By Noni Ramos
Across the country, affordable housing is facing intensifying headwinds. From Oakland to Omaha, developers are navigating rising construction costs, protracted approval processes and a funding landscape that rarely aligns with the urgency or complexity of the work. Public subsidies — while essential — are often insufficient to bring projects across the finish line. These conditions are particularly acute in high-cost regions, but they are playing out in communities of every size and type.
In the face of these challenges, community development financial institutions (CDFIs) are stepping up. Of the more than 1,400 certified CDFIs nationwide, several hundred are actively engaged in affordable housing — deploying mission-driven capital in all 50 states, as well as in Washington, D.C., and Puerto Rico. One reason CDFIs are present in every part of the country is that many are built to be responsive to local and regional needs. Those with deep roots in their communities are especially well-positioned to tailor financing to local conditions — whether that means supporting urban infill, rural preservation or tribal housing efforts.
CDFIs are not new to this work, but their role has never been more important. At a time when traditional finance models are falling short, CDFIs are providing flexible, patient capital that meets projects where they are — offering a path forward when other sources can’t or won’t. In doing so, they help communities translate vision into viability, making affordable housing possible in places where the odds are often stacked against it.
Startup Capital for Affordable Housing
The first dollars into an affordable housing project are often the hardest to secure. Yet without capital to acquire land or complete predevelopment work, no amount of subsidy or equity can bring a project to life. This is where CDFIs are making the biggest impact.
With a mission-driven approach and deep local knowledge, CDFIs provide the start-up capital that gets affordable housing off the ground — funding land acquisition, feasibility, entitlement and early design work before conventional or public sources are available. These early investments are critical to keeping momentum going on timelines that can otherwise stall for years.
By offering flexible, patient and responsive capital, CDFIs help developers establish site control, lock in pricing with general contractors, engage communities in design and clear the path for larger public and private investment to follow.
Consider Eden Housing’s La Avenida Apartments, a 100-home affordable community in Mountain View, California. In 2017, Housing Trust Silicon Valley provided a $9.7 million acquisition loan through its TECH — which stands for tech equity community housing — fund. This flexible capital allowed Eden to secure the site in a high-cost market and to begin moving the project forward before other sources were available.
Bridging Gaps and Stretching Public Dollars
CDFIs are not a substitute for public subsidies, but they are essential partners in helping subsidy go further. Their capital is often used to bridge gaps — covering critical costs that fall outside the timelines, restrictions or availability of government programs.
This bridging role also gives public agencies more room to operate strategically. When CDFIs provide early-stage or gap financing, public dollars can be used later in the process, leveraged alongside other sources, or reserved for the most deeply affordable units.
As the La Avenida project advanced, predevelopment costs emerged that public sources were not able to fund at that stage of the development process. Housing Trust increased its support with additional financing via the Google Launch Initiative — bridging critical gaps and allowing Eden to keep momentum through design and entitlement while positioning the project for future public investment.
Just as importantly, CDFIs are also bringing new capital into the field. Foundations, impact investors and corporations are increasingly turning to CDFIs as trusted intermediaries — offering a vehicle for deploying values-aligned capital in ways that are measurable, mission-driven and community-rooted.
Reimagining the Capital Stack
There’s growing interest — and growing need — for CDFIs to remain in deals beyond the early stages. By staying in through construction or even into permanent financing, CDFIs can help deliver more creative capital stacks that reflect today’s challenges and tomorrow’s opportunities.
When CDFIs stay in longer, they unlock new possibilities for preservation deals, mixed-income structures and deeply affordable projects that might otherwise be stalled by rigid underwriting or disjointed public funding cycles. This approach also encourages greater continuity and alignment across the housing lifecycle — building stronger partnerships and better outcomes.
La Avenida also demonstrates the value of long-term CDFI engagement. After supporting acquisition and predevelopment, Housing Trust provided a $3 million construction-to-permanent loan through the Apple Affordable Housing Fund — offering the final piece of permanent financing that enabled the project to get over the finish line.
Mission Meets Mismatch
Even as CDFIs demonstrate their effectiveness, they continue to face structural limitations that prevent them from fully meeting the housing needs of their communities.
Access to long-term, flexible and affordable capital remains a persistent challenge. Affordable housing development spans multiple years and phases — from design and financing to construction and, in some cases, permanent financing — but most financing available to CDFIs is short-term or constrained, misaligned with the extended development process and complexity.
Some partners — philanthropic institutions, impact investors and corporate leaders — have stepped forward with mission-aligned capital that has made a meaningful difference. Their participation has helped unlock projects that otherwise may not have moved forward. Still, to meet the scale of need, we need more of these partners to join in — and for those already engaged to consider investing for longer terms.
Policymakers and public agencies are also beginning to better understand the value CDFIs bring — not only as lenders, but as trusted, mission-driven partners with deep community relationships. Yet even as awareness grows, CDFIs are still too often left out of the policy conversations and funding frameworks where their expertise could add the most value. CDFIs operate in every part of the country, from rural towns to major cities, in both blue and red states. Their presence is national — but their strength is local.
At the same time, CDFIs must navigate a landscape of volatility — from shifting economic conditions to inconsistent public investment. Despite these challenges, they remain focused on delivering capital where it is needed most and doing so in ways that reflect the priorities and needs of local communities.
By expanding access to flexible, long-term capital and integrating CDFIs more deeply into planning and funding processes, we can ensure they are empowered to do what they do best: deliver high-impact housing solutions rooted in community.
Strengthening the Ecosystem
To fully realize their potential, CDFIs need to be integrated more intentionally into the housing finance system — with support from both public agencies and private, mission-aligned capital. This means creating the conditions that allow CDFIs to scale, innovate, and extend their reach across the full housing lifecycle.
Public agencies can:
- Call on CDFIs to help shape and implement local housing strategies, including bond measures, funding initiatives and deployment frameworks
- Align entitlement processes and land-use planning with the availability of early-stage capital
- Leverage CDFIs to deploy time-sensitive funds efficiently and equitably
Private and philanthropic partners can:
- Take a longer-term view of their housing investments — extending beyond traditional timelines to help unlock lasting affordability and equity
- Support innovation in permanent financing models that make mixed-income and deeply affordable housing more feasible and scalable
- Partner with CDFIs to reach historically underinvested communities with solutions grounded in local knowledge and relationships
CDFIs also represent a strong option for public and philanthropic partners seeking proven deployment vehicles. Many have been operating for decades, with sound financials, third-party ratings and established relationships with conventional lenders.
These are well-vetted organizations that offer not only mission alignment, but also the financial and operational discipline needed to manage complex capital and deliver results. For philanthropic institutions and corporate investors seeking both impact and accountability, CDFIs offer a proven, reliable path forward.
By deepening collaboration across sectors, we can build a more durable and responsive capital ecosystem—one that not only brings projects to life but also supports their long-term success in the communities that need them most.
A Call to Action
As the affordable housing crisis deepens, it’s clear that traditional finance alone can’t meet the challenge. We need partners willing to take risks earlier, stay in longer and prioritize impact. CDFIs are already doing this — quietly and effectively — in communities across the country.
Their role goes beyond filling capital gaps. CDFIs help reimagine how affordable housing is financed: with trust, creativity and deep community commitment.
La Avenida is proof of what’s possible. With support at every stage — from acquisition and predevelopment to permanent financing — Housing Trust helped bring the project to life by blending public, philanthropic, and corporate capital. Today, it’s a thriving place for those lucky enough to call it home. This is the kind of catalytic, community-centered financing that only CDFIs are built to lead.
When local capital leads, projects move, public dollars go further, and communities thrive. Now is the time to scale what works.
Noni Ramos is the chief executive officer of Housing Trust Silicon Valley, a nonprofit community group that works to develop affordable housing. She can be reached at [email protected].