The European Investment Bank is lending the UK £1bn to build social housing.
The deal for 20,000 homes has been agreed with the Housing Finance Corporation to help the housing shortage.
The 30-year EIB loan will be matched by THFC and be backed by a government guarantee.
More than 70 housing associations have already applied for financing under the initiative and others will be assessed in the coming weeks.
Housing associations expected to build the homes are spread across the country.
An EIB statement says the loan will be the biggest ever for European social housing.
EIB vice-president Jonathan Taylor says: “The European Investment Bank has a firm commitment to supporting investment in social and affordable housing across the UK, where we provide nearly half of overall EIB support for social housing in Europe.
“This record new backing builds on a successful partnership with THFC and the EIB’s strong track record of providing nearly £2bn for investment in social housing by more than seventy housing associations across the country.
“Local investment under this initiative will improve lives, create jobs and cut heating bills in homes across the UK.”
THFC chief executive Piers Williamson says: “Affordable Housing Finance, working in partnership with Government, is sourcing some of the most cost-effective long-term finance ever utilised by Housing Associations to underpin the delivery of badly needed affordable homes, across Great Britain.
“We completed the first drawdown under this facility yesterday for GreenSquare Housing Association at a long term rate of 1.93 per cent, or 0.27 per cent below the UK Government’s own funding rate”.
GreenSquare aim to build 1,000 homes in the next five years.
The European Investment Bank has provided more than £4.2bn for UK investment in social housing and urban renewal since 1998.