Seven federal housing and banking agencies yesterday withdrew guidance that had encouraged lenders to offer special purpose credit programs (SPCPs) to disadvantaged borrowers, marking the latest reversal of Biden-era housing policy. The rescission, published Monday, August 24, 2026 in the Federal Register, affects programs that provided down payment assistance, closing cost help, and rate buydowns to borrowers who historically faced barriers to homeownership.
The agencies—including the Department of Housing and Urban Development, Federal Housing Finance Agency, FDIC, Office of the Comptroller of the Currency, National Credit Union Administration, Consumer Financial Protection Bureau, and Department of Justice—said the February 2022 interagency statement conflicts with the Equal Credit Opportunity Act, the Fair Housing Act, and Supreme Court precedent on race-conscious policies. The action took effect Tuesday, August 25, 2026.
The withdrawal follows a series of regulatory changes this year that have steadily narrowed the scope of special purpose credit programs, which have existed since Congress authorized them in 1974 as a tool to expand credit access to groups denied loans due to discrimination.
The policy shift
What changed and when
A timeline of regulatory rollbacks affecting lending programs for underserved borrowers
The original February 2022 interagency statement reminded banks, credit unions and other creditors that the Equal Credit Opportunity Act and Regulation B permitted SPCPs designed to meet the credit needs of specified classes of borrowers and encouraged institutions to explore such programs consistent with fair lending and safety-and-soundness requirements. That guidance came after HUD issued a December 2021 opinion concluding that properly designed SPCPs generally would not violate the Fair Housing Act.
But the Trump administration has systematically dismantled support for these programs. On March 25, 2025, Federal Housing Finance Agency Director Bill Pulte ordered Fannie Mae and Freddie Mac to terminate Special Purpose Credit Programs that they support. In April 2026, the CFPB amended Regulation B to prohibit for-profit lenders from using race, color, national origin or sex as factors in determining eligibility for an SPCP. The CFPB then rescinded a 2020 advisory opinion on SPCPs on June 17, 2026. The Federal Reserve withdrew its version of the interagency statement on August 21, 2026.
In the Federal Register notice, agencies said prior interpretations that allowed certain race-based programs conflict with ECOA, the Fair Housing Act and Supreme Court precedent holding that race-based policies are subject to heightened scrutiny and that a general desire to remedy societal discrimination does not meet that standard. HUD Assistant Secretary for Fair Housing and Equal Opportunity Craig Trainor said in a statement that “no regulation or interagency statement fixated on the Biden administration’s DEI commitments can defeat the Fair Housing Act’s categorical prohibition against discriminating on the basis of race and color in any residential real estate-related transaction.”
The regulatory cascade
March 25, 2025: FHFA orders Fannie Mae and Freddie Mac to end SPCP support
April 2026: CFPB amends Regulation B to ban race, color, national origin, and sex as SPCP eligibility criteria for for-profit lenders
June 17, 2026: CFPB rescinds 2020 advisory opinion on SPCPs
August 21, 2026: Federal Reserve withdraws interagency statement
August 25, 2026: Seven agencies formally rescind 2022 guidance
Background
What special purpose credit programs did
How SPCPs worked and who they served
SPCPs are targeted lending products designed to specifically advantage groups historically denied credit due to discrimination. While broader adoption of SPCPs didn’t occur until recently, the programs have been legal and allowable since 1974 due to a provision in the Equal Credit Opportunity Act to reverse centuries of unfair laws and practices. The programs can take many forms, but the most common products included downpayment assistance, closing-cost assistance, and rate buydowns.
Under the Equal Credit Opportunity Act and Regulation B, SPCPs are credit assistance programs for economically or socially disadvantaged consumers and commercial enterprises. Before the recent regulatory changes, for-profit lenders could establish SPCPs that identified beneficiaries by characteristics including race, national origin, or sex—factors that would normally be prohibited under fair lending laws.
Real-world examples illustrate how these programs worked. Bank of America has an SPCP called the “Community Affordable Loan Solution” for first-time homebuyers that offers zero down-payment and zero closing-cost mortgages. Guaranteed Rate offers an SPCP that provides up to $8,000 in assistance to help borrowers overcome accessibility challenges such as deposit minimums and move-in repair and maintenance costs. In many cases, eligible buyers received $4,500 to $5,000 toward down payment or closing costs, along with an additional $1,000 credit that could be applied toward things like an appraisal and a home warranty.
According to FHFA, in 2023, the GSEs acquired 14,968 mortgages originated through SPCPs. The official rescission notice is published on the Federal Register website, and more information about the agencies’ positions can be found on HUD’s website and the FHFA website.
Impact
What this means for homebuyers
How the policy change affects access to down payment help and affordable mortgages
The practical effect of these regulatory changes is that many borrowers who would have qualified for down payment assistance or reduced closing costs through SPCPs will no longer have access to those programs. While FHFA Director Pulte’s announcement puts an end to SPCPs that would be available for purchase at the GSEs, it does not eliminate SPCPs entirely—lenders can still offer SPCPs on their own and fund them through their own capital. However, the majority of mortgages secured in the country today are originated by non-bank lenders without deposits to fund their own loans, so although lenders may continue to offer SPCP loans, the recent action by FHFA significantly dries up capital available for them.
For buyers who previously benefited from these programs, the withdrawal means fewer options for zero-down or low-down-payment mortgages and less assistance with closing costs. First-time buyers, low-to-moderate income households, and borrowers in historically underserved communities are most likely to feel the impact. You may need to explore other down payment assistance programs offered at the state or local level, or consider conventional programs like FHA loans that still offer low down payment options.
It’s worth noting that there has been speculation among mortgage loan originators that the FHFA directive would dismantle Freddie Mac’s Home Possible mortgage program and Fannie Mae’s HomeReady mortgage program, but those two GSE programs are distanced from SPCPs and are specifically referenced as Equitable Housing Finance Plans, or EHFPs. HomeReady and Home Possible remain available and continue to offer low down payment options for qualifying borrowers.
If you were planning to use an SPCP for your home purchase, contact your lender immediately to understand whether your program is still available. Some lenders with strong balance sheets may continue to offer SPCPs and hold the loans in portfolio, but availability will be much more limited than before. Consider working with a HUD-approved housing counselor who can help you identify alternative first-time buyer programs and assistance options in your area.
Programs still available
Despite the SPCP guidance withdrawal, several assistance programs remain in place:
Fannie Mae HomeReady: Low down payment program with flexible credit requirements (not classified as an SPCP)
Freddie Mac Home Possible: Down payment assistance for low-income borrowers (not classified as an SPCP)
FHA loans: 3.5% down payment with credit scores as low as 580
State and local programs: Many state housing finance agencies offer down payment assistance independent of federal SPCP guidance
Quick answers
Special purpose credit programs: common questions
Are special purpose credit programs completely illegal now?
No. SPCPs remain legal under the Equal Credit Opportunity Act, which has permitted them since 1974. However, the regulatory environment has changed significantly. For-profit lenders can no longer use race, color, national origin, or sex as eligibility criteria for SPCPs as of the April 2026 Regulation B amendments. Lenders can still offer SPCPs based on economic disadvantage or geographic criteria, but they cannot sell those loans to Fannie Mae or Freddie Mac, which severely limits the capital available to fund such programs.
Will I still be able to get down payment assistance?
Yes, but your options may be more limited. State and local down payment assistance programs continue to operate independently of the federal SPCP guidance. Programs like Fannie Mae’s HomeReady and Freddie Mac’s Home Possible, which offer low down payment options, are not classified as SPCPs and remain available. FHA loans still require only 3.5% down. However, specific SPCP programs that offered zero-down or zero-closing-cost mortgages to certain groups of borrowers are no longer supported by the GSEs and may be discontinued by many lenders.
What should I do if I was planning to use an SPCP?
Contact your lender immediately to confirm whether your specific program is still available. If your SPCP has been discontinued, ask your loan officer about alternative programs. Explore state housing finance agency programs in your area, which often offer down payment assistance grants or low-interest loans. Consider FHA, VA (if you’re a veteran), or USDA loans (for rural properties) as alternatives. Work with a HUD-approved housing counselor who can help you navigate the current landscape of assistance programs and identify the best options for your situation.
Why did the agencies rescind the 2022 guidance?
The agencies stated that the 2022 guidance conflicts with the statutory text of the Equal Credit Opportunity Act and the Fair Housing Act, which prohibit discrimination based on protected characteristics. They also cited Supreme Court precedent holding that race-based policies are subject to strict scrutiny and that a general desire to remedy societal discrimination does not meet constitutional standards. The Trump administration has characterized the withdrawal as part of broader efforts to eliminate what it describes as diversity, equity, and inclusion initiatives that favor one class of Americans over another.
Are HomeReady and Home Possible affected?
No. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs are not classified as special purpose credit programs. They are designated as Equitable Housing Finance Plans (EHFPs) and were not affected by the FHFA’s March 2025 directive ending GSE support for SPCPs. Both programs continue to offer low down payment options and flexible credit requirements for qualifying borrowers, including those in low-to-moderate income brackets. You can still apply for these programs through participating lenders.
Can nonprofit organizations still offer SPCPs?
The legal framework for nonprofit SPCPs is more favorable than for for-profit lenders. Under the Equal Credit Opportunity Act and Regulation B, credit assistance programs offered by nonprofit organizations for the benefit of their members or economically disadvantaged classes of persons have fewer restrictions. However, the withdrawal of federal guidance and the elimination of GSE support means that even nonprofit-sponsored SPCPs may face challenges if they cannot be sold to Fannie Mae or Freddie Mac. Nonprofits offering SPCPs should consult with legal counsel to ensure compliance with current regulations.