Officials will require half of all federally backed loans to be for mission-driven properties, or those with an affordability component, with increased focus on deep affordability.

A total of 25% of Freddie Mac and Fannie Mae loans will be for properties with rents set at up to 60% of the area median income, Wealth Management reports. That figure marks an increase of 20% from last year.

Not all of the loans for mission-driven properties must be for those affordable to people with incomes below area median income. The Federal Housing Finance Agency, which oversees Fannie and Freddie, defines properties in certain high-cost markets that are affordable to renters with incomes of up to 120% of AMI as mission-driven.

“Freddie Mac and Fannie Mae’s market share will be one of the lowest we have seen in a long time,” Dave Borsos, vice president of capital markets for the National Multifamily Housing Council, told Wealth Management. “The natural funder to fill in the gap this year is debt funds.”

He added that most of the multifamily properties bought last year weren't financed by Freddie and Fannie loans.

“It didn’t get financed by Freddie Mac and Fannie Mae — they were constrained,” he said.

In all, the FHFA will allow Freddie Mac and Fannie Mae to buy up to $78B each for apartments this year, marking an 11% jump over last year. While there will still be $39B for both Freddie and Fannie to fund high-end apartments, sources predicted private equity debt funds will see more business as investors look to finance Class-A properties.

Building affordable housing for both low- and middle-income families is enormously challenging, and fixing the problem has become urgent as rents are rising rapidly across the country because of a supply shortage.

In New York City, for example, the Real Estate Board of New York estimates the city needs 560,000 new units by 2030 to keep up with its predicted population and job growth.