, Section 603, Veteran's Affairs Loan Information Disclosure (VALID) Act*, requires lenders to include additional language on the URLA intended to help veterans effectively compare FHA and VA loan programs.
Central Bank Digital Currency Prohibition Extended
Title 11, Central Bank Digital Currency*, may also be of interest to financial institutions. Specifically, Title 11 prohibits the Federal Reserve from creating a central bank digital currency through 2030. Although unrelated to housing policy, the provision gives financial institutions regulatory certainty when planning payment system and digital asset strategies over the next several years, alleviating, for now, policy uncertainty that many institutions have been monitoring.
What Financial Institutions Should Do
- Confirm whether your institution's deposit reporting reflects the amended treatment of brokered deposits under Sections 901 and 902.
- Determine whether your asset size now qualifies you for the extended examination cycle under Section 903.
- Eligible credit unions should review board bylaws to decide whether to adopt a reduced meeting schedule under Section 904.
- Institutions should reassess their current public welfare investment capacity pursuant to the new 20% cap.
- De novo institutions should evaluate the new phase-in periods applicable to federal capital requirements and use of agency-approved business plans pursuant to Section 908.
- Institutions with rural or minority depository status should evaluate participation in the Section 906 mentor-protégé program.
- Ensure the URLA includes the requisite veteran-specific language.
Sections marked with * incorporate related legislation.
Warner's Financial Institutions Industry Group will continue to monitor implementation guidance from the FDIC, the Federal Reserve and the National Credit Union Administration as it is issued.
If you have questions about how the 21st Century ROAD to Housing Act may affect your institution's compliance obligations or investment capacity, please contact a member of our Financial Institutions Industry Group.
Restrictions on Institutional Buyers and Streamlined Development Review
Developers, institutional buyers and lenders active in single-family and multifamily housing should review the following changes:
New Limits on Institutional Purchases of Single-Family Homes
Title 10, Home-Ownership for Main Street America, restricts any institutional investor that directly or indirectly owns at least 350 single-family homes or duplexes (“large institutional investors”) from acquiring additional single-family homes or duplexes. The provision includes several “excepted purchases” that are not prohibited or counted toward the threshold, including homes that are newly constructed, renovated or converted for sale by institutional investors; purchased from another large institutional investor under certain conditions; or purchased from other investors within two years of the Act’s enactment.
Institutional investors near or above the 350-home threshold should determine whether planned acquisitions are “excepted purchases” before closing and consider accelerating acquisitions that may qualify for a time-limited exception.
Streamlined Environmental Review for Housing Development
Several provisions of the Act are intended to reduce the time and cost of environmental review for housing projects. Section 206, the Unlocking Housing Supply Through Streamlined and Modernized Reviews Act, expands categorical exemptions under the National Environmental Policy Act (NEPA) for a broad range of federally supported housing activities. Section 103 exempts U.S. Department of Agriculture (USDA) assistance for infill housing development from federal environmental review altogether.
Developers using implicated federal funding or federally backed financing should reassess projects in light of these exemptions.
Appraisal and Manufactured Housing Changes Affect Transaction Timing
Section 403, the Appraisal Industry Improvement Act, reforms appraisal licensing and training standards and adds flexibility for the use of trainee appraisers. Section 704 requires lenders on federally backed mortgages to implement review and resolution procedures for certain value reconsiderations or subsequent appraisals that consumers request.
Section 301 amends the definition of “manufactured home” in the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402(6)) by removing the permanent chassis requirement. It also requires states to regulate manufactured homes equally regardless of whether they have a permanent chassis and directs HUD to set minimum energy efficiency standards for manufactured homes, which may, in turn, affect financing and insurance underwriting.
Multifamily Financing and Rental Assistance Provisions
Section 211, the Housing Affordability Act, updates the statutory loan limits for mortgage insurance eligibility on FHA multifamily mortgages and reforms the formula used to set them, which may affect the pool of multifamily projects that qualify for FHA-insured financing. Section 212 increases the cap on conversions under the Rental Assistance Demonstration (RAD) program by 100,000 units and extends tenant protections in RAD buildings.
Owners and developers of affected multifamily properties should factor these changes into underwriting and due diligence on new acquisitions.
