The bill also creates pilot grants for cities to develop pre-approved “pattern books” — standard housing designs that builders can use without individual design reviews.
On Monday, i The US House voted to pass the 21st Century Housing Act by a margin of 390-9.
Environmental reviews of housing are reduced
Environmental review requirements under the National Environmental Policy Act (NEPA) will be greatly reduced for housing.
Projects of less than 15 units, infill development, office-to-residential conversion and renovation work will qualify for an extended “partial exemption,” allowing it to bypass lengthy federal reviews.
The HOME Investment Partnerships program will receive similar exemptions, as well as new planning grants for areas to make design changes.
Proponents argue that the changes could shave months — or years — off project timelines, reduce administrative costs and increase housing stock.
Some commentators have highlighted that reducing or loosening NEPA’s environmental review could reduce environmental protections and may face opposition from environmental activists who say NEPA serves as a critical protection and not just unnecessary “red tape”.
Federal Housing Administration (FHA) Multifamily loan limits will increase by about 300% to 400%, and each unit for elevator buildings will increase from about $38,000 to just over $167,000.
Limits will be indexed annually to the increase in construction costs, aligning the association’s bylaws with modern construction costs.
“By modernizing outdated housing systems, reducing unnecessary barriers to development and increasing the flexibility of local communities, the Housing for the 21st Century Act helps create the conditions necessary to build and maintain affordable housing across America,” said David Dworkin, president and CEO of the National Housing Conference (NHC). “This bill rightly emphasizes transparency, consumer protection and accountability.”
Additional financing provisions include a new FHA pilot for small dollar loans of less than $100,000 – and incentives for lenders to increase participation.
Banks will be allowed to invest up to 20% in community development projects. Section 8 voucher properties can rely on a Low Income Housing Credit, HOME or USDA inspection in lieu of repeated HUD reviews.
Built and affordable housing
The bill also rewrites the rules for manufactured housing – removing the requirement that homes retain a permanent chassis.
Factory-built homes placed on permanent foundations will be treated as site-built homes for financing, title and tax purposes.
“The Housing for the 21st Century Act is a meaningful step forward in addressing the problem of unaffordability by supporting the supply of housing, modernizing government programs and reducing unnecessary barriers that slow development,” it said. American Land Title Association CEO Chris Morton. “As policymakers work to increase the likelihood of homeownership, the title insurance industry will continue to play an important role in protecting consumers and helping to ensure that buyers and lenders can proceed through the closing process with confidence.”
Employer protections will increase – including the exclusion of Veterans Affairs disability benefits from HUD-VASH housing assistance income calculations, the creation of a national eviction helpline and the expansion of Family Support payment programs.
What it means for agents, lenders and builders
For real estate professionals, the most important implications include:
For real estate agents
- An extensive housing inventory ranging from duplex, triplex and ADU
- Great financing with high FHA limits
- A driver of small mortgage dollars, improved access for newcomers and first-time home buyers
- Increased resale and financing options for manufactured homes
- Employee housing eligibility is up to 100% of local income
- Faster project approval and reduced environmental delays
For lenders and mortgage professionals
- The FHA multifamily loan limit is increasing
- FHA driver for small dollar mortgages under $100,000
- The flexibility of community banking and the reduction of test burdens
- High investment rates for community development
For engineers and builders
- Right-of-way design incentives, aiming for fewer discretionary hearings and faster approvals
- Environmental review exemption for projects under 15 units and vacant lots
- Pattern books containing pre-approved designs
- Equality of control of manufactured homes and locally built homes
If implemented, the changes would mark one of the most aggressive federal efforts in decades to improve housing supply and market activity — relying less on direct policing and more on fiscal stimulus, deregulation and expanded access to credit.
