MassHousing has received $560.8 million in private activity bonds from the state for affordable home mortgages and for the construction and preservation of rental housing.

The agency received the allocation from the Executive Office for Administration and Finance. MassHousing said it is the largest allocation to one quasi-public agency of so-called "private activity bonds" in state history.

The allocation will allow MassHousing to sell tax-exempt bonds up to the $560 million limit in order to raise capital to lend to homebuyers with modest incomes and developers or apartment complex owners who build or preserve affordable rental housing.

MassHousing’s $560.8 million will be split almost evenly between affordable homeownership lending ($280 million) and lending for rental housing construction or preservation ($280.8 million).

"This certainly reflects the strong commitment that the Patrick-Murray Administration has always had for affordable housing and we deeply appreciate their vote of confidence in us," said MassHousing Executive Director Thomas R. Gleason. "It sends a strong message to homebuyers and developers of affordable rental housing that we are ready and able to lend."

Each year, every state receives from the federal government the authority to issue federally tax-exempt, private activity bonds up to a certain amount, based on the state’s population. The bonds are then used to finance housing and economic development projects and student loans.

While the bonds are exempt from federal taxes, the decision on how to allocate them falls to state governments. In Massachusetts, the Executive Office for Administration and Finance allocates the tax-exempt bonding authority to MassHousing, MassDevelopment, and MEFA (the Mass. Education Financing Authority).