state programs
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Goal: Increase the Availability of Affordable Homes
Role: Generate Capital
Policy: Provide Pre-development and Acquisition Financing

State Programs

Many states across the country have lending programs that provide pre-development and acquisition financing for affordable homes. These programs are often administered by the state housing finance agency. Typically, states loan money directly to the organization that will be developing the homes; however, at least one state also loans money to local governments to support locally-administered pre-development and acquisition loans.

An extended list of examples of these programs has been provided below to help interested organizations identify funding sources for pre-development and acquisition funding and to help states interested in developing or improving a program to understand what other states are doing. Because these programs are often similar to one another, other readers may find it sufficient to review one or two examples.

To switch to reading about local programs, click here.


To navigate through the examples of state programs that provide pre-development or acquisition financing, click on the links in the box to the right. Or just scroll and read below.

Connecticut

Pre-Development Loan Program

Connecticut's Pre-Development Loan Program provides no-interest loans to cover pre-development expenses associated with the construction or rehabilitation of homes affordable for low- and moderate-income households. The maximum loan is $250,000 and is repayable upon receipt of permanent financing. The state may forgive loans if permanent financing cannot be obtained. To find out more about this program, see the Connecticut Department of Economic and Community Development web site. 

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Connecticut
Delaware
Florida
Georgia
Maine
Mississippi
Nebraska
New Hampshire
New Mexico
North Carolina
Oregon
South Carolina
Washington


Delaware

Housing Development Fund Pre-Development Loans

The Delaware State Housing Authority's Housing Development Fund Pre-Development Loans are funded in part through the state's HOME allocation. Loans are made to non-profit organizations to cover acquisition and pre-development expenses associated with the development of homes for low- and moderate-income households. Repayment is due upon receipt of construction financing, although the loan may be waived if development cannot proceed due to factors outside of the borrower's control. To find out more about this program, see this PDF.

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Florida

Pre-Development Loan Program

The Florida Housing Finance Corporation offers the Pre-development Loan Program to non-profits, local governments, and public housing authorities seeking to increase the supply of affordable housing. The maximum loan for pre-development expenses is $500,000; the maximum loan for pre-development and site acquisition is $750,000. Interest rates generally fall between 1 and 3 percent. In order to qualify for the Pre-development Loan Program, at least 60 percent of the units in rental developments must be affordable for households earning 60 percent of Area Median Income (AMI); in homeownership developments, at least 50 percent of the units must be affordable for households earning 80 percent of AMI and the remainder must be affordable to households at or below 120 percent of AMI. Technical assistance is provided to ensure that applicants have a feasible plan for obtaining construction and permanent financing. Repayment is deferred for three years or until construction or permanent financing is obtained.

In 2008, the PLP provided nearly $6.8 million in rental housing pre-development loans and over $1.4 million in homeownership pre-development loans. In total, PLP helped create 178 affordable single-family homes and 446 affordable rental homes in complexes that also included 295 market-rate rentals. Funding comes from the State Housing Trust Fund.

For more information on this program, see the Florida Housing Finance Corporation web site. Funding statistics can be found in their 2008 annual report [PDF].

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Georgia

CHDO Predevelopment Loan Program (CPLP)

The CHDO Predevelopment Loan Program (CPLP) is provided by the Georgia Department of Community Affairs out of its HOME allocation. The total size of the fund is $150,000 per year, while the maximum size of individual loans is $30,000. In order to qualify for financing, applicants must be non-profits that are certified as Community Housing Development Organizations (CHDO). Both rental and homeowner developments are eligible for funding. Predevelopment loans are interest-free and carry a term of up to 24 months. If the development is determined to be infeasible, the state may waive repayment of the loan. For more information on this program, see the Georgia Department of Community Affairs web site.

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Maine

Revolving Loan for Acquisition Program

The Maine State Housing Authority's Revolving Loan for Acquisition Program loans up to $300,000 for the acquisition or land or land and buildings for affordable housing development. Repayment is deferred until permanent financing is obtained or a maximum of 24 months. Developments must also either qualify and apply for Low-Income Housing Tax Credits or create supportive housing. One third of any loan has no interest and two-thirds has a 3% interest rate. The loan program has $2,100,000 in funding -- partly from a state affordable housing bond and partly from Maine Housing's bond funds. For more information on this program, see the Maine Housing web site.

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Mississippi

Affordable Housing Development Fund

The Mississippi Affordable Housing Development Fund is a revolving loan fund that provides pre-development and acquisition financing as well as construction and rehabilitation loans. Loans are made for rental homes that are affordable to households earning 60% or less of AMI and to homeownership developments that will be affordable to households at or below 115% of AMI. A Land Use Restrictive Agreement will ensure affordability for at least 15 years. Interest rates may be as low as 3 percent, and loans may be amortized or deferred with repayment due within 3 years. Priority is given to developments that serve broader state goals such as housing for senior citizens and developments with resident management or other self-sufficiency programs. For more information on this program, see the Mississippi Home Corporation web site.

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Nebraska

Pre-Development Revolving Loan Fund

The Nebraska Investment Finance Authority (NIFA) created the Predevelopment Revolving Loan Fund which loans between $5,000 and $20,000 to non-profit community-based housing developers or public housing authorities. The interest rate is 3 percent for loans without matching funds; no-interest loans are made if the developer has obtained matching funds equal to at least 25% of the value of the pre-development loan. Interest and principal are deferred until permanent financing is obtained or for no more than 18 months. For more information on this program, see the Nebraska Investment Finance Authority web site.

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New Hampshire

Technical Assistance Program

New Hampshire Housing's Technical Assistance Program provides no-interest, deferred loans for pre-development expenses associated with the development of affordable homes. The loans are funded by the state's Affordable Housing Fund and HOME allocation. Repayment is due upon receipt of construction financing and may be waived if the development plans cannot be implemented for reasons beyond the borrower's control. The program's standard loan limit of $30,000 may be raised to $45,000 if the development will be in a community with a very low percentage of non-senior rental homes. For more information on this program, see the New Hampshire Housing web site.

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New Mexico

Primero Loan Program

The New Mexico Mortgage Finance Authority's Primero Loan Program began in 1993 as a source of pre-development and acquisition financing and was expanded in 2002 to provide financing for all other stages in the development of affordable rental or special needs housing when other financing is not available. The maximum loan is $1 million. Repayment is due within 5 years or upon receipt of subsequent financing. For more information on this program, see the New Mexico Mortgage Finance Authority web site's Primero Loan pages for rental housing development and for single-family housing development.

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North Carolina

Supportive Housing Development Program

The North Carolina Housing Finance Agency provides limited pre-development loans as part of its larger Supportive Housing Development Program. Loans of up to $25,000 are available for non-profits and local governments to develop emergency, transitional, and permanent service-enriched housing for the homeless and/or people with disabilities. For more information on this program, see the North Carolina Housing Finance Agency web site.

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Oregon

Pre-Development Loan Program

Oregon's Predevelopment Loan Program provides below-market interest loans of $40,000 to $1.5 million to cover acquisition and predevelopment expenses for the construction or acquisition and rehabilitation of affordable homes. Loans of more than $500,000 are due in no more than six months; loans of $500,000 or less are due within two years. Developments funded by this program must have either 20 percent of units affordable for households earning 50 percent Area Median Income (AMI) or 40 percent of units affordable for households earning 60 percent of AMI. Up to one-third of units may be affordable to households earning more than 120 percent of AMI. Both rental and homeownership developments with at least five units are eligible for funding. For more information on this program, see the Oregon Department of Housing and Community Services web site.

Loan Guarantee Program

Oregon's Loan Guarantee Program provides guarantees of up to 25 percent of the principal of loans for the acquisition and rehabilitation of affordable homes, or for new construction. Developments that receive loan guarantees should include homes that are affordable to households earning 80 percent of AMI or less. An annual fee of 1 percent of the guarantee amount is charged. Mixed-income developments may receive a smaller loan guarantee than fully affordable developments. For more information on this program, see the Oregon Department of Housing and Community Services web site.

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South Carolina

CHDO Pre-Development Loan Program

South Carolina's CHDO Pre-Development Loan program uses a portion of the state's HOME funds - federal block grants provided so that states can increase the supply of affordable housing -- to provide loans for predevelopment and site acquisition costs. Funds are only open to certified Community Housing Development Organizations (CHDO) -- non-profits who meet a number of criteria outlined by the U.S. Department of Housing and Urban Development (HUD). CHDO Pre-Development loans have no interest and are available first-come, first-serve on a non-competitive basis. The maximum loan is $150,000 and can either be an amortizing loan or a deferred loan which must be repaid upon receipt of construction financing. The state may forgive the loan if it determines that the project is infeasible or can not be completed for reasons beyond the applicant's control. For more information on this program, see the South Carolina State Housing Finance and Development Authority web site.

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Washington

Land Acquisition Program

In 2007, Washington State created a land acquisition pilot program to facilitate the development of affordable homes. The state has leveraged its initial $1 million appropriation to raise nearly $1 million more for the fund. The land acquisition program is a revolving loan fund that can be used to acquire sites for the development of affordable homes or facilities for the provision of supportive services. Development should occur within 8 years, and repayment of the loans is also due within 8 years or upon receipt of construction financing. Homes should be affordable to households at or below 80 percent of AMI for at least 30 years. For more information on this program, see the Washington State Housing Finance Commission web site.

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State programs
Find examples of state programs for pre-development and acquisition financing. Examples include Nebraska, Vermont, California, and Mississippi.

Other pages in this section:

One Church StreetLocal programs
Some local governments have also created loans or loan guarantee programs to facilitate access to pre-development and acquisition financing. Examples include New York City and Washington, DC.