Weekly Real Estate News
Ginnie Mae is expanding access to its mortgage-backed securities program for certain USDA-backed rural apartment loans, raising the maximum eligible loan-to-cost ratio from 70% to 80% for qualifying Section 538 multifamily mortgages.
The federal housing-finance agency announced the change October 20, following a September 25 USDA Rural Development notice that raised the maximum loan-to-cost ratio for loans under the Section 538 program’s Option Three, or Continuous Guarantee. Ginnie Mae’s revised pooling eligibility applies to qualifying loans submitted on or after November 1, 2026.
Why the change matters for rural apartment financing
USDA’s Section 538 program provides guarantees on eligible rural rental housing loans. Ginnie Mae does not make those loans; instead, its securities program helps approved issuers finance eligible government-guaranteed mortgages through the secondary market.
After USDA increased the permitted loan-to-cost ratio, a mismatch remained: a loan could meet USDA’s higher guarantee threshold yet exceed Ginnie Mae’s existing 70% pooling limit. The October 20 change addresses that gap for qualifying transactions.
For lenders and developers, the additional financing flexibility could make some affordable rural rental housing projects easier to structure, including transactions that also use Low-Income Housing Tax Credits. It does not mean every project qualifies for 80% financing, nor does it waive credit, program or issuer requirements.
Separate from USDA’s preservation pilot
The increase is distinct from USDA’s broader multifamily preservation pilot announced in September. That pilot addresses administrative and transfer-related barriers, while this change aligns the securitization ceiling with USDA’s Section 538 Continuous Guarantee rules.
Ginnie Mae announced the updated guidance in its October 20 newsroom and All Participants Memorandum. USDA described the underlying 70%-to-80% change in its September 25 Federal Register notice.
WRE News previously covered USDA’s rural rental housing preservation pilot. The Ginnie Mae action is a subsequent, separate secondary-market development.
Lenders planning November submissions should review the applicable Ginnie Mae MBS Guide provisions and confirm transaction eligibility before relying on the higher ceiling.