What Real Estate Developers, Investors and Lenders Should Do
- Institutional buyers approaching the 350-home threshold should audit portfolios, confirm which acquisitions qualify as “excepted purchases” and accelerate any acquisitions that fall under time-limited exceptions.
- Developers relying on federal funding should identify which NEPA categorical exclusions under Sections 103, 205 and 206 apply to pending or planned projects.
- Lenders should update appraisal dispute procedures to comply with Section 704's review and resolution requirements.
- Manufactured housing lenders and insurers should track HUD's forthcoming energy efficiency standards under Section 301.
- Multifamily owners and buyers should reassess FHA loan sizing under the revised limits in Section 211 and review RAD conversion opportunities under Section 212.
If you have questions about how the 21st Century ROAD to Housing Act may affect your real estate acquisitions, development projects or financing arrangements, please contact a member of our Real Estate Practice Group.
Expanded Economic Incentives for Housing Development
Opportunity Zone and CDBG Provisions Broaden Eligible Uses
Section 201 allows HUD to prioritize competitive housing development and preservation grant awards for projects located in or primarily serving communities designated as Opportunity Zones under Section 1400Z-1 of the Internal Revenue Code.
Section 204 adds construction of new affordable housing as an eligible use of CDBG funding, expanding a program historically focused on rehabilitation and infrastructure.
Section 213, the Build Now Act, ties certain localities’ CDBG funding to housing production by offering bonuses for accelerated homebuilding and imposing modest funding reductions on lagging grantees. This structure may benefit jurisdictions that pair incentive packages with faster permitting processes.
New Innovation Fund Rewards Local Reforms
Section 208 creates a competitive grant program, funded at $200 million annually for fiscal years 2027 through 2031, for local governments and tribes that demonstrate measurable increases in housing supply. Grant awards range from $250,000 to $10 million. The fund is designed to encourage local reforms such as streamlined permitting, density bonuses and zoning changes, giving clients that advise municipalities on incentive packages a potential new federal funding source to pair with local reforms.
Higher Investment Caps Expand Community Development Financing Capacity
Section 203, the Community Investment and Prosperity Act, raises the cap on bank public welfare investments, including investments in affordable housing and community development projects, from 15% to 20% of a bank’s capital and surplus. The change gives banks additional capacity to invest in low-income housing tax credit transactions and other community development vehicles that developers often use to fill financing gaps.
Separately, Section 207 creates a competitive pilot grant program at HUD to help state, local and tribal governments and regional planning agencies fund planning and implementation activities related to affordable housing, including updates to regulatory processes and coordination of housing development with transportation planning. Grant funds under Section 207 may not be used for direct physical construction, alteration or building repair work. The pilot program sunsets five years after enactment.
Pre-Reviewed Designs and Adaptive Reuse Grants Add New Tools
Section 209, the Accelerating Home Building Act, provides grants to local governments and tribes to select and implement pre-reviewed housing designs, such as accessory dwelling units, duplexes or townhouses, to streamline affordable housing construction. Ten percent of total funding is reserved for rural areas, and jurisdictions have five years to adopt the designs.
Section 210, the RESIDE Act, creates a pilot grant program operating within the HOME Investment Partnerships Program to help local governments convert vacant commercial or industrial buildings into affordable housing, prioritizing economically distressed areas and Opportunity Zones.
Developers and municipal clients considering adaptive reuse projects or standardized housing designs should assess whether these new grant programs may help offset predevelopment costs.
What Developers and Economic Development Clients Should Consider
- Confirm whether pending or planned projects in Opportunity Zones qualify for prioritized consideration under Section 201.
- Evaluate whether CDBG funding can now support new construction costs under Section 204.
- Municipal and developer clients pursuing zoning or permitting reforms should assess eligibility for the Section 208 Innovation Fund before the application cycle opens.
- Developers relying on low-income housing tax credit financing should discuss the expanded 20% public welfare investment cap with bank partners under Section 203.
- Clients with vacant commercial or industrial properties in distressed areas should evaluate the Section 210 RESIDE Act pilot before pursuing conventional financing.
Warner's Economic Incentives Group will continue to monitor HUD's rollout of the Innovation Fund and other new incentive programs and will provide updates as application guidance is released.
If you have questions about how the 21st Century ROAD to Housing Act's new incentive programs may affect your development or financing plans, please contact a member of our Economic Incentives Group.
