Clean Water Affordability Act of 2011 - Amends the Federal Water Pollution Control Act (commonly known as the Clean Water Act) to revise requirements for capitalization grant agreements with states for establishing water pollution control revolving funds. Requires states to set aside 15% of funds for assistance to municipalities of fewer than 10,000 individuals that meet specified affordability criteria. Authorizes the fund to be used to make loans at terms not to exceed 30 years or the design life of the project to be financed with the proceeds of the loan (currently 20 years). Authorizes a state to provide additional subsidization, including forgiveness of principal and negative interest loans, to benefit a municipality that: (1) meets affordability criteria, or (2) does not meet such criteria if the recipient seeks the additional subsidization to benefit ratepayers that will experience a significant hardship from the increase in rates necessary to finance the project or activity for which assistance is sought. Establishes affordability criteria to assist in identifying municipalities that would experience a significant hardship raising the revenue necessary to finance a project or activity eligible for assistance.
Requires the Administrator of the Environmental Protection Agency (EPA) to update the guidance entitled "Combined Sewer Overflows--Guidance for Financial Capability Assessment and Schedule Development," dated February 1997, to ensure that the evaluations by the Administrator of financial capability assessment and schedule development meet specified criteria, including criteria used in: (1) assessing financial capability of a community to make investments necessary to make water quality-related improvements, and (2) implementing water quality-related improvements.