Congress Approves Housing Affordability Reform Bill: Key Changes Announced
Congress has taken a major step toward addressing the persistent housing affordability crisis with the passage of the Housing for the 21st Century Act. This extensive legislation aims to tackle rising home costs, mortgage rates, insurance expenses, and supply constraints, marking it as one of the most comprehensive housing reform efforts in years. However, significant differences between the House and Senate versions of the bill must still be reconciled.
Key Provisions of the Bill
The House passed its version of the bill, H.R. 6644, on February 9, 2026. This version features six titles and 38 sections, addressing issues such as housing supply, federal housing program modernization, manufactured housing, borrower protections, congressional oversight, and community banking regulations. The accompanying committee report describes the bill’s intent as making it "easier to build and afford housing, including modernizing outdated government programs, lowering costs by removing unnecessary federal requirements, and increasing local flexibility over housing decisions."
Key elements of the House version include:
- Zoning and Land Use Reforms: The bill directs the Department of Housing and Urban Development (HUD) to publish land use guidelines and establish a competitive grant program promoting pre-reviewed "pattern book" housing designs to streamline permitting. It also encourages single-stair design for multifamily buildings up to six stories, though the National Fire Protection Association has raised fire safety concerns about this provision.
- Environmental Review Changes: The legislation seeks to streamline federal processes by exempting certain housing projects, such as small infill developments on previously disturbed lots, from full National Environmental Policy Act (NEPA) review. Additionally, four types of housing activities would be reclassified to require no environmental review if they do not significantly alter environmental conditions.
- Program Updates: The bill proposes modernizing the HOME Investment Partnerships program, which has not been reauthorized since 1992, by raising income eligibility for homeownership assistance and expanding provisions for Community Land Trusts. It also allows new housing construction to qualify as an activity under the Community Development Block Grant program, capped at 20% of a grantee's allocation.
- Financial Reforms: The bill increases Federal Housing Administration (FHA) multifamily loan limits and authorizes a new pilot program to improve access to small-dollar mortgages. It also raises the cap on bank public welfare investments from 15% to 20% of a single institution's unimpaired capital and surplus.
- Veteran Support: Addressing a long-standing issue, the legislation excludes VA disability benefits from income calculations for HUD-VA Supportive Housing eligibility. It also requires the Federal Housing Finance Agency to notify veterans about potential VA home loan eligibility on residential loan applications.
The Senate passed a modified version of the bill on March 12, 2026, combining H.R. 6644 with provisions from the ROAD to Housing Act of 2025. The Senate version, titled the "21st Century ROAD to Housing Act", omits the House's community banking regulations and introduces new provisions, including restrictions on institutional investors purchasing single-family homes and a requirement related to central bank digital currency.
Political Challenges Ahead
The path to enacting the Housing for the 21st Century Act faces considerable political obstacles. Reconciling the differences between the House and Senate versions will be critical. The community banking provisions in the House bill, which offer regulatory relief for smaller banks, are entirely absent in the Senate version. These provisions include measures to ease deposit classifications, adjust examination requirements, and allow new banks to phase in capital requirements over two years.
The Senate, however, added provisions not considered by the House, such as institutional investor purchase restrictions and a central bank digital currency measure. These additions introduce new political complexities and could complicate negotiations between chambers.
Implications for the Public
While the bill’s provisions aim to address housing affordability, much depends on implementation at the local level. The reforms focus on providing guidance, incentives, and streamlined processes rather than imposing federal mandates. As a result, state and local governments retain significant control, and the extent of their adoption will determine the legislation's real-world impact.
The Bottom Line
The Housing for the 21st Century Act represents a bold effort to modernize housing policy and address affordability issues, but its ultimate success hinges on navigating the conference process between the two chambers. The final version of the bill, if agreed upon, will demonstrate whether Congress can deliver on its promise to make housing more accessible and affordable for American families. As negotiations continue, the stakes remain high for lawmakers, the administration, and millions of Americans struggling with the housing affordability crisis.