The Federal Home Loan Bank (FHLBank) System supports housing and community development across the US. It provides stable, low-cost advances to member institutions, including banks, credit unions, insurance companies, and consumer financial development institutions, to support mortgage lending and investment in members’ local communities.
This system includes 11 regional FHLBanks that operate programs that provide direct support for affordable housing and community development. By law, FHLBanks must contribute at least 10 percent of their prior-year earnings to affordable housing through the Affordable Housing Program (AHP).
In recent years, FHLBank contributions to the AHP and voluntary initiatives have averaged more than 15 percent of net earnings, reflecting a notable increase in funding to address unmet local needs. Between 2015 and 2024, FHLBanks directed roughly $147 billion toward housing and community development activities.
Here, we highlight three trends in FHLBanks’ investments in two of their five mission activities between 2015 and 2024, the Affordable Housing Program and voluntary programs. Both provide direct grants to member institutions.
Growing support for affordable housing development
The AHP General Fund, which provides grants to help finance affordable housing projects, is funded entirely through FHLBank earnings. These grants are typically used to fill funding gaps—covering the difference between total development costs and what developers can raise from other sources.
From 2015 to 2024, FHLBanks provided $3.75 billion to the AHP General Fund. This helped finance more than $70 billion in affordable housing development, supporting nearly 248,000 housing units, most of which were rental housing. These developments primarily serve households with low or very low incomes, including people experiencing homelessness, older adults, and people with disabilities. A significant share of the AHP General Fund supports smaller multifamily projects (with 5 to 49 units), which often face greater financing challenges than larger developments.
Although AHP General Fund grants typically cover a small portion of total project costs, they are often critical to making projects financially viable. They’re also associated with substantial construction activity and broader economic spillover effects over time.
We estimate that AHP General Fund grants have generated approximately $27 billion in economic activity over the past decade in the base-case scenario, ranging from $6 billion to $59 billion under more conservative and more expansive assumptions, respectively. But these estimates do not capture long-term outcomes, such as improvements in housing stability or neighborhood conditions.
Expanding access to homeownership
The FHLBank System also focuses on helping households become homeowners. Through the AHP Set-Aside Fund, participating banks provide homeowners with grants to cover down payments and closing costs.
In 2024 alone, this program disbursed $241.6 million in grants and assisted more than 17,000 households, with most of the funding going to first-time homebuyers. From 2015 to 2024, the program supported more than 157,000 households.
But rising home prices and borrowing costs in recent years have led to a significant increase in the average amount of assistance per household.
The average AHP Set-Aside grant roughly doubled from $7,000 per household between 2015 to 2023 to $14,000 in 2024. This means that even as funding levels rose, the number of households served didn’t necessarily increase at the same pace.
The growing role of voluntary programs
In addition to statutorily required housing programs, FHLBanks fund voluntary programs. Funding for these programs has increased sharply since 2022, reaching $528 million in 2024. The funds support a wide range of activities, including disaster relief, support for community development financial institutions, tribal housing development, and small business assistance.
Voluntary initiatives offer each of the 11 FHLBanks the flexibility to address local needs often exceeding statutory requirements. But this flexibility and the large number of programs make it challenging to collect, analyze, and compare data, especially because the programs are administered by diverse member organizations who receive funding from FHLBanks. Strengthening data collection and reporting could help policymakers and practitioners identify which programs are most effective and help inform future program design.
Looking ahead
Overall, funding for FHLBanks’ targeted mission programs has increased substantially over the past decade, driven by their higher earnings and expanded voluntary commitments. At the same time, rising construction costs, home prices, and interest rates have made these activities more expensive, limiting how far funding can stretch.
Further research on program effectiveness—how well these programs are targeted and streamlined, how outcomes are measured, and whether resources can be better aligned or scaled—could help FHLBanks maximize the impact of their programs. More robust data can help policymakers and practitioners better understand the FHLBank System’s role in addressing housing affordability challenges and identify opportunities to maximize its impact going forward. Improved data, particularly for newer voluntary initiatives, could help the FHLBanks more rigorously assess program performance, make informed adjustments, and share best practices.
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