Federal Home Loan Bank Affordable Housing Program (AHP)

How It Works

The Federal Home Loan Banks (FHLBanks) are 11 regional, member-owned banks chartered by Congress. They lend to banks, credit unions, insurers, and community development financial institutions. Federal law requires each FHLBank to run an Affordable Housing Program (AHP) and fund it with 10% of the previous year’s net income. If that 10% adds up to less than $100 million across all 11 banks, each must contribute a proportional share to reach the minimum.

AHP subsidy comes in two forms: a grant (a “direct subsidy”) or a below-market loan from the FHLBank to its member (a “subsidized advance”). It rarely pays for a whole project. Instead it works as gap financing, a modest subsidy that helps close a funding hole in the capital stack. In the Federal Home Loan Bank of Pittsburgh’s 2025 round, for example, $61.3 million in AHP grants went to projects with $292.8 million in total development costs.

Federal rules allow two channels:

• Competitive application program. In each funding round, member institutions submit applications on behalf of nonprofit or for-profit sponsors. The bank scores them under its published AHP Implementation Plan and approves them in descending order of score.
• Homeownership set-aside programs. Optional for each bank. Members give grants to eligible households for down payments, closing costs, counseling, or owner-occupied rehabilitation. A bank may put up to the greater of $4.5 million or 35% of its required annual AHP contribution into set-asides, and at least one-third of that must help first-time homebuyers or owner-occupied rehabilitation. Effective January 1, 2026, FHFA’s cap on set-aside grants is $32,837 per household. Individual banks can set lower limits.

Who It Serves

• Ownership: households at or below 80% of area median income.
• Rental: projects in which at least 20% of units are occupied by and affordable to very low-income households (50% of area median income or less). Scoring rewards deeper targeting: a rental project earns the most income-targeting points when at least 60% of its units are reserved for households at or below 50% of median income.

Assisted housing is subject to a retention period: 15 years for rental projects, and five years for owner-occupied homes bought or built with AHP money. Grants used only to rehabilitate a home the household already owns carry no retention requirement. For owner-occupied homes, the commitment is enforced through a deed restriction or a similar legally binding agreement. If the home is sold or refinanced during the five years, part of the subsidy may have to be repaid, with exceptions such as a sale to another low- or moderate-income household.

How to Access It

A developer or nonprofit needs a sponsoring member institution of its regional FHLBank. Banks publish application guides, scoring rules, and deadlines each year. Delaware, for example, is in the Federal Home Loan Bank of Pittsburgh’s district, along with Pennsylvania and West Virginia. Its 2026 competitive round closed on August 6, 2026. In 2025, that bank awarded AHP grants to 51 projects with 1,082 affordable units.

Homebuyers do not apply to an FHLBank. They ask a participating lender whether it offers the bank’s set-aside grant. These grants often appear in pathways from renting to owning.

History

Congress created the FHLBank System in 1932. The AHP came later, added by FIRREA, which became law on August 9, 1989, during the savings and loan crisis. Contributions began in 1990 at 5% of net income, rose to 6% in 1994, and reached the current 10% in 1995. FHFA overhauled the program rules in a final rule published in November 2018. Among other changes, the current rules let each bank create targeted funds for specific housing needs in its district.

In a November 2023 review, FHFA encouraged the FHLBanks to voluntarily increase their AHP contributions and said it would recommend that Congress consider at least doubling the required minimum contribution. As of October 2026, the statute still sets the requirement at 10%. According to their SEC filings, some banks have committed about another 5% of prior-year earnings to voluntary housing and community programs. Pittsburgh reports doing so in 2023, 2024, and 2025, and Atlanta beginning in 2024. That brings their total housing and community giving to roughly 15% of earnings. Most of the extra money sits outside the statutory AHP and follows each bank’s own rules.

Limitations

• Small and competitive. Awards cover a fraction of project costs, and many applications go unfunded. FHLBank Pittsburgh, for example, funded 51 projects out of 160 eligible applications in 2025.
• Varies with bank earnings. Because funding is tied to profits, the pot grows and shrinks with interest rates and lending volume.
• Low income ceilings. Homeownership help stops at 80% of median income, and rental scoring favors units for households at or below 50%. AHP does little for the moderate-income band above 80%.
• Member gatekeeping. Sponsors without a relationship with a member institution may find it harder to apply.

For how AHP fits alongside tax credits and local money, see how affordable workforce housing gets built.