Discounted-rate advances from FHLB to member institutions, used to fund community lending including affordable housing. Continuous availability, non-competitive. Authorized under 12 U.S.C. § 1430(j) and regulated under 12 CFR Parts 1290 and 1292.
The Community Investment Program (CIP) is one of the Federal Home Loan Bank System's two flagship affordable housing and community development programs. Where the Affordable Housing Program (AHP) provides competitive grants and subsidized advances to projects, CIP provides discounted advances directly to FHLB member institutions to fund their community lending activity, including loans to affordable housing projects and other targeted community development purposes.
CIP is authorized under Section 10(j) of the Federal Home Loan Bank Act (12 U.S.C. § 1430(j)) and regulated by FHFA under 12 CFR §§ 1290 and 1292. Each of the 11 FHLB districts administers its own CIP within these federal parameters.
FHLB member institutions (commercial banks, thrifts, credit unions, insurance companies, and community development financial institutions that are FHLB members) can request advances from their FHLB at below-market interest rates when those advances will be used to fund qualifying community lending. The rate discount typically runs 5–25 basis points below the FHLB's standard advance rates, with the exact discount varying by district, product, and market conditions.
The advance is a debt obligation of the member institution to the FHLB. The member uses the advanced funds to make community-purpose loans (which may include affordable housing project loans, small business loans in low- and moderate-income areas, infrastructure loans for distressed communities, etc.).
Critically, CIP is not direct project financing — it's wholesale funding for member institutions. Affordable housing developers don't apply directly to FHLB for CIP. They work with member lenders who, in turn, may fund their loans using CIP advances.
| Feature | AHP | CIP |
|---|---|---|
| Funding mechanism | Direct grants and subsidized advances to projects | Discounted advances to member institutions |
| Application timing | Annual competitive rounds | Continuous, non-competitive |
| Project applicant | Developer applies through member institution | Member institution directly requests advance |
| Subsidy form | Grant or below-market loan to project | Below-market rate on advance to member |
| Income targeting | Stringent, deep-affordability typical | Broader community lending |
| Scoring complexity | Detailed scoring per district plan | Compliance-based, not scored |
Under FHFA's Community Investment Cash Advance regulation (12 CFR Part 1292), CIP advances must fund eligible community lending purposes, which include:
The detailed eligible-use definitions vary by FHLB district within FHFA's framework.
Although developers don't apply to FHLB directly for CIP, the program creates real economic benefit for affordable housing finance in several ways:
When an FHLB member uses CIP funding to make an affordable housing project loan, the lower wholesale cost of capital may translate into more competitive loan pricing for the developer. The extent of pass-through varies by lender and market conditions, but in competitive lending markets, CIP-funded loans can have measurably better pricing or terms.
Some smaller FHLB member institutions might otherwise be capacity-constrained for affordable housing lending. CIP advances expand their balance sheet capacity to make such loans, increasing the number of lenders effectively in the market.
Community Development Financial Institutions (CDFIs) that are FHLB members can use CIP advances to fund their own affordable housing lending. This is particularly relevant for smaller deals or markets where CDFIs are primary capital providers.
CIP-funded short-term advances at member institutions can support bridge financing for LIHTC equity timing, particularly for 9% deals where equity flows in over multiple periods relative to construction draw timing.
To use CIP, a financial institution must be a member of one of the 11 FHLBs. Membership requires:
Once a member, the institution can request CIP advances by demonstrating that the underlying loans qualify for community lending purposes under 12 CFR Part 1292.
For CIP-funded advances, member institutions must:
This documentation flow means project sponsors typically work with their member lender to produce the data the lender needs for FHLB CIP compliance — income certifications, project details, AMI documentation, and similar materials are part of the standard LIHTC compliance burden that satisfies CIP documentation as well.
Each district administers its own CIP within FHFA's framework. The districts are:
To use CIP in a specific district, contact a member institution chartered or operating in that district.
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This is educational reference material, not legal, tax, financial, or investment advice. CIP rules and district implementations evolve; consult your FHLB member institution and qualified counsel for transaction-specific advice. See Disclaimer.