Funds are awarded for projects that assist in the development of housing or which create or retain jobs. Only projects within the Fifth District (Kentucky, Ohio, and Tennessee) are eligible.

Eligible uses include early-in project costs such as
application(s) packaging services, appraisals, architectural drawings, consulting fees, engineering fees, environmental testing, feasibility analyses, legal costs, licensing and permit fees, market studies, infrastructure or other expenditures normally associated with the development of residential, commercial, or industrial real estate-related projects.

Zero Interest Funds are available daily and are processed within two business days from receipt of application (pdf).

Upon project approval and execution of a funding agreement, members may submit a Request for Funds form for the entire approved amount. Members are limited to one draw per project. Funds will be deposited in the member institution's demand deposit account.

Members may request up to $100,000 per project but are limited to one project approval per calendar year regardless of the amount requested. Projects will be approved on a first-come, first-served basis so long as funds are available. If no funds are immediately available, approved requests will be added to a waiting list and funded when funds become available.

All Zero Interest Fund transactions must be structured for repayment, at the earlier of 24 months (or 18 months for housing projects), or at the closing of either the construction or permanent loan and must be evidenced by a note and/or loan document, for a term not to exceed 24 months (or 18 months for housing projects).

Upon repayment of the note to the member institution, the member will notify the FHLBank. The FHLBank will debit the member institution’s demand deposit account for the amount repaid. If the FHLBank has not been repaid by the end of the 24 month period (or 18 month period for housing projects), the member’s demand deposit account will be debited for the full amount of the Zero Interest Funds.

Member institutions applying for Zero Interest Funds should complete an application form (pdf) which describes the eligible activity for which the funds will be used. The Housing and Community Investment Department will determine if the proposed activity is eligible for funding.

A funding agreement between the FHLBank and the member institution (by an authorized FHLBank signatory) must be executed prior to any disbursement of funds.

Upon repayment, the member will provide the FHLBank with a narrative report on the use of funds and project status.

For information or assistance, please contact Housing and Community Investment at (888) 345-2246.