Hardware Retailing The Industry's Source for Insights and Information
The National Association of Home Builders (NAHB) recently released a new guide on financing missing middle housing, designed to help builders, developers and lenders better understand why these products often struggle to secure financing and what can be done to close the gap.
Missing middle housing includes smaller-scale residential development such as duplexes, duplexes, triplexes, fourplexes, townhomes, cottage courts and small multifamily buildings. These housing types can provide more attainable housing options, support workforce housing and help communities grow incrementally while making more efficient use of land.
Missing middle projects are often too large for conventional single-family lending, but too small or unconventional for standard multifamily loan programs. As a result, builders and developers can face higher equity requirements, limited financing options and underwriting standards that were never designed for projects at this scale.
Lenders also view these projects as riskier simply because they are less familiar. Yet many missing middle developments are in established neighborhoods with strong demand, and can often deliver housing more quickly and with less exposure than large multifamily projects.
NAHB’s new guide addresses these challenges from both the developer and lender perspectives and details solutions that can help bring more missing middle housing to market. The guide examines:
- Where financing gaps exist
- Why traditional lending structures often fall short
- How builders, developers, lenders and policymakers can work together to support these projects
- How strategies such as portfolio-based lending approaches, revolving loan structures, public-private financing partnerships and zoning reforms can make missing middle housing more financially feasible
This new resource provides a framework for understanding the problem and identifying solutions that can help move missing middle housing from concept to construction.
