House in GlobeUnder HUD’s “Affirmatively Furthering Fair Housing” demonstration program, developers working in the Baltimore region may now have the opportunity to receive favorable FHA financing terms by setting aside a portion of the units in their newly constructed or rehabilitated housing projects for families holding Section 8 Housing Choice Vouchers.  The  incentives, available for the 221(d)(4) program or other FHA multifamily financing programs, include:

  • Lower mortgage insurance premiums;
  • Lower assumed vacancy rate when establishing a project’s proposed budget; and
  • More frequent or greater distributions of surplus cash for projects containing a specified number of affordable units.

The demonstration was designed by HUD to encourage racial integration in housing by promoting the construction of more affordable housing units in areas with good schools, safe neighborhoods and sustainable employment opportunities – so called “communities of opportunity” — in Baltimore City, Baltimore County, Anne Arundel County, Howard County, Carroll County and Harford County.  Eligible communities can be found here.

To be eligible for the program, developers must otherwise qualify for FHA financing under the 221(d)(4) program or other FHA multifamily program and must be willing to set aside at least 10% of the two- and three-bedroom units in their project for eligible families for a period of 15 years.  The demonstration program allows HUD to offer incentives for the creation of between 300 to 500 affordable housing units per year for up to 7 years.  More detailed information on the Affirmatively Furthering Fair Housing demonstration program can be found in HUD Notice H 2013-20.