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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 34 December 2025 F E A T U R E S T O R Y and opportunity: rethinking how to use existing assets, policies, and partner- ships to meet modern housing needs. In an environment shaped by economic uncertainty and regulatory flux, success will depend on the sector's ability to innovate, collaborate, and invest in resil- ience, ensuring that optimism translates into real progress. 2026: A Turning Point in Affordable Housing N ext year is shaping up to be a de- fining year for affordable housing, one that could set the tone for the next decade. Across the country, demand contin- ues to far outpace supply, and the gap is widening. The National Low Income Housing Center reported earlier this year that the U.S. is short 7.1 million affordable rental homes for extremely low-income renters. Meanwhile, as more aging baby boomers and home- owners in general stay put, the housing market continues to feel the squeeze. The result? Rising prices, shrinking options, and fewer paths to homeown- ership. Adding to the pressure, tariffs and surging construction costs, highlighted in the TD Bank survey, are expected to weigh heavily on how many affordable housing projects actually reach comple- tion in 2026. As we approach the new year, policy changes that could affect lending and borrowing costs are also under close watch for affordable housing profes- sionals. The Big Beautiful Bill is another factor to consider, which plans to expand the Low-Income Housing Tax Credit (LIHTC), the nation's primary tool for financing affordable housing. The expansion is expected to support new development and advance previ- ously delayed projects. The outcome of the FY26 federal budget is also a question. The propos- al calls for a 44% funding cut to the Department of Housing and Urban Development (HUD) compared with FY25. The plan consolidates key rental assistance programs to achieve the reduction by consolidating HUD's largest rental assistance programs and eliminating several initiatives tied to homelessness prevention, fair housing, and community and development. Additional reforms to housing programs under other federal agencies could further reshape the landscape. For example, the TD Bank survey reported that 60% believe proposed changes to the Section 8 Housing Choice Voucher Program will shape their development strategies. Among them, 84% anticipate a negative impact. Beyond the federal government, cities, towns, counties, and state governments play a critical role in developing affordable housing. Many local governments are pursuing a wide range of solutions, including land use reforms that help to implement zoning policies to meet the specific needs of the community. States such as Connecticut and Massachusetts have been leading the way in trying to encourage zoning reform. This trend may widen in the coming years as local governments grapple with trying to meet the need for affordable housing. Working Together for Impact A s we head into the new year, financial partnerships are crucial in helping affordable housing profes- sionals overcome challenges from a de- velopment, cost, and policy perspective. Financial institutions can offer support with dedicated affordable housing lend- ing programs or teams, flexible lending terms, and bridge financing or gap fund- ing solutions. Many leading financial institutions have long been pushing for access to this capital and are among the largest investors in affordable housing. In addition to lending and equity investments, philanthropy and part- nerships are also crucial. Charitable foundations and housing programs play a vital role, helping fill funding gaps and ensuring that communities have the resources they need to grow and thrive. Each grant given through a charita- ble program helps sustain homeowner- ship for families facing rising property taxes, costly repairs, or the threat of foreclosure. Grants help support purchase counseling, energy-efficiency improvements, and emergency financial assistance. At TD Bank, in 2024, there were 138 ($1.7 billion) loans or letters of credit for affordable housing, creating or retaining 6,710 units of affordable housing for low- and moderate-income families. In short, 2026 will test the resiliency and creativity of affordable housing developers, a year of both headwinds and hard-won opportunities. At its core, affordable housing is about more than construction. It's about community— about giving people a place to thrive, not just survive. This work matters and is the foundation of stability for families, which ultimately drives broader eco- nomic growth. Across the country, demand continues to far outpace supply, and the gap is widening.