The Act establishes an annual $200 million “Innovation Fund” to reward local governments that increase attainable housing.

The 21st Century ROAD to Housing Act (HR 6644)—enacted to address the housing affordability and shortage crisis—became law on July 11, 2026, with broad bipartisan support. The Act reaches nearly every corner of the residential real estate market, from zoning and land-use policy to environmental review, manufactured housing, community banking and restrictions on institutional purchases of single-family homes.

Key Provisions

Zoning and Land-Use

The Department of Housing and Urban Development (HUD) must publish best-practice zoning and land-use frameworks within three years. Although adoption is voluntary and the Act does not preempt local zoning authority, the guidelines will address topics such as simplification of zoning codes, maximum review timelines, by-right multifamily uses, parking and lot-size requirements, accessory dwelling units and disposition of government-owned land for affordable housing. Additionally, the Act directs HUD to establish a competitive grant program for eligible state and local entities to fund planning and implementation activities related to affordable housing. Those grant funds may be used for planning and implementation activities such as housing plans, zoning-code updates, regulatory-process reforms, inspection capacity and efforts to reduce barriers to housing supply and affordability.

Innovation Fund

The Act establishes an annual $200 million “Innovation Fund” to reward local governments that increase attainable housing. Grants range from $250,000 to $10 million, with at least 25 awarded annually. Eligible initiatives include by-right multifamily uses, parking reforms, streamlined permitting, accessory dwelling unit (ADU) expansion and local tax incentives.

Environmental Review Streamlining

HUD may expedite National Environmental Policy Act (NEPA) review for infill projects, adaptive reuse, rehabilitation, new construction of 15 units or fewer, and activities within existing footprints. For HOME-funded activities, categorical exemptions apply to infill housing, property acquisition, rehabilitation and small-scale construction. HUD must also coordinate with other federal agencies to avoid duplicative reviews.

Manufactured Housing

The definition of “manufactured home” now includes homes with or without a permanent chassis, and HUD must issue standards for homes without a chassis. States must certify equivalent treatment for financing, title, insurance and taxation. Federal Housing Administration (FHA) loan limits increase to approximately $106,000 for single-section homes and $195,000 for multisection homes. HUD must also review FHA construction financing barriers and initiate rulemaking on alternative financing structures.

HOME Investment Partnerships Program

Under the Act, the HOME program is reauthorized with expanded income eligibility, now reaching families earning up to 100 percent of area median income rather than the prior low-income threshold. HOME-funded activities also benefit from the NEPA categorical exemptions described above, reducing environmental review burdens for participating projects.

Community Banking

The Act raises the public welfare investment cap for national and state member banks from 15 percent to 20 percent of capital and surplus, encouraging greater bank investment in housing and community development. Title IX, “Strengthening Community Banks’ Role in Housing,” delivers regulatory relief including a limited custodial-deposit exception, a revised reciprocal-deposits framework easing broker-deposit restrictions, a doubled asset threshold (from $3 billion to $6 billion) for tailored supervisory testing and a two-year phase-in of capital standards for newly chartered community banks.

Institutional Investor Restrictions

The Act prohibits large institutional investors—entities with investment control of 350 or more single-family homes—from purchasing additional single-family homes. The prohibition responds to concerns that large institutional investors compete with individual homebuyers in the single-family housing market. But the Act provides several exceptions for purchases by a large institutional investor under Section 1001 such as: new construction, renovation and build-to-rent; homeownership programs; foreclosures, debt satisfaction and loss mitigation; transfers and transition-period purchases.

Action Items

Institutional Investors

Determine if you meet the 350-home threshold. Map your portfolio against statutory exceptions (build-to-rent, renovate-to-rent, purchases from other investors). Prepare for annual HUD notifications starting January 7, 2027, and post renter outreach resources on your website.

Developers and Builders

Monitor HUD’s zoning and land-use frameworks. Pursue Innovation Fund grants for pro-housing initiatives. Leverage NEPA exemptions for infill, rehab and adaptive reuse projects. Review expanded FHA loan limits for manufactured homes and upcoming alternative construction financing rules.

Community Banks and Lenders

Leverage the increased public welfare investment cap (now 20 percent of capital and surplus). Review eased broker-deposit restrictions. Banks with under $6 billion benefit from a doubled supervisory testing threshold; newly chartered banks get a two-year capital standards phase-in.

Local Governments

Review zoning and land-use regulations for HUD grant eligibility—particularly by-right multifamily uses, streamlined permitting, reduced parking and lot-size requirements and ADU reforms.

For More Information

If you have any questions about this Alert, please contact David Amerikaner, Daniel L. Mita, Brendan Mullen, any of the attorneys in our Real Estate Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.