HUD priorities signal a more streamlined path forward for affordable housing

At this year’s MBA CREF conference, a clear theme emerged across agency leadership and industry panels: the affordable housing market is entering a more execution-driven phase. Capital is more predictable. Discipline and efficiency are a focus as the operating environment has stabilized. For HUD and the GSEs, the priority is clear: modernize systems, refine policy to remove overburdensome regulations, and enhance execution certainty to better support the delivery of more affordable housing.

While the conference covered a range of capital markets topics, one of the most anticipated discussions centered on HUD’s forward-looking priorities and how those policies can meaningfully improve affordable housing production and preservation in 2026 and beyond.

As discussed in the lender roundtable and multifamily panels, HUD’s leadership team is focused on practical, durable changes that increase efficiency, reduce friction, and expand access to capital, without compromising program integrity.

A systems-first approach: streamlining execution

HUD’s priority is improving systems and processes.

A key initiative is the move toward a more streamlined underwriting framework, including a HUD single underwrite model. The objective is straightforward: clearer standards, improved communication, and greater consistency across transactions. For lenders and developers, that translates into higher certainty of execution and shorter processing timelines.

With the introduction of the Lean Express loan, Lean closing reforms are also underway, with changes being rolled out in stages. These include evaluating which exhibits are truly necessary, standardizing punch lists, and clarifying roles and responsibilities among stakeholders to drive greater consistency at closing. Multifamily production is exploring similar process enhancements tailored to its distinct risk profile. Some of our clients are already reaping the benefits of these reforms, receiving loan decisions in days rather than months.

Policy improvements that expand access

Beyond process improvements, HUD is advancing several policy updates designed to broaden eligibility and increase flexibility for affordable housing transactions.

Expanding build-to-rent eligibility

HUD is considering allowing both new construction and recently constructed (less than three years old) purpose-built rental projects to qualify under revised build-to-rent (BTR) guidance. Importantly, projects would no longer need to meet the prior 50 percent four-unit structure threshold, provided they are designed and built for rental use and offer market-consistent amenities.

For affordable housing developers, expanded build-to-rent (BTR) eligibility can unlock additional production pathways, particularly in markets where traditional multifamily density is constrained. Clarified federal guidance during the Trump administration, distinguishing newly constructed BTR communities from large-scale institutional acquisitions of existing housing stock, helped separate production-focused rental strategies from broader investor ownership concerns. As a result, developers may have greater confidence that qualifying BTR projects can access capital and policy support aligned with affordable housing supply objectives.

Supporting modular construction

Promoting modular construction is another area of focus. By encouraging construction methods that can reduce timelines and increase cost predictability, HUD is signaling support for innovation that will help builders meet affordability goals. Faster delivery and lower construction risk directly support feasibility in today’s cost environment.

Broadening real estate tax savings applications

HUD is also evaluating revisions to its treatment of real estate tax savings mechanisms, such as abatements, PILOTs, and TIFs, to allow greater underwriting flexibility where savings are reliable and transferable.

For affordable housing transactions, particularly LIHTC developments, more comprehensive underwriting of federal and state tax benefits can increase projected after-tax cash flow and improve debt service coverage ratios. This enhanced recognition of tax savings may support higher loan proceeds, reduce reliance on gap financing, and improve execution certainty, helping more projects reach closing in a constrained capital environment.

Multifamily improvements and efficiencies

Additional policy considerations include allowing 5 percent vacancy underwriting on 223(f) transactions, eliminating large loan requirements, reducing certain technical reviews, and modernizing select documentation requirements.

Collectively, these updates aim to lower transaction friction and reduce unnecessary costs while maintaining program discipline.

Regulatory enhancements with a practical lens

Some of HUD’s longer-term priorities will require regulatory or legislative action. Here, too, the emphasis is on practicality and modernization.

Davis-Bacon wage requirements remain in place, but discussions are focused on common-sense adjustments that reflect current market realities. Similarly, HUD is evaluating elements of the NEPA implementation framework and advancing modernization efforts around environmental reviews, noise calculations, and Choice Limiting Actions.

GSE alignment and product enhancements

Alongside HUD’s priorities, GSE leaders emphasized the importance of execution discipline and product enhancements within their lending caps. Clear standards, predictable capital, and expanded delegation were recurring themes during the panels.

Enhancements such as variable-rate product focus, new forward commitments for non-LIHTC construction, and successful rate buydown initiatives reflect a shared objective: ensuring that affordable housing sponsors can access capital efficiently within established program parameters.

As greater LIHTC allocation and potential legislative developments unfold, the interaction between HUD policy, GSE lending caps, and tax credit equity will continue to shape affordable housing production.

2026 outlook: equilibrium and discipline

If one theme defined the forward-looking discussion, it was equilibrium. Words like “normalcy,” “discipline,” and “efficiency” surfaced repeatedly.

In a more predictable capital environment, opportunities will hinge less on macro tailwinds and more on the ability to structure and execute effectively. For affordable housing developers and owners, that means:

• Delivering well-located, purpose-built projects
• Leveraging program enhancements strategically
• Engaging early to align on underwriting standards
• Utilizing technology to improve reporting, inspections, and internal processes

Technology was highlighted as an enabler, from sales force coordination to potential AI-supported inspection reviews, further reinforcing the theme of modernization.

A meaningful opportunity for affordable housing

Taken together, HUD’s priorities—streamlined systems, targeted policy updates, and practical regulatory modernization—have the potential to materially improve execution certainty, reduce processing times, lower transaction costs, and expand the pool of eligible applicants.

At Walker & Dunlop, we view this moment as an opportunity. With capital more predictable and agencies focused on efficiency, success in 2026 will depend on preparation, alignment, and disciplined execution. We are committed to helping our clients navigate evolving policy, seize these new opportunities, and find the financing solutions that best meet their needs. Reach out to our affordable and HUD financing experts to discuss your next project.

Special thanks to Charley Conkling and Ken Buchanan for their insights and contributions to this piece.