Supporting Access to Affordable Housing Nationwide

Rising costs of living and shortages in rental housing inventory nationwide have made affordable housing less attainable. Housing is affordable when a household spends no more than 30% of their income on housing costs; households that spend more than 30% of their income on housing costs are considered “cost-burdened.”

Housing affordability challenges are impacting every part of the country – spanning urban, suburban and rural communities and impacting households across the income spectrum. According to the America’s Rental Housing 2024 report from the Joint Center for Housing Studies of Harvard University: 

• In 2022, half of all renter households were cost-burdened.

• All income groups had increasing cost-burden rates from 2019 to 2022.

• Cost-burden shares are highest in the largest metros, and more than half of renter households living in metros with populations over 1 million were cost-burdened in 2022.

Higher home prices and interest rates also continue to squeeze potential buyers out of the home ownership market and drive up the number of renter households. Gen Z – which represents nearly one-fourth of the US population – is entering prime renting age only to find an increased demand for affordable and workforce rental housing and fewer available rental options given the housing pressures facing their Millennial counterparts.

“Each of us needs safe, decent, stable housing, and yet, there are still many misconceptions about affordable housing,” says Desiree Francis, head of Community Finance at Capital One. “With home prices and rents rising, many people are feeling the squeeze. High housing costs means that people are paying more and more of their income for housing.”

Safe, affordable housing isn’t just essential for well-being. It’s also a determinant of a wide range of health outcomes and risks. According to the Insights from Housing Policy Research, affordable housing can alleviate overcrowding, reduce stress and positively impact mental health.

Capital One deploys capital in the form of debt and equity investments to finance affordable housing primarily through the low income housing tax credit (LIHTC) program, working alongside developers and governmental agencies. Over the past 17 years, Capital One has been an avid collaborator in this space to advance shared goals of affordable housing creation. In 2023, Capital One financed more than $5.4 billion of affordable housing for low- to moderate-income households nationwide.

In addition to leveraging the LIHTC program, Capital One is an experienced originator in mission-driven and affordable lending programs through Fannie Mae, Freddie Mac and FHA. Through these entities, Capital One not only finances affordable housing, but also workforce housing, which can be defined as housing that is affordable to households whose income is too high to qualify for rent-restricted or subsidized housing but too low to qualify for luxury properties.

“There are fewer programs targeted specifically toward workforce housing to help bridge the cost of development and operations while keeping rents affordable for workforce housing residents,” says Maggie Burke, senior vice president of Agency Finance at Capital One. “Therefore, we need to get creative as an industry to allow for the creation, preservation and renovation of workforce housing.”

Fannie Mae and Freddie Mac have taken meaningful steps to fill those gaps through their workforce housing loan products for eligible properties. As a top-10 Agency Lender by total Agency loan volume – and Freddie Mac’s 2023 Top Workforce Preservation Lender – Capital One has supported the creation and preservation of workforce units through these programs.

Capital One strives to promote individual well-being by financing both the development and preservation of affordable housing, along with services that directly respond to the needs of residents. In some cases, these services may be tailored for populations such as veterans, intergenerational households and those formerly experiencing homelessness.

Capital One takes a multi-pronged approach to support resident services. Two ways that Capital One supports resident services are by financing properties with a resident services component built into the operating budget, and designing and funding programs for implementation in the affordable housing properties financed by Community Finance.

Resident services are typically provided solely by dedicated staff, through partnerships or a combination of both.  Services support greater stability and well-being for residents. Programs, which are free to residents, may include, but are not limited to:

• Onsite health screenings

• Access to mental health services

• Financial coaching

• Positive rent reporting

• Credit counseling

• Digital access

• Wellness events

• Access to transportation

In 2023, Capital One launched a Financial Well-being pilot program, which provides residents at three properties with access to financial coaching and tools to build their credit. Tools include positive rent reporting, in which on-time monthly rental payments are reported to credit bureaus; installment loans through a nonprofit Community Development Financial Institution (CDFI), where residents get positive credit reporting history for paying back their loans on time; and a secured credit card offered through a local, nonprofit CDFI, in which residents who otherwise might not qualify for a credit card have access to a low-limit card they can use to build credit.

In 2020, Capital One also launched the Capital One Digital Access (CODA) pilot program. CODA aims to increase digital access by providing residents with free high-speed Internet access and tablets, through which they can pursue education and employment goals, as well as access finances, health and other services online. 

These two programs were designed to provide residents with tools and resources that can unlock opportunities for upward socioeconomic mobility.

Capital One recently announced a $265 billion Community Benefits Plan as part of its proposed acquisition of Discover. The plan commits $44 billion in community development financing, including over $35 billion supporting affordable housing for low- to moderate-income (LMI) communities and individuals and over $5 billion supporting solutions to challenges LMI communities face, including employment, food accessibility, healthcare, education, renewable energy and public infrastructure. Learn more.