State's New Loan Program Aims to Address Housing Affordability and Boost Middle-Income Housing Development

Oregon's efforts to address the state's housing crisis have taken a significant step forward with the announcement of 0% interest loans for developers to finance the construction of middle-income housing. On February 20, the governor's office revealed the launch of the Moderate Income Revolving Loan (MIRL) Program, which will offer loans to help developers build homes for middle-income Oregonians.

The program is part of Gov. Tina Kotek's housing package, which was approved in the 2024 legislative session. The state's $75 million investment in MIRL marks a crucial step in the effort to tackle Oregon's growing housing affordability issues.

"When Oregonians making a good wage can’t afford to live where they work, our businesses and communities can’t thrive. We have to work to make sure all Oregon families can afford a home with the urgency they deserve," said Gov. Tina Kotek in a press release. "This program is an essential piece of the affordability puzzle, lending a hand to our local partners who need a little help to make the balance sheet make sense."

Program Details and Local Impact

The MIRL program will make zero-interest loans available to cities and counties in Oregon that meet specific requirements for low- or moderate-income housing projects. Sponsoring jurisdictions can then use these loans to award grants to developers working on eligible housing projects in their communities.

"MIRL supports development activity that is approved at a local level," said Andrea Bell, executive director of the Oregon Housing and Community Services (OHCS). "Development in general, depending upon the size and scope of the project, is often a one- to three-year process, but cities and counties could start discussing MIRL and passing ordinance/resolutions in the next 60 to 90 days if they are interested in accessing the loan program."

The program targets the development of new housing or the conversion of nonresidential structures into housing, aimed at households earning up to 120% of the area median income (AMI).

In addition, taxable improvements made through the program will be exempt from property taxes for 10 years. Developers will pay a predetermined annual program amount instead of regular property taxes during this exemption period, and the sponsoring jurisdiction will use this money to repay the zero-interest loan.

Supporting Local Housing Solutions

The MIRL program will provide funds to cover a variety of project expenses, including infrastructure, redevelopment, and construction costs. When the program loans are repaid through the program fee structure, OHCS can then issue additional loans for new housing development.

"The heart of local governments is rooted in making everyday life better for their residents. Boosting housing support reinforces the importance and unity we ought to have about getting big things done, through locally driven housing solutions," Bell added.

Addressing Oregon's Housing Shortage

The median home price in Oregon is currently $549,949, making it increasingly difficult for middle-income families to afford homes. According to Carl Riccadonna, the state’s chief economist, Oregon needs to build 29,500 units annually to meet the anticipated demand driven by population growth and migration.

While Oregon’s housing shortage has stalled in recent years, the MIRL program is a key initiative to address this gap and increase the supply of affordable homes. Oregon Housing and Community Services expects to build 2,000 to 3,000 homes with the $75 million allocated to the program.

National Trend: Other States Follow Oregon’s Lead

Oregon is not alone in using revolving loan funds to address its housing crisis. In January 2025, New York Governor Kathy Hochul proposed a similar initiative in her State of the State address. Like Oregon's program, New York’s revolving loan fund aims to fill financing gaps for mixed-income rental developments, offering lower-cost capital to developers.

Hochul’s program will be designed to self-sustain over time, as loan repayments from completed projects will fund future developments, helping to address housing needs in both urban and suburban areas outside of New York City.

Looking Forward: Building a More Affordable Future

As Oregon’s MIRL program begins to take shape, local governments and developers are encouraged to engage in the planning process and consider how the funding can help meet the state's housing demands. The program’s zero-interest loans, property tax exemptions, and flexible funding options will provide essential support in building the affordable housing infrastructure needed for Oregon’s growing population.

With the program’s focus on middle-income housing and local government collaboration, Oregon hopes to see a significant reduction in the housing affordability gap, enabling more families to find homes they can afford and strengthening the state’s economy.

Originally reported by Joy Dumandan in Realtor.