Birmingham City Council has been given the go ahead to borrow an extra £11.8 million to build more than 200 more affordable homes for citizens.
Housing minister Brandon Lewis has also given the green light to Dudley to borrow an extra £6.2 million and for Cannock Chase to raise an extra £1 million to kick-start building projects in their districts.
The three West Midlands councils are among 22 nationwide to be allowed to borrow an extra £122 million to deliver homes and boost local economies.
Mr Lewis said this was just the first step and, with one week left to bid for the second round of £178 million extra borrowing available, he challenged councils which had not already done so to come forward.
He said: "I'm giving borrowing powers to 22 councils who over the next two years will use that to build over 1,700 new affordable homes for their communities.
"It's one of the many things we've done that have got Britain building - with housebuilding levels now at their highest since 2007 and climbing.
"I want more councils to do their bit, to follow in the footsteps of these 22, and bid for the very powers they asked for."
The investment is thought to boost local economies by kick-starting private developments nearby and providing work for local traders.
Coun Tahir Ali, Birmingham City Council's cabinet member for development, transport and the economy, said: "Like many parts of the country, we have a real housing shortage in Birmingham, due to our expanding population and the shortfall in new houses, and we need to provide around 80,000 new homes by 2031.
"Through our house-building arm, the Birmingham Municipal Housing Trust, we have become a leading developer of new homes within the city, both for sale and rent, and particularly affordable housing.
"I welcome the announcement of new powers to help us provide housing for people most in need, though of course there is still a lot more to be done to close the housing gap."
Projects in Birmingham to receive funding are:
Birchfield Phase 2, 18 homes, £540,000
Jarvis Road 60 home, £3,600,000
Radnor Road HRA, 13 home, £780,000
Caynham Road, 20 homes, £1,200,000
Kings Norton Phase 1, 44 homes , £2,640,000
White Farm Road Phase, 2 6 homes, £360,000
Park Lane Aston, ten homes, £600,000
Cat Lane Shard End, 15 homes, £900,000
Bangham Pit Road, 21 homes, £1,260,000
Projects in Dudley to received funding are:
Wrens Nest EO, two homes, £46,000
Dudley Guest, 40 homes, £2,001,888
Middlepark Road, 41 homes, £2,080,000
Roseville (archives), 16 homes, £824,000
Portway Close, eight homes, £414,000
Lea Bank Road, six homes, £312,000
Marley Drive, four homes, £209,200
Mars Close/Priory Field, three homes, £157,200
The Walk Depot, three homes, £166,000
Cannock Chase Council will receive £1 million in additional borrowing powers to deliver 21 new affordable homes.