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Housing and Communities Minister Alex Neil said gaining access to alternative sources of funding at competitive rates signalled a "new dawn" in Scotland's ability to attract and access European investment.
The fund will offer housing associations an alternative private lending source helping to support new affordable private home developments and jobs in the house building sector.
The Minister will meet with the Vice President of the European Investment Bank (EIB) in Brussels on Monday (September 28) to shake hands on the deal and scope out opportunities for making available European lending in other areas.
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Speaking ahead of the meeting with the EIB in Brussels Mr Neil said: "My number one priority is to deliver a good deal for the housing sector and find innovative ways to support it during tough economic times.
"Opening up access to a European fund of this size will give Housing Associations access to another lending source, with competitively priced loans.
"I believe this signals a new dawn in Scotland's ability to attract and access European investment. There is also a real opportunity to replicate this success across other areas and provide a boost for Scotland's economic recovery.
"As a priority, I am strengthening Scotland's relations with the EIB and helping to build fruitful relationships between the bank and Scotland's Housing Associations."
Chief Executive of The Housing Finance Corporation, Piers Williamson, said: "We welcome this opportunity to greatly extend our existing Scottish commitment and look forward to working with a broad range of Scottish Housing Associations over the coming months to help them deliver new housing in the communities they serve."
As well as helping housing associations to access new sources of lending, the Scottish Government will invest more than £1.65 billion over three years in affordable homes across Scotland, and is on track to build 8,100 homes this year.
The government are investing £50 million to reverse decades of decline in council house building. So far, 17 councils are benefitting from the largest council house building programme for 30 years with over 1300 new council homes planned across the country.
(GK/BMcC)
