CalHFA considers construction loan options for home builders amid housing challenges

The CalHFA General Board Meeting held on May 22, 2025, focused on innovative financing solutions for housing development, particularly for single-family homes. Board members discussed the potential for creating new loan products aimed at home builders, which could facilitate the construction of new homes and address ongoing housing shortages.

One key proposal involved exploring a construction loan product that would allow home builders to secure financing backed by mortgage-backed securities. This approach aims to streamline the financing process for developers while ensuring that the homes built would eventually be available for individual buyers through CalHFA's existing mortgage programs.

However, the discussion revealed that under the current structure, CalHFA does not offer construction loans directly. The agency primarily focuses on providing permanent loans for already constructed homes. Board members acknowledged the challenges in motivating home builders to engage in new construction and noted that while some other Housing Finance Agencies (HFAs) have ventured into this territory, it remains a complex and evolving area.

The meeting underscored the agency's commitment to exploring innovative solutions within its statutory framework while recognizing the limitations of its current offerings. As the housing market continues to face challenges, the board's discussions reflect a proactive approach to finding ways to support home builders and increase the availability of affordable housing in California.

The next steps involve further exploration of potential products and collaboration with other HFAs to address the pressing need for new housing construction.