By law, each FHLBank must establish an Affordable Housing Program (AHP), and must contribute 10 percent of its earnings to its AHP.
Under the Federal Home Loan Bank Act (FHLBank Act), the specified uses of AHP funds are to finance the purchase, construction, or rehabilitation of owner-occupied housing for low- or moderate-income households (with incomes at 80 percent or less of the area median income), and the purchase, construction, or rehabilitation of rental housing where at least 20 percent of the units are affordable for and occupied by very low-income households (with incomes at 50 percent or less of the area median income). The AHP leverages other types of financing, and supports affordable housing for special needs and homeless families, among other groups.
The FHLBanks are authorized to operate two programs:
Competitive Application Program – A financial institution member of a FHLBank submits an application for AHP funds to the FHLBank on behalf of a non-profit or for-profit sponsor and is evaluated in comparison to other applications under the FHLBank’s scoring system. The FHLBank approves the applications in descending ranking order starting with the highest scoring application.
Homeownership Set-Aside Program – FHLBanks make grants available to their financial institution members, who provide the funds as down payment, closing cost, or counseling assistance to homebuyers, or as rehabilitation assistance to homeowners. Establishment of homeownership set-aside programs is elective for each FHLBank. FHFA’s regulation limits the amount of funds that a FHLBank may allocate annually to its set-aside program.