Sarah Brundage, president and CEO of the National Association of Affordable Housing Lenders (NAAHL), says 2026 is emerging as a pivotal year for the industry as key changes begin to take hold.
In this interview with Affordable Housing Finance, Brundage discusses her outlook for affordable housing lending, top priorities, and the question she hears most often on Capitol Hill.
The affordable housing industry veteran previously served as the senior adviser for housing supply and infrastructure in the Office of the Secretary at the Department of Housing and Urban Development (HUD). She also previously served as general deputy assistant secretary for the Office of Congressional and Intergovernmental Relations at HUD.
What is your outlook for affordable housing lending this year?
When it comes to affordable housing lending, we must be ambitious in 2026. There are tremendous opportunities emerging from recent and pending legislative changes. The low-income housing tax credit (LIHTC) expansion alone is set to produce or preserve over 1 million homes over the next decade. Combining program expansions like the LIHTC with ongoing reforms means 2026 could hold huge potential for lending that truly supports affordable homes.
From the local to federal levels, a record wave of housing bills is paving the way for 2026 innovations. Key bills like the ROAD to Housing Act and the Housing for the 21st Century Act could help make more affordable housing possible, slashing red tape and boosting Federal Housing Administration multifamily financing.
And going into 2026, President Trump affirmed that affordable housing is a top priority. As we gear up for the State of the Union address [Feb. 24], I hope President Trump outlines even more plans to boost affordable housing supply and support lenders.
That being said, there are still challenges and uncertainties ahead so we can’t assume that we will be able to make a dent in the national shortage of affordable housing without real intentionality, commitment, and innovation.
Share NAAHL’s priorities for 2026.
As we head into election season, conversations focused on affordability will continue to be center stage. Housing affordability is a nonpartisan issue—it’s affecting homeowners and renters in every community across the country. For 2026, our vision is to make affordable housing a cornerstone of national progress.
To really tackle housing costs and expand opportunity, we need to leverage the strengths of both the public and private sectors. We’re focused on ways to build and expand on proven public-private partnership models, including through:
- Increasing the public welfare investment (PWI) cap for banks from 15% to 20%, allowing them to invest more in affordable housing and economic opportunity. This would be a game-changer for 2026, amplifying investments and driving real change;
- Enacting the Neighborhood Homes Investment Act, creating a federal tax credit to support the repair and construction of affordable starter homes;
- Updating federal housing programs like HOME and Community Development Block Grants to reduce red tape and ensure these programs can be leveraged to expand housing supply; and
- Expanding opportunities for Community Development Financial Institutions (CDFIs) to support affordable housing and financial opportunity in underserved markets, including through legislation like the Scaling Community Lenders Act.
All of these priorities have bipartisan champions in Congress. It is especially encouraging that there is unprecedented support for bipartisan housing legislation, including the ROAD to Housing Act and the Housing for the 21st Century Act, which both include an increase in the PWI cap and housing program reforms. Bipartisan action isn’t just possible; it is essential for America’s housing future.
President Trump has also made housing affordability a key priority. We hope that his State of the Union address will highlight the need for bipartisan action that draws on the public and private sectors to expand affordability.
What changes do you expect to see from lenders this year, and are there any emerging financing structures to watch?
This year we’ll see the beginning of implementation of the LIHTC expansion and reforms that passed Congress last year, which will help create and preserve additional homes. One standout reform is the lowered threshold for private-activity bonds—from 50% to just 25% for 4% LIHTC deals. This isn’t just a tweak; it’s a catalyst that stretches bond capacity further, making it easier to preserve existing housing and fill funding gaps for projects that were previously out of reach.
Beyond the LIHTC, we’re seeing a rise in innovative non-LIHTC equity models across states and cities. These programs offer lower-cost financing in exchange for affordable units. As these programs mature, we’re eager to scale successes in new markets. This is an opportunity to drive real, community-focused impact.
Overall, 2026 is shaping up to be a pivotal year for affordable housing, with these changes paving the way for greater accessibility.
What are you most concerned about this year?
I am most concerned about ensuring robust private investment fuels affordable housing for American families while we maintain a functioning federal government that is delivering on its commitments to the American people, especially as funded by Congress. Partnership is power, and we need to both scale investments for the public good with the private sector and a strong federal partner to help maximize the impact of those private dollars.
To that end, we are watching out for how agencies like HUD and Treasury operate, especially after last year’s disruptions to Congressionally appropriated funding and the longest federal government shutdown on record. With many fiscal 2025 appropriated funds still pending, we are advocating hard for timely access at places like the CDFI Fund. Ultimately, we are optimistic that, with the administration’s support, we will create a stable environment where investors can thrive and tackle our housing shortage head-on. We hope President Trump will use his remarks at the State of the Union to give private lenders and investors certainty that the federal government will provide them with the tools they need to accomplish this.
What’s the latest on Community Reinvestment Act (CRA) reform efforts?
After years of uncertainty around CRA rule revisions, banking regulators have proposed reinstating the longstanding 1995 regulation. Putting that regulation back in place is a positive step for lenders and for communities. CRA plays an essential role in supporting access to financing for low- and moderate-income and underserved areas, and it is CRA-qualifying loans and investments that are building and preserving affordable housing in communities nationwide. This rule isn’t new; banks and their partners have years of working under this framework to foster meaningful collaborations and drive real community investments. At NAAHL, we’ve been urging regulators to fast-track this reinstatement and provide additional guidance to help lenders make even more innovative investments. In short, this is about providing certainty so that banks can do the long-term projects and build the local partnerships that truly make a difference. Because when communities thrive, everyone benefits.
What’s something to watch for in the next federal budget?
The annual appropriations bills for HUD and the CDFI Fund, signed by the president in early February, delivered stable funding—and even increases—for key housing and community development programs, despite earlier proposals for drastic cuts. The bipartisan backing underscores the essential role these initiatives play in enabling affordable housing and successful public-private partnerships. While the president’s budget might again suggest cuts, the strong Congressional support we have seen is encouraging. It highlights the recognition that federal programs are vital catalysts for private investment and boosting housing supply. As we look ahead, I’m optimistic that Congress will continue prioritizing these efforts, proving that housing is a nonpartisan priority for our federal budget.
What question do you get most when on the Hill, and what is your answer?
Currently, the most common question I’m hearing on the Hill is why there aren’t enough starter homes—affordable options for first-time buyers with modest incomes.
This is a pressing issue because skyrocketing prices are locking people out of the American Dream. There are multiple factors at play, including local zoning laws that enforce minimum lot sizes, but it boils down to basic supply and demand: We simply don’t have enough homes that fit people’s budgets and needs. This drives up costs, making it harder than ever to get that foothold in homeownership.
I am proud to say that NAAHL co-chairs the Neighborhood Homes Coalition, championing the Neighborhood Homes Investment Act.
This game-changing, bipartisan legislation could build or preserve 500,000 affordable for-sale homes over the next decade, directly tackling the shortage and creating real opportunities for families.
Ultimately, this is a key tool in our arsenal to boost affordable housing supply and make homeownership accessible again.