Residential Lending Advance

The Bank’s Community Investment Advance provides your financial institution with a useful tool for the business of residential lending. These funds are at a discounted rate to the member, and are intended to assist our members in meeting affordable housing needs in economically depressed areas in both urban and rural communities.

These discounted advances are available for targeted loans that support the purchase, construction, rehabilitation, or refinancing of owner-occupied residential housing and rental housing. The program also supports predevelopment financing of owner-occupied residential housing and rental housing. Loans that are short-term or long-term, refinance loans and purchased loan participations are eligible. Refinance loans for housing projects are eligible if equity proceeds are used to rehabilitate the project or to preserve affordability for current residents. For more information, see Loan Qualifications for owner-occupied housing or rental housing.

 

Typically, loans are eligible if they serve low-and-moderate income households or are originated in targeted areas. There are several targeted area designations, but the most common is targeted area by income. (see Loan Qualifications for owner-occupied housing or rental housing)

The minimum borrowing amount is $100,000.

Example

A member is involved in an initiative to fund a rental housing project that would purchase and rehabilitate 50 units of housing for rent to low income persons. Financing needs include a construction loan to purchase and rehabilitate the building. For the long term, the project will obtain low income housing tax credits and subsidies from the local government. There will also be a need for some long-term mortgage financing. The member will use a shorter term Community Investment Advance to help support the construction loan, and later, a 20 year advance to support the long-term loan. For the construction and long-term loans, the member is able to offer the project a low, competitive fixed rate, to help make the project possible. With this project, the bank gained a new banking relationship and managed financial risk with matched Community Investment funding.

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Community Investment