FHA in 2025 and 2026: what changed for rental, factory-built and workforce housing

FHA has made more changes relevant to housing developers in the past year than in several years before that. Some are already in effect. Others were written into the 21st Century ROAD to Housing Act in July 2026 and depend on HUD guidance. Here is where things stand.

1. Multifamily premiums dropped to the floor

For applications submitted or amended on or after October 1, 2025, HUD cut the mortgage insurance premium for every FHA multifamily program to 0.25 percent, the statutory minimum. Section 221(d)(4) new construction fell from 0.65 percent, 223(f) acquisition and refinance from 1.00 percent upfront and 0.60 percent annual, and Section 207 manufactured home park financing from 0.70 percent.

Because every program now pays the same rate, HUD retired the reduced-premium categories for green, affordable and broadly affordable properties, along with the green reporting requirements that came with them. For owners and developers of manufactured home communities, the Section 207 change is easy to overlook and worth a second look.

2. Build-to-rent communities can now use FHA multifamily insurance

Effective October 14, 2026, under a new mortgagee letter, build-to-rent communities of single-family homes, duplexes and triplexes, site-built or manufactured, can qualify for FHA multifamily insurance under Section 221(d)(4) for new construction and Section 223(f) for acquisition or refinance, on the same terms as traditional multifamily rental properties. The program is aimed at professionally managed rental communities, and the mortgagee letter sets the specific requirements, which sponsors should read in full.

Eligibility is not approval. These are full HUD multifamily underwritings with their own timelines, third-party reports and requirements, including federal prevailing wage requirements on 221(d)(4) new construction. They suit sponsors who can plan for that process from the start.

3. What the ROAD to Housing Act changed for FHA

• Multifamily loan limits: the statutory per-unit limits across several FHA multifamily programs roughly triple to quadruple, and annual adjustments now follow a Census measure of multifamily construction costs instead of general inflation.
• Manufactured homes under Title I: higher limits, annual indexing, a single maximum term of up to 30 years, more flexibility for homes on leased lots in communities, and accessory dwelling units as an eligible use. HUD adjusts the limits annually by notice. For reference, the limits HUD set in 2024 under its indexing rule were $105,532 for a single-section home and $193,719 for a multi-section home, or $148,909 and $237,096 with the lot.
• Modular construction loans: HUD must review FHA construction financing for barriers to modular construction by July 11, 2027, then start a rulemaking on an alternative draw schedule within 120 days.
• Small-dollar mortgages: HUD is to establish a four-year pilot for FHA-insured mortgages of $100,000 or less, a segment that matters for lower-cost homes.
• Appraisals: appraisers licensed in the property's state, not only certified appraisers, may perform FHA appraisals under HUD guidance due by March 8, 2027 and effective within 180 days after it is issued. Lenders must offer a process for requesting reconsideration of value.
• Oversight: HUD reports monthly to Congress on the capital ratio of the single-family insurance fund.

4. What has not changed

None of this changes underwriting fundamentals. A project still needs a supportable market study, a feasible budget, an appraisal that holds up, entitlements in hand and a sponsor the lender can underwrite. HUD processing times, third-party report requirements and construction standards still have to be planned into the schedule. And a lower premium on a loan that closes six months late is not a saving.

What we would check before choosing FHA

• Which program fits: 221(d)(4), 223(f), Section 207 for a manufactured home community, or conventional or agency debt
• Whether the provision the plan depends on is already in effect or still waiting on a mortgagee letter, rule or guide revision
• How HUD's timeline and third-party reports line up with the approval schedule and the construction start
• Prevailing wage, construction standard and cost certification requirements, priced into the budget from day one
• For factory-built homes, how the lender handles deposits and progress payments to the plant

General information, not legal, engineering or investment advice. Approval requirements vary by jurisdiction.