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By Erika Morphy/GlobeSt.
More than any basis-point move, the most consequential number in multifamily finance heading into 2026 may be $30 billion. That is the combined increase in Fannie Mae and Freddie Mac’s multifamily purchase caps, a shift that appears technical on paper but is already reshaping how lenders structure deals, ways borrowers time refinancings and how capital stacks come together on the ground.
The Federal Housing Finance Agency has lifted each enterprise’s 2026 multifamily cap to $88 billion, up from $73 billion this year, for a combined $176 billion in potential liquidity. The move represents a roughly 20.5 percent jump in the agencies’ buying power and comes with a familiar condition: at least half of that volume must qualify as mission‑driven, affordable housing, with workforce housing again excluded from the cap calculation.
On the surface, the increase appears to be a straightforward response to rising transaction volume. Beneath that, the implications are more nuanced, particularly given how Fannie and Freddie have already been operating at the higher run‑rate since mid‑2025.
Running at the Higher Run‑Rate
Josh Bodin, senior vice president of Capital Markets Strategy & Trading at Berkadia, noted that the step‑up is less a greenfield expansion than a formalization of what the two agencies have been doing for months.
“Fannie and Freddie have actually been running at that sort of new $88‑billion run rate for the second half of this year already,” he said on a recent Berkadia podcast, pointing out that production in the third and fourth quarters accelerated sharply after a slow start to 2025.
That pace has been fueled by a combination of tighter spreads, moderating rates and a rebound in sales pipelines, particularly in multifamily, where Berkadia expects its own debt volume to finish 35 to 40 percent above 2024 levels.
The timing of the FHFA decision aligns with another shift that is less visible to the broader market: both enterprises have already demonstrated they can process $88 billion in annual volume. The first half of 2025 was relatively subdued, but by mid‑year, agency pipelines had ramped to the point of effectively running at the higher cap, even before it was officially announced.
That lends credibility to the idea that the extra $30 billion is deployable rather than aspirational. It also means borrowers should not expect a fundamental change in underwriting posture; the increase gives Fannie and Freddie room to keep doing what they have been doing at year‑end, rather than forcing a late‑year slowdown or rationing of allocations.
Two Operating Models, Two Paths to Capacity
Operationally, the agencies are positioned very differently to absorb the additional $30 billion in capacity, and that divergence matters for experienced borrowers deciding where to start. Freddie Mac leans on a more centralized, in‑house approach, with staff handling much of the due diligence, review and processing of loans. That model can give Freddie tighter control over credit and pricing and Bodin suggests it has allowed the enterprise to move quickly into niches such as floating‑rate executions as the Federal Reserve shifted from hikes to cuts in 2025.
The upshot for borrowers is that Freddie’s internal machine is geared toward speed and certainty once a deal fits within its credit box, particularly for stabilized and light-value-add assets that also meet affordability or mission criteria.
Fannie Mae, by contrast, is structured to distribute more of the front‑end workload through its Delegated Underwriting and Servicing network. Lenders in the DUS program carry significant authority to underwrite, structure and service loans, which effectively extends Fannie’s processing capacity out into the field.
In practical terms, the higher cap allows Fannie to lean harder on that delegated model without hitting the brakes late in the year, especially in markets where local DUS lenders have deep pipelines of workforce and naturally affordable product. The cap increase also creates more room for Fannie to retool and expand structured products, such as floating‑rate executions that have been “in the lab,” according to Bodin, after a period when fixed‑rate, five‑year paper dominated agency production.
Who Actually Benefits From the Extra Capacity
If the agencies’ operating models define how quickly capital can move, the more pressing question for owners is which asset profiles stand to benefit most from the new headroom. Bodin characterizes Fannie and Freddie as the “lender of first resort” for multifamily, but within that broad mandate, they have been particularly aggressive on stabilized and light value‑add deals, and on both capital‑A Affordable and “lowercase a” attainable units.
The FHFA’s requirement that at least half of 2026 business be mission‑driven all but guarantees that capital will continue to skew toward affordable executions, where the agencies have wide latitude to compete on proceeds and structure.
In practice, that means properties with clear affordability components—regulated rents, income‑restricted units, or documented workforce-housing characteristics—are best positioned to tap the incremental capacity on attractive terms.
Late‑cycle lease‑up deals are also emerging as beneficiaries, although with important caveats. Bodin cites a Las Vegas lease‑up transaction north of $100 million where an initial push to the agencies in mid‑year produced a lackluster response, in part because the mandate tilt toward affordability was still being met through other business. Three months later, as affordability quotas had been “well in hand,” the same deal returned to market and saw the agencies “really lean in on just sort of a T‑1 underwrite and get the deal up and down in relatively quick order.”
The episode underscores how timing relative to mission‑driven volume, as much as asset quality, can influence whether a lease‑up execution fits the agencies’ priorities at a given moment.
The additional cap space is also likely to extend deeper into markets facing short‑term oversupply, where life companies have been selectively stepping into construction and lease‑up risk. With more capacity and growing comfort around current rent and absorption trends, Fannie and Freddie have scope to compete more directly in these segments, especially when a project’s rent roll skews affordable or when it sits in metros with structural supply constraints, such as parts of the Midwest, the Mid‑Atlantic and coastal markets like Boston and San Francisco.
In those locations, Bodin and his colleague, Mike Miner, Berkadia’s senior vice president and head of Investment Sales, point to strong rent performance tied to limited new construction and high barriers to entry, conditions that align well with the agency’s appetite for predictable cash flows and durable demand.
By contrast, core institutional assets in high‑growth Sun Belt markets with heavy recent deliveries may see less direct benefit from the cap increase in the near term. Those properties often pencil better into life company or debt fund executions that can flex leverage and structure to address lease‑up risk and near‑term concessions.
For them, the agencies remain an option, but not necessarily the most competitive bid, particularly when affordability is limited and when value‑add or opportunistic business plans depend on more aggressive underwriting of future rents.
Easing a Key Friction in the Sales Market
Beyond individual asset types, the larger story is about market function. Miner describes 2025 as “bumpy, busy, basics,” with a notable gap between elevated broker opinion of value activity—up roughly 70 percent year-over-year in the third quarter—and a more modest sub‑10‑percent increase in closed multifamily volume.
On the sales side, Berkadia’s pipeline of actively marketed deals and assets in escrow has reached record levels, even as closings lag. The additional $30 billion of agency capacity will not, on its own, close that gap. But it does reduce one source of friction: the risk that a viable deal, particularly one with a clear affordability angle, will stall late in the process because Fannie or Freddie has run out of room for the year.