Nothing unites opposing political factions faster than seeing homeless encampments in American cities. That’s why the Housing Act for the 21st Century passed the U.S. House of Representatives by an overwhelming vote of 390 to 9 is now on its way to the Senate.
The 200-page bill contains a proposal of particular interest to real estate investors. Most importantly, it increases borrowing limits for short people multi-family properties, allowing for greater purchasing power and potentially higher returns on investment.
Representatives French Hill (R-AR) and Maxine Waters (D-CA), from opposite sides of the political spectrum, are two of the bill’s primary sponsors and pushed to ensure it included provisions from both parties, which one has celebrated in the residential and construction sectors.
“NAHB commends the House for passing the Housing for the 21st Century Act, bipartisan legislation that will reduce barriers to increasing housing supply,” said Buddy Hughes, president of the National Association of Home Builders. in a press release.
His sentiments were echoed by Shannon McGahn, executive vice president and chief advocacy officer of the National Association of Realtors, who stated in a press release“With the country facing a shortage of roughly 5 million homes and first-time buyers now entering the market at an average age of 40, bold action to expand supply and remove barriers to homeownership has never been more urgent.”
Broader initiatives applicable to investors include the following.
Modernization of building codes (single-step reform)
Section 103 addresses one of the most important provisions for small multi-family residential development: point access block buildings (also known as single-stair apartments).
- National guidelines: Requires HUD to establish federal guidelines and best practices for multifamily buildings with one stair to five stories. Currently, many jurisdictions require double staircases due to safety concerns. However, this makes it difficult and expensive to build multi-family buildings on narrow urban lots. This is already being considered in California and other states.
- Pilot programs: The law allows competitive grants for pilot projects to test the safety and effectiveness of new designs, which could eventually lead to smaller European-style apartments.
Streamlining environmental assessments
The federal National Environmental Policy Act (NEPA) has done just that criticized because it is prohibitively expensive and slow, especially for developers of small-scale projects. In a move similar to that of California Governor Gavin Newsom reforming the California Environmental Quality Act to accelerate housing development, new measures aim to reduce delay by bypassing some assessment processes.
- Categorical exclusions: The expansion of “categorical exclusions” exempts small-scale construction. Complete environmental assessments are no longer required for infill development and the rehabilitation of residential buildings.
- Faster timelines: The bill aims to do this by reducing the federal administrative burden reduce construction timelines and below the per unit costs for modest multi-family projects.
Encouragement of “Missing Middle” zoning plans.
The Action uses federal guidelines to push local governments toward friendlier zoning for small multifamily units (section 102):
- Legal development: Encourages localities to expedite duplexes, triplexes and quadplexes “as of right,” meaning they can are built without a lengthy permitting process.
- Pattern books: It offers grants to local governments and tribes to create “pattern books”: pre-approved architectural designs for ADUs, duplexes and townhouses. If a builder uses a pre-approved design, the permitting process is expedited.
Financial and programmatic support updates
- FHA Loan Limits: Section 106 Updates the legal maximum loan limits for multifamily properties with FHA mortgage insurance. These limits have been adjusted to reflect modern construction costs, making it easier for developers of small and medium-sized buildings to secure federal financing.
- Flexibility of the HOME program: The action reforms the HOME Investment Partnerships Program to allow money are used for “workforce housing” and infrastructure improvements (such as water and sewer) specifically for new housing projects.
- Streamlined Inspections: For properties with multiple federal funding sources like Low-income tax credit ( LIHTC ) and section 8, the bill allows a some successful inspection to automatically meet Housing Choice Voucher (HCV) inspection requirements, reducing the number of applications the administrative headache for small landlords.
How these laws help small investors
Although many of these proposals are coordinated Some specific aspects will appeal to landlords towards developers. Increased FHA loan limits for small multifamily properties could help first-time investors harness the power of hack house and rental income to kick-start their investment career.
An FHA loan, which allows a buyer to put down as little as 3.5%, requires a buyer to live in one of the units for at least 12 months, meaning that after the year they are free to move out and purchase another property, renting out the original FHA loan property in its entirety. FHA rules state that a buyer can only have one FHA loan at a time (unless the other is in another state); however, investors can refinance the first home in a conventional mortgage, allowing them to purchase the second with an FHA loan.
By living in one unit and having the tenant’s rent cover most, if not all, of the mortgage, an owner-investor places themselves in fine position to save for the deposit on their next real estate investment. The cash flow of the original FHA home and the second home can also provide the down payment for a third home, and so on. Ultimately, the timeline between real estate purchases becomes shorter.
This commonly used wealth-building strategy is based on a few basic principles: Conscientious screening of tenants and live low to the ground, and don’t spend money on a luxurious personal home until you passive income is significant.
FHA Loan Limits for Multifamily Properties
The current 2026 FHA multifamily loan limits are as follows:
Two units (duplex)
- Cheap area: $693,050
- High cost area: $1,599,375
Trinity (plywood)
- Cheap area: $837,700
- High cost area: $1,933,200
Four-unit (fourplex)
- Cheap area: $1,041,125
- High cost area: $2,402,625
The limits are higher in Alaska, Hawaii, Guam and the US Virgin Islands.
The effect on home inspections
For anyone who has ever had the misfortune of dealing with an unofficial housing inspector, you know that they can make or break your cash flow. The less time you have to communicate with them, the better. So the proposal for streamlined inspections will come as a huge relief to landlords who are used to standing on eggshells as an inspector looks for hairline cracks in exhaust plates or a faucet that drips once every 30 seconds.
To clarify, here is the 2025 section 8 inspection checklist.
Final thoughts
Raising FHA loan limits means more people can buy more multifamily properties, saving as little as 3.5% and potentially qualifying for lower-cost financing. credit scores than required for a conventional mortgage. Rinsing and repeating this formula works as long as interest rates and house prices are relatively low and rents are high. Two of those three no longer apply, which means that implementing this strategy invariably means using a lot of borrowed money and hoping your tenants pay their rent on time.
So be careful if you plan to use this to boost your portfolio. It’s not a technique that will allow you to quickly quit your day job. If you do the job correctly, you should keep your daily work as a buffer in case things go wrong, which they usually do.
FHA loans were invented to make it easier for owner-occupiers to purchase a home and, in the case of small multifamily properties, to allow homeowners to get a little help from their tenants with their payments. As real estate investors we are tend to think outside the box and have developed the concept of repeat house hacking to game the system. However, in today’s era of high rates and high costs, this is fraught with risks. Just because FHA loan limits will increase, allowing you to borrow more, doesn’t mean you should.
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