Finance term
Capital Magnet Fund (CMF)
Also known as: CMF, CDFI Fund CMF, Capital Magnet Fund grant
Definition
The Capital Magnet Fund (CMF) is a U.S. Treasury CDFI Fund competitive grant program that awards funding to CDFIs and nonprofit housing organizations to finance affordable housing and community development — each CMF dollar must attract at least 10 dollars in private capital.
Detailed explanation
The Capital Magnet Fund was established by the Housing and Economic Recovery Act of 2008 (HERA) and is administered by the CDFI Fund at the U.S. Department of the Treasury (cdfifund.gov/programs-training/programs/cmf). CMF provides flexible grants to certified Community Development Financial Institutions (CDFIs) and qualifying nonprofit housing organizations to develop, preserve, rehabilitate, or purchase affordable housing and related community service facilities.
CMF's defining feature is its leverage requirement: each CMF award dollar must attract at least $10 in private capital investment for eligible affordable housing activities. In practice, top-performing awardees frequently leverage $20–$30 per CMF dollar by combining CMF with Low-Income Housing Tax Credits (LIHTC), HOME funds, Community Development Block Grant (CDBG), Federal Home Loan Bank Affordable Housing Program (AHP) funds, and private debt. This leverage model makes CMF one of the most capital-efficient federal affordable housing programs.
Funding source: CMF is capitalized from a set-aside of a percentage of the annual assessments on Fannie Mae and Freddie Mac (the GSEs) under 12 U.S.C. §4567, as administered by Treasury. Annual awards typically range from $100 million to $180 million. Eligible activities include construction/rehabilitation of rental and ownership housing for households at or below 120% of AMI, with at least 70% of CMF-assisted units benefiting households at or below 80% AMI (cdfifund.gov/programs-training/programs/cmf/Pages/default.aspx). Business owners in the construction, real estate, and community development sectors frequently interact with CMF through CDFI lending partners.
◈ Worked example
- A CDFI receives a $3 million CMF award and leverages it into a $42 million affordable rental housing development (14:1 leverage) by combining CMF with 4% LIHTC tax credit equity, tax-exempt PABs, and a conventional construction loan.
- A nonprofit housing developer uses $1.5 million in CMF grant funds alongside LIHTC equity and Federal Home Loan Bank AHP funds to rehabilitate 85 units of workforce housing at 60–80% AMI.
- A CDFI lender deploys $8 million in CMF-funded revolving loan capital across 12 affordable housing projects, generating $95 million in total development cost — approximately 12:1 leverage exceeding the statutory 10:1 minimum.
Common questions
The most-asked questions about Capital Magnet Fund (CMF) — answered straightforwardly.
Who can apply for Capital Magnet Fund awards? +
Eligible applicants are: (1) certified CDFIs — organizations with CDFI certification from the CDFI Fund at treasury.gov/cdfi-certification; and (2) nonprofit organizations with a primary mission of developing or managing affordable housing. For-profit developers cannot apply directly but may participate as development partners alongside a CDFI or qualifying nonprofit awardee. Applications are accepted during competitive funding rounds published at cdfifund.gov/programs-training/programs/cmf.
How does the 10:1 leverage requirement work? +
Every dollar of CMF award must be matched with at least $10 in private capital invested in CMF-eligible affordable housing activities. Private capital includes: private debt (bank loans, CDFI loans), equity investments (including LIHTC equity), Federal Home Loan Bank AHP funds, state housing trust fund dollars, and other non-federal sources. The CDFI Fund tracks leverage ratios and requires awardees to demonstrate compliance in annual performance reports (cdfifund.gov/programs-training/programs/cmf).
Can CMF be combined with LIHTC? +
Yes, and it frequently is. CMF and LIHTC are complementary programs: LIHTC provides equity financing (via tax credit syndication) while CMF provides grant funding that can cover financing gaps, reduce debt load, or deepen affordability below what LIHTC alone achieves. Combining 4% LIHTC with tax-exempt PABs and CMF is a standard financing stack for large affordable multifamily projects. Treasury coordinates CMF and LIHTC policy at cdfifund.gov and irs.gov/credits-deductions/individuals/earned-income-tax-credit/low-income-housing-tax-credit.
Further reading
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