A Surprising Backer Of America’s Affordable Housing Push: Big Banks

• JPMorgan Chase announced it will direct $750 billion to US housing projects through 2035.
• Big banks, like Citi and Bank of America, have made similar investments in affordable housing.
• Public-private partnerships could help boost housing supply — and banks get a tax break.

JPMorgan Chase announced plans to shell out $750 billion to boost America's home supply — and it isn't the only big bank in the housing development game.

The Jamie Dimon-led financial giant said this week that it will finance 1 million affordable housing units and help 500,000 buyers purchase homes over the next decade through its "American Dream Initiative," which focuses on local-level economic development. While the firm is already among the US' top multifamily and residential mortgage lenders, this is the biggest investment it has ever made in homebuilding initiatives.

"Housing, you have two issues: One is affordable, so we're doing a lot of affordable housing," Dimon told CNBC on August 5. "The other one is supply. Supply is mostly around permitting, approvals, local zoning requirements."

It's part of a larger phenomenon. Banks are partnering with developers to help cities build multifamily developments — like apartment buildings — from the very beginning. And it could benefit both banks, which are encouraged through various government programs to make these kinds of community investments, and residents in expensive cities seeking an affordable home.

A slew of banks have committed to affordable housing financing

Building enough houses and apartments to meet America's demand isn't cheap. In New York City, for example, Mayor Zohran Mamdani's pledge to build 200,000 new affordable homes is slated to cost $22 billion in capital investment over five years. Governments and independent developers in NYC, San Francisco, Atlanta, and more have called on banks to help fund housing projects.

Wall Street giants often back affordable housing ventures, alongside philanthropists and local governments. Business Insider recently toured a Midtown Manhattan hotel-to-apartment conversion that's being partially funded by Wells Fargo and JPMorgan Chase, as well as an affordable housing development for seniors in Brooklyn that was partially backed by TD Bank.

Local property developer David Schwartz previously told Business Insider that this support is especially necessary for affordable housing. Land, construction, and architecture costs are the same as any other space, but long-term tenant returns are lower than in market-rate or luxury buildings. "That's the challenge," he said.

While banks have long had a hand in real estate, their investment in affordable housing developments is gaining momentum. Bank of America provided upwards of $42 billion in financing for affordable housing efforts between 2020 and 2025, and Citi committed $60 billion to housing affordability efforts between 2026 and the early 2030s. This comes as the US' affordable housing supply continues to lag demand, and the rental vacancy rate is climbing because many lower- and middle-income households can't afford to pay the market rate.

For residents, bank investment in housing could be good news. JPMorgan said roughly $200 million of its multibillion-dollar investment will be directed toward affordable developments in San Francisco, which Dimon has expressed specific concern about as one of America's priciest markets.

Olivia Barrow Strauss, vice president of housing at the JPMorgan Chase Policy Center, told Business Insider that funding must go hand in hand with strong policy. "That includes modernizing zoning and permitting, unlocking underused land, and strengthening public-private partnerships so more housing can move from concept to construction," she said. Because "capital alone won't solve the country's housing affordability challenges."

Banks and cities could both benefit

What's in it for the banks? Investing in affordable homes is a potential path to tax breaks and economic development.

The federal government offers a low-income housing tax credit to investors and developers who build or rehabilitate affordable housing, and a new markets tax credit to incentivize investment in low-income and distressed communities. Parties can then claim an annual tax break — so long as a portion of the apartments is set aside for low- and middle-income residents or materially improves residents' lives in eligible areas. Credits like this are sometimes distributed at the state and local level, and banks might be able to write off their assistance for first-time homebuyers.

Citi has published disclosures that it "may employ a combination of taxable and tax-exempt loans or bonds, a combination of taxable and tax-exempt loans or bonds; Low Income, Historic or New Markets Tax Credits; and government and private subsidies," as part of its housing plan. Bank of America made similar statements in regulatory filings. It's unclear exactly which subsidies JPMorgan Chase qualifies for, and how much the bank's annual tax break will be, but government credits are likely a factor in its $750 billion investment.

"Tax credits and subsidies are important tools to encourage public and private investments that create or preserve affordable housing because they can help close financing gaps," Karen Purcell, head of Community Development Banking at JPMorgan Chase, told Business Insider. Still, these credits aren't a cure-all, she said, "and often don't reach the 'missing middle,' which is why moderate-income housing remains chronically undersupplied."

Passed in the 1970s, the Community Reinvestment Act also requires banks to provide financial support to the communities where they operate, including low- and moderate-income neighborhoods. Backing affordable housing developments and providing resources to homebuyers are ways banks can comply with this law. CRA requires banks to publish their performance review. Between 2020 and 2023, JPMorgan Chase's disclosures show the bank scored "outstanding" in 31 of the 56 lending areas — criteria that's based on both the bank's lending behavior and the demographics it served.

The public sector is making big bets on affordable housing, too. Congress passed a bipartisan housing bill in July. The law is set to loosen zoning restrictions, boost resources for communities impacted by natural disasters, and make it harder for major corporations to buy residential real estate. Big bank investment won't be capped by this law, and it may create more opportunities for public-private affordable housing ventures in the future.

As Dimon put it to CNBC, "The bill the House passed is a very good bill, and then we have to do complements to it locally."