Multifamily Financing In 2026: How Are Projects Moving Ahead?

After a dramatic few years, pressure seems to be easing on the multifamily market, with construction starts slowing and absorption catching up to inventory growth. That doesn’t mean developers should be scrapping their plans for new developments, however, particularly if they are interested in the affordable market. 

A national shortage of 7.2 million affordable, available rental homes remains for low-income renters, a gap the U.S. consistently struggles to fill. Financing often is a problem for these projects, though U.S. Department of Housing and Urban Development-backed loans can help developers bring them to life. 

Capital One offers a wide range of commercial real estate financing, with a $95B CRE portfolio across the U.S. This includes a comprehensive multifamily portfolio with developers in the market-rate and affordable markets. 

“Our mission is to help build inclusive, thriving and resident-centered communities that catalyze opportunity and promote long-term well-being for all residents,” said Capital One Director of FHA and Agency Lending Michael Slonim. 

Slonim walked Bisnow through the realities of multifamily financing today, including how developers can leverage HUD loans and work with firms like Capital One to push projects ahead. 

Bisnow: What trends in multifamily financing are you seeing in 2026, particularly concerning HUD?

Slonim: We're seeing borrowers search for higher-leverage loans. The equity markets have shifted. Many LP equity investors are now using preferred equity, leaving sponsors fewer options for partners on ground-up projects.

Many recently completed projects were started in a different rate environment and had value expectations that were in line with lower rates.

I have clients who have recently been caught in a capital markets trap, with today's higher rates making it difficult for sponsors to refinance without bringing equity to close. These clients are looking at 221(d)(4) loans, which are nonrecourse, Federal Housing Authority-insured construction-to-permanent mortgages for multifamily properties, to avoid this potential issue on projects going forward.

Borrowers are exploring permanent executions, like the HUD 223(f), which offers attractive, long-term, fixed-rate financing with the lowest debt service coverage ratios, in order to maximize proceeds.

Bisnow: Which multifamily projects stand the best chance of gaining financing today? 

Slonim: While affordable projects have more hoops to jump through to get approved, there are executions designed explicitly for affordable properties. 

HUD loans remain a great option. Qualifying projects with low-income housing tax credits can skip the preapplication phase of 221(d)(4) construction-to-perm process, cutting months off the timeline. 

For market-rate projects, those with a low basis are at a greater chance of penciling in this period of continually increasing hard costs.

Bisnow: In light of current market uncertainty, what advice do you have for investors and developers to get their projects from concept to completion? 

Slonim: It's important to have a long-term plan, which can lessen interest rate risk. HUD financing has a built-in interest rate reduction feature, and the only cost to the borrower is their legal bill. If rates drop, a borrower can potentially lower their interest rate by filling out a form, without reunderwriting the deal.

Bisnow: What services does Capital One offer that can help a multifamily investor in this environment? 

Slonim: We have a competitive bridge platform for properties that are in lease-up or have minimal value-add. Properties that aren't yet ready for permanent financing can season on aggressively rated debt. 

For affordable developers, we have products that are designed to work in conjunction with low-income housing tax credits. Our Community Finance platform provides essential capital through debt and equity investments to finance properties developed primarily via the federal LIHTC program. Our goal with this initiative is to build resident-centered communities for all. 

Capital One is a large financial institution. In addition to our own balance sheet, we have debt fund partners with whom we can work to offer solutions to our clients. 

This article was produced in collaboration between Capital One and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.