Industry News: What the ROAD to Housing Act of 2025 Means for Affordable Housing

Industry News: What the ROAD to Housing Act of 2025 Means for Affordable Housing

The U.S. Senate Banking, Housing, and Urban Affairs Committee delivered a unanimous 24–0 vote advancing the Renewing Opportunity in the American Dream (ROAD) to Housing Act of 2025. This marks the first time in over a decade that a sweeping housing bill has gained such momentum—Congress is trying to tackle America’s housing affordability predicament.

Policymakers, advocates, and regional leaders are watching closely. Housing groups—from Habitat for Humanity to the National Association of Local Housing Finance Agencies—have lauded its breadth and potential impact.

What’s in the ROAD to Housing Act?

The legislation is a broad, integrated package with some major focus areas:

1. Expanding Housing Supply & Reducing Regulatory Barriers

• Encourages modular housing by removing the outdated “permanent chassis” requirement, making prefabricated homes more affordable and easier to build.
• Supports pre-approved housing designs (pattern books) to speed permitting processes at the local level.
• Prioritizes housing development near transit by modifying the Federal Transit Administration’s evaluation process.

2. Modernizing Financing & Housing Options

• Creates a $1 billion “Innovation Fund” to help communities expand infrastructure in pro-housing jurisdictions.
• Revises how manufactured and modular housing is financed, including removing a chassis mandate and modernizing loan eligibility.

3. Strengthening HUD, HOME, and RAD Programs

• Lifts the cap on the Rental Assistance Demonstration (RAD) and extends tenant protections.
• Reauthorizes and enhances the HOME Investment Partnerships Program, including pilot innovations around converting vacant buildings.

4. Promoting Financial Literacy & Homeownership

• Improves housing counseling programs with performance evaluations, training mandates, and protections against fraud.
• Encourages access to small-dollar mortgages by modifying fee regulations and supporting appraiser workforce expansion.
• Incentivizes small-dollar mortgage creation and eases appraisal backlogs to improve access to homeownership.

Implications for Developers:

What are the implications for developers that are currently developing and building affordable housing and receiving LIHTC or affordable housing tax credits? The answer is there are many positive implications to the new 2025 ROAD Act:

1. Expanded Access to 9% LIHTC Credits

The act makes a 12% increase in 9% LIHTC allocations permanent, enhancing each state’s capacity to fund projects—providing developers with richer and more reliable equity opportunities.

2. Easier Eligibility for 4% LIHTC Projects

Lowering the private activity bond (PAB) threshold from 50% to 25% significantly eases financing requirements for 4% credit projects. This broadens eligibility, benefiting preservation, rehabilitation, and mixed-income developments that previously didn’t meet the 50% financing rule.

3. Fewer Regulatory Barriers & Streamlined Approval

Provisions such as HUD-issued model zoning frameworks, streamlined environmental reviews, and pattern-book designs aim to simplify development, reduce delays, and help fast-track approvals—especially for modular or infill housing.

4. Innovation Fund Boosts Infrastructure & Scalability

The new $1 billion Innovation Fund offers competitive grants for communities pursuing affordable housing expansion, enabling developers to tap into infrastructure support and foster growth in high-demand areas.

5. Stronger Support for Rural & Opportunity Zone Projects

The Act emphasizes rural housing and Opportunity Zone developments by prioritizing HUD grants and reforming USDA programs to promote preservation and equitable development.

Competitive Implications:

While there are many positive outcomes if the ROAD Act is passed by US government, there will likely be increased and diversified competition: HUD Code manufactured homes are now in the same classification as prefabricated modular homes.  The bill does not consider or factor key differences in cost structure, building codes, and affordability.  Prefabricated or modular homes could become a much larger portion of affordable housing.

Final Thoughts:

For LIHTC developers, the ROAD to Housing Act promises a more favorable financing and regulatory landscape, with expanded credit supply, reduced eligibility barriers, and stronger master planning tools—all of which can accelerate project pipelines and deliver greater community impact.

Accelerated opportunities, project pipelines can also mean increased work and operating on condensed timelines. Fusion can help developers with team productivity and efficiency without increasing overhead. By automating time-consuming tasks and delivering standardized, LIHTC-specific reports, Fusion gives asset managers and compliance teams the tools they need to work faster, stay audit-ready, and make smarter decisions.

To review the full bill please visit:

https://www.congress.gov/bill/119th-congress/senate-bill/2651/text

Fusion will continue to monitor and update with any legislation milestones.