Working Families Home Construction Act of 2026
- Sponsor
- Rep. Fitzgerald, Scott [R-WI-5]
- Committees
- Financial Services Committee (primary)
- Last action
- Jun 25, 2026
Bottom line
The bill aims to increase the supply of affordable, owner-occupied housing for middle-income families by expanding the types of construction loans that Fannie Mae and Freddie Mac can support, shifting a portion of their affordable housing goals to this purpose.
What it actually does
This bill authorizes the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) to purchase and securitize specific residential construction loans. These 'qualifying construction loans' are for projects building owner-occupied dwelling units for families earning between 90% and 130% of the area median income. The bill reallocates 22% of existing affordable housing goal funds from Freddie Mac and Fannie Mae to support this new program, reducing the amounts previously dedicated to low-income and very low-income housing.
Proponents argue
Proponents argue that this bill directly addresses the critical shortage of affordable housing for working families by leveraging the secondary mortgage market to inject much-needed liquidity into residential construction. They emphasize the importance of increasing overall housing supply and making homeownership more accessible to the 'missing middle'—a demographic often squeezed out of the market. The bill's focus on owner-occupied units and local community support is highlighted as a safeguard against speculation.
Opponents contend
Opponents might express concerns about expanding the scope of Fannie Mae and Freddie Mac into construction lending, potentially exposing taxpayers to new risks. They could argue that reallocating existing affordable housing funds diverts crucial resources from lower-income housing needs, potentially exacerbating housing challenges for the most vulnerable populations. Concerns may also be raised about the administrative burden on the Federal Housing Finance Agency (FHFA) to manage these new loan types and ensure compliance with the various criteria.
The bill is concise and its core provisions are clearly laid out, making it accessible for a quick but informed review.
Section 2(a)
Authorization for Enterprises to Purchase Construction Loans
This section mandates that the Director of the Federal Housing Finance Agency (FHFA) permit Fannie Mae and Freddie Mac (referred to as 'enterprises') to buy and package into securities certain construction loans. This expands their traditional role beyond purchasing and securitizing mortgages for completed homes, allowing them to support the financing of new housing construction.
Supporters argue
Supporters argue this is crucial for increasing liquidity in the construction loan market, which is often underserved, thereby stimulating housing production and addressing supply shortages.
Critics contend
Critics might argue this expands the risk profile of the government-sponsored enterprises (GSEs) into a more volatile asset class and could lead to market distortions.
Tradeoffs
Balancing the need for housing market liquidity and increased supply with potential risks to GSEs and, by extension, taxpayers.
Section 2(b)
Criteria for Qualifying Construction Loans
This section establishes ten specific criteria for a construction loan to be eligible for purchase and securitization by Fannie Mae or Freddie Mac. These include requirements for the originating institution, verification of builder viability, an interest rate set by the Director considering affordability and safety, loan purpose (owner-occupied units), developer contribution (not less than 10%), loan limits ($100,000 per unit, $2.4M total), eligible uses of funds (e.g., land acquisition, infrastructure, construction), income limits for purchasers (90-130% AMI), and a 1-year owner-occupancy requirement with a restrictive covenant.
Section 2(c)
Reallocation of Affordable Housing Goal Amounts for Construction Loans
This section amends existing law (Section 1337 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) to reallocate the affordable housing goals for Fannie Mae and Freddie Mac. It reduces the percentage of funds allocated for 'housing for low-income families' (from 65% to 53%) and 'housing for very low-income families' (from 35% to 25%). Concurrently, it dedicates 22% of these amounts for the purpose of purchasing and securitizing qualifying construction loans under this Act.
Requires that each dwelling unit built as part of a construction project financed with a qualifying loan be sold to a purchaser who must reside in the dwelling unit for not less than 1 year. Furthermore, developers are required to include a recorded, restrictive covenant to enforce this owner-occupancy requirement.
Section 2(b)(10)
Why it matters:This is standard legislative practice to include all criteria for a program in one place; it does not appear to be intentionally evasive.
Case for: Supporters would argue this requirement prevents speculation and ensures that the homes genuinely serve working families seeking primary residences, aligning with the bill's intent to promote homeownership, not investment properties.
Case against: Opponents might argue that this adds a layer of complexity and enforcement burden for developers and local authorities, and could potentially deter some purchasers or developers if market conditions or personal circumstances change rapidly.
Estimated impact: Ensures that all housing units financed under this program are utilized for their intended purpose of owner-occupancy for at least the initial year, affecting all purchasers and developers involved.