NAHB has released a new guide on financing missing middle housing. The guide is designed to help builders, developers and lenders better understand why these projects often struggle to secure financing and what can be done to close the gap.

This resource is part of NAHB’s broader effort to identify and remove barriers that limit housing supply and affordability across the country.

What Is Missing Middle Housing?

Missing middle housing includes smaller-scale residential development such as duplexes, triplexes, fourplexes, townhomes, cottage courts and small multifamily buildings. These housing types can provide more attainable housing options, support workforce housing and help communities grow incrementally while making more efficient use of land.

In recent years, state and local governments have focused on zoning reform to legalize these types of housing. But allowing missing middle housing on paper is only part of the solution; financing still remains a major challenge.

Why Do Middle Housing Projects Face Financing Challenges?

Missing middle projects often do not fit neatly into traditional lending categories. They are often too large for conventional single-family lending, but too small or unconventional for standard multifamily loan programs. As a result, builders and developers can face higher equity requirements, limited financing options and underwriting standards that were never designed for projects at this scale.

Lenders also view these projects as riskier simply because they are less familiar. Yet many missing middle developments are in established neighborhoods with strong demand, and can often deliver housing more quickly and with less exposure than large multifamily projects.

Top Solutions for Middle Housing Financing

NAHB’s new guide explores these challenges from both the developer and lender perspectives, and outlines practical solutions that can help bring more missing middle housing to market.

The Financing Guide for Builders, Developers and Lenders for Missing Middle Housing examines:

• Where financing gaps exist,
• Why traditional lending structures often fall short,
• How builders, developers, lenders and policymakers can work together to support these projects, and
• How strategies such as portfolio-based lending approaches, revolving loan structures, public-private financing partnerships and zoning reforms can make missing middle housing more financially feasible.

As communities continue searching for ways to increase housing supply and improve affordability, financing will be just as important as zoning reform. This new resource provides a framework for understanding the problem and identifying solutions that can help move missing middle housing from concept to construction.