The new policy for Sacramento's public housing fund loans focuses on expanding accessibility for smaller developers and offering flexible repayment terms to address housing shortages. It reduces interest rates by 1.5 percentage points and extends loan maturities from 20 to 25 years, with a cap on monthly payments at 30% of a household's income. These changes aim to incentivize affordable housing projects in underserved neighborhoods.

The policy addresses systemic barriers faced by smaller developers, who previously struggled to secure loans due to stringent credit requirements and shorter terms. Data from the Sacramento Housing Authority (2023) shows that only 12% of applicants with annual revenues under $5 million received funding under the prior system, compared to 35% under the updated guidelines. Lower interest rates align with national trends; a 2022 U.S. Department of Housing and Urban Development report found that every 1% reduction in loan costs can increase affordable housing production by 8%. By capping payments, the policy ensures affordability for low-income residents, a critical factor in reducing homelessness. The changes are projected to fund 1,200 new units by 2026, based on pilot program outcomes in neighboring cities. This approach balances fiscal responsibility with social equity, leveraging data-driven adjustments to maximize impact.